American Express Co.’s profit missed Wall Street estimates on Thursday despite higher spending by its customers as the credit card giant kept aside a large sum to cover potential defaults and spent more on promotions.
Shares fell as much as 7 percent to a near three-month low of $154.01 as expenses surged 22 percent to $11.1 billion in the first quarter, higher than expectations of $10.4 billion.
“While the elevated provision does not come as a surprise, the miss on expenses is likely the driving force behind the shares’ move lower,” UBS analysts wrote in a client note.
AmEx raised its provisions to $1.1 billion compared with a benefit of $33 million a year ago in anticipation of more cardholders falling behind on their debt repayment….