AmEx earnings drop

American Express stated on Monday that its profits dropped nearly 10% during the 4th quarter. Apparently the company made a decision to conserve more money to prepare for possible customer defaults. Total provisions for losses and benefits rose 70% to $1.52 billion from the prior year.

"The fourth-quarter additions to reserves were appropriate for an environment that is more difficult than we have seen in recent years," said Chairman and Chief Executive Kenneth Chenault in a statement. "While our outlook for 2008 remains cautious and we continue to expect slower earnings growth in the year ahead, we are not changing our fundamental approach to managing the business."

Comparing to other credit companies, American Express cardholders have a propensity to have better credit histories and tend to spend more. Still, the annual revenue fell short $0.49 billion of what the analysts predicted to climb to $7.85 billion in 2007. American Express shares closed at $47.40 on Monday.