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AmEx profit tumbles 85% as pandemic-related defaults loom

Credit: REUTERS/KAI PFAFFENBACH

Credit card issuer American Express Co reported a 85% slump in quarterly profit on Friday after it set aside nearly $628 million to prepare for a flood of potential defaults caused by coronavirus-led layoffs.

July 24 (Reuters) - Credit card issuer American Express Co AXP.N reported a 85% slump in quarterly profit on Friday after it set aside nearly $628 million to prepare for a flood of potential defaults caused by coronavirus-led layoffs.

The company's net income fell to $257 million, or 29 cents per share, in the second-quarter ended June 30, from $1.76 billion, or $2.07 per share, a year earlier.

The health crisis has hammered economies worldwide and triggered mass layoffs, which in turn made more people default on their bills, hurting credit card issuers.

AmEx said its consolidated loss provisions stood at $1.6 billion, up from $861 million a year ago, with the increase driven primarily by new reserves created to account for the effects of the pandemic.

Total revenue, excluding interest expense, fell 29.2% to $7.67 billion.

Rivals Visa V.N and Mastercard MA.N are expected to report their quarterly results next week.

(Reporting by C Nivedita Editing by Tomasz Janowski)

((C.Nivedita@thomsonreuters.com; Twitter: @NivCholayil;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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