American Express suffers $659 million loss

American Express faced a strong decline on their credit card usage system in the latest quarter. Its income dropped 79% to $172 million, 15 cent a share, from $831 million, or 72 cents a share in the previous year.  

Chairman and chief officer of American Express Kenneth Chenault, explained this by a decline in whole card users spending as well as increasing of late payments for company’s last performance. Its failure originated from the previous year namely in the last three month, because at that time card users spending figures fell 10% to $160.5 billion from $177.5 billion. 

Chenault also added that in this year in the credit card usage sector they expected weak operations by cardholders. Also he added that delinquencies and uncollectible card balances will likely continue to grow.

Current ability of American Express to resist a prolonged slump surprised experts and analysts from rating agencies. However the latest findings depict that company save its face despite slash economic conditions. Previous year in October the company made steps toward 7000 job cuts, or around 10% of its staff. Under this step they anticipated to save $1.8 billion for the current year. After that in December the American Express reorganized as bank holding company. These changes allowed American Express to increase its capital and get assist from the government’s bailout program of $700 billion. Also it has received $3.39 billion from Treasury Department in exchange for planned stock and warrants.