(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.
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