American Express announced intra-quarter guidance today saying that the company would be impacted by worse-than-expected credit conditions. They expect their business to be impacted as economic activity slows and consumer late-pays and credit defaults on AMEX cards continue to mount.
From the Market Watch story:
“Business conditions continue to weaken in the U.S. and so far this month we have seen credit indicators deteriorate beyond our expectations,” Chief Executive Kenneth Chenault said in a statement.
“Today’s release indicated that the company would likely hold off on potential business building initiatives until business conditions improve,” the analyst wrote.American Express has been hit by rising losses on its credit cards as the housing slump and slowing economic growth limit customers’ ability to repay debts.Provisions for losses on American Express’s credit cards have risen over the past year to $1.15 billion from $783 million as the consumer credit market has weakened, Egan-Jones Ratings, a rating agency that’s paid by investors rather than issuers, noted.
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