American Express Co.'s first-quarter profit surged 82.1% from the previous quarter but fell 55.9% from a year earlier, to $437 million, or 31 cents a share, trouncing the 12-cent average of analysts' estimates.
Credit expenses grew 28.4% from the previous quarter and 48.9% from the year earlier, to $1.8 billion. But noncredit and noninterest expense fell 26% from the previous quarter and 21.7% from the year earlier, to $3.6 billion. The New York card company attributed part of the decline to a restructuring effort and said it would cut additional costs this quarter.
The managed chargeoff rate in the company's U.S. credit card business rose 180 basis points from the previous quarter and 420 basis points from the year earlier, to 8.5%.
Amex projected that the rate would increase another 200 to 250 basis points this quarter and as much as 50 basis points the next quarter, then level off in the fourth quarter. The forecast assumes the unemployment rate will rise to 9.7% by December.