American Express Co on Friday warned that business travel spending would not pick up before early 2022 after reporting underwhelming third-quarter profit due to weak spending on travel and entertainment by its card users.

In what appears to be a shift in strategy, the New York-based credit card issuer, for long a preferred choice of affluent Americans, walked back on its cost-cutting target of nearly $3 billion in 2020 and decided to spend heavily to add new card customers.

"We're all consistent in terms of how we feel about business travel, which is probably not going to (pick up) till late 2021, early 2022," Chief Executive Officer Stephen Squeri said in a post-earnings conference call with analysts.

Credit card companies have been hit hard as the pandemic-induced recession forces companies to lay off workers and consumers to stay at home, drastically reducing their purchasing power.

Spending on its cards fell 19% to $248.7 billion in the quarter, with travel and entertainment related spending sliding 69% from a year earlier.

AmEx, which has tie-ups with large airlines and hotels and whose largest shareholder is Warren Buffett's Berkshire Hathaway Inc, set aside $665 million in loss provisions during the quarter.

However, it was still lower than what it set aside last quarter, as the outlook for potential defaults improved, with AmEx saying that overall spending volumes had shown a "steady recovery" since the lows of mid-April.

Online consumer retail spending was a bright spot for the card issuer during the quarter, clocking a 32% jump over last year.

Non-travel and entertainment spending, which comprises most of the spending on AmEx's network and includes online and offline retail spending, inched up 1% from a year ago after adjusting for cross-currency fluctuations.

Quarterly profit fell 40% to $1.07 billion, or $1.30 per share, missing analysts' average estimate of $1.35 per share, according to Refinitiv data, hurt mainly by higher expenses.

Total revenue, excluding interest expense, fell 20% to $8.8 billion, but came in ahead of muted expectations.

AmEx shares (AXP), which have lost about 16% of their value so far this year, fell 3.5% after reporting results.