AmEx sees light at the end of the recession tunnel on strong Q3 results

23 Oct 2009

The biggest US credit-card issuer by purchases, American Express Co, posted profit that beat most analysts' expectations and said the recession may be drawing to an end.

The company's third-quarter income from operations plunged 25 per cent to $642 million or 54 cents a share from $861 million or 74 cents in the same period last year the New York-based company said in a statement yesterday.

Excluding a one-time accounting change, the 44 cents a share profit neatly beat the 38 cent profit projected by analysts.

''While there is still reason to be cautious about high unemployment levels, we are seeing broad-based improvements in credit quality, the trends in card-member spending are encouraging and there are signs that the recession may be approaching an end,'' chief executive officer Kenneth Chenault said in the statement.

Chenault's statement was indicative of the increasing confidence in the economic climate during the third quarter when he told his staff on 24 September that he was withdrawing the pay cuts introduced eight months ago.

Card write-off dropped in September for the eighth consecutive month. Capital One Financial Corp, the McLean, Virginia-based card lender also turned in results that beat estimates by posting a 14 per cent profit increase.