By Sohini Podder and Niket Nishant
(Reuters) -American Express Co said travel and entertainment-related spending on its cards halved in the first quarter as customers stayed at home due to the COVID-19 crisis, overshadowing a better-than-expected profit and sending its shares down 4%.
Cross-border travel 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 on Friday that 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.
However, Campbell struck a more optimistic tone for the latter half of the year, saying he expected overall spending volumes to be back to pre-pandemic levels either later this year or in 2022.
The credit card issuer reported a six-fold surge in net income to $2.2 billion earlier in the day, as it freed up more than $1 billion of funds that 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, thanks to a rebound in non-travel spending.
Total revenue, excluding interest expense, fell 12% to around $9 billion, primarily reflecting a decline in spending by card holders and lower loan volumes.