American Express Co.'s first-quarter profit missed Wall Street estimates as the credit card giant set aside more money to cover potential losses stemming from cardholders falling behind on debt repayments.
Shares fell nearly 1% in premarket trading on Thursday as the growing economic uncertainty in the United States slowly begins to catch-up with AmEx, which has so far been in a better position compared to its peers due to a wealthy customer base.
A persistently high inflation and a rapid rise in borrowing costs have begun to pinch customers, resulting in AmEx raising its provisions to $1.1 billion in the quarter compared with a benefit of $33 million a year ago.
"We're mindful of the mixed signals in the external environment," said Chief Executive Stephen Squeri in a statement.
AmEx profit fell 13% to $1.8 billion, or $2.40 per share, for the three months ended March 31, missing analysts' average estimate of $2.66 per share, according to Refinitiv data.
The company, however, reaffirmed its profit forecast for 2023. It expects to earn $11 to $11.40 per share compared to analysts' estimate of $11.10.
Total revenue, excluding interest expense, rose 22% to $14.38 billion in the first quarter.
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