NEW YORK-- American Express Co said on Friday travel and entertainment-related spending on its cards halved in the first quarter as customers stayed at home during the COVID-19 crisis, overshadowing its better-than-expected profit.
Cross-border restrictions and a resurgence of COVID-19 cases in several parts of the world have forced people and businesses to put travel on hold, hitting credit-card issuers. Chief Financial Officer Jeffrey Campbell said in an interview with Reuters the continued travel restrictions would slow a rebound in business travel for large corporations.
"Our baseline assumption remains that by the fourth quarter of this year, global T&E (travel and entertainment) spending will be at around 70% of 2019 levels. But travel for large and global corporations is going to rebound slower," Campbell said.
Shares of AmEx fell over 2% in afternoon trading.
But Campbell struck a more optimistic tone on overall spending volumes, saying he expected recovery to pre-pandemic levels either later this year or in 2022. The credit card issuer is already seeing signs of a pick-up in domestic travel thanks to pent-up demand and vaccine rollouts, Chief Executive Officer Stephen Squeri told analysts on a call.
Cross-border travel, however, will bounce back only in the second half of 2022, he said.
The New York-based company's first-quarter revenue fell 12% to about $9 billion, also hit by lower loan volumes. But AmEx's net income surged six-fold to $2.2 billion as it freed up more than $1 billion of funds it had set aside to cover credit losses from the pandemic.
Excluding that benefit, earnings were $1.74 per share, higher than a Refinitiv IBES estimate of $1.61 per, driven by a rebound in non-travel spending.
