American Express cuts expenses, boosts cash position during Covid-19

By Devika Patel

Knoxville, Tenn., April 24 – American Express Co. has seen a dramatic decrease in volumes due to the Covid-19 pandemic.

Although the company has a strong cash position, management cut expenses by nearly $3 billion and increased cash balances to $41 billion from $32 billion last quarter.

“We are in unprecedented times,” chairman and chief executive officer Stephen J. Squeri said on the company’s first quarter ended March 31 earnings conference call on Friday.

Results in January and February continue strong trends seen over the past 10 quarters, but American Express is now operating in a “very different world,” Squeri said.

The deterioration in the economy due to Covid-19 that started in the first quarter and accelerated in April dramatically the company’s volumes, he said.

“Looking ahead, it’s impossible to know when the economy will improve.

“In the meantime, we’re focused on supporting our colleagues and customers, while remaining financially strong so that we could be in a position to grow when the crisis ends,”

The company has a strong liquidity position and has cut expenses by nearly $3 billion.

“We entered this crisis with particularly strong capital and liquidity positions that will enable us to remain financially strong,” Squeri said.

“While some of our expense categories such as rewards cost and the cost of card member services will decline automatically as spending declines and customer behaviors change, we’re taking aggressive actions to reduce discretionary expenses across the enterprise by nearly $3 billion from our original plan,” Squeri said.

Cash balances increased in the last quarter, giving the company the flexibility it needs during the crisis.

“We are entering the current crisis with a strong capital position,” executive vice president of finance and chief financial officer Jeffrey C. Campbell said on the call.

“The countercyclical nature of our business is reflected in our particularly strong liquidity position during the first quarter.

“Our cash and investments balance increased from $32 billion to $41 billion in Q1.

“Our capital funding and liquidity positions are strong and we have significant flexibility to maintain a strong balance sheet in periods of uncertainty or stress,” Campbell said.

The credit card services company is based in New York.

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