Chillin' out till it needs to be funded
Though Liz Warren may not make it to discipline the errant children as it were, Amex and Cap One together slashed provisions by nearly $2 billion, with $952 m and $1 billion each from provisions resulting in a net profit of $0.84 and $1.33 for the two true blue American all stars. Meanwhile Geithner has come out in eaarly morning reports against a continuing crusade from Liz Warren at the new fangled CFPRA:
American Express Co. and Capital One Financial Corp. reported big quarterly profits late Thursday as the credit-card giants benefitted from fewer bad loans.
Still, the companies were cautious about the economy and their shares declined in after-hours trading.
American Express (AXP 42.99, -0.20, -0.46%) said second-quarter net income came in at $1 billion, or 84 cents a share, up from $337 million, or 9 cents a share, in the year-ago period. The company was expected to make 75 cents a share, according to the average estimate of 18 analysts surveyed by FactSet Research.
Capital One (COF 40.98, -1.10, -2.61%) reported second-quarter net income of $608 million, or $1.33 per common share. That compares with a loss of $277 million, or 66 cents a share, in the second quarter of 2009.
An economic recovery in the past year has stabilized unemployment and limited bad loans that hit credit-card companies hard during the 2008 financial crisis.
AmEx had $652 million of provisions for loan losses in the second quarter, less than half the $1.6 billion it set aside in the year-earlier period. Capital One released $1 billion from its loan loss allowance in the latest period, up from $566 million in the first quarter of this year.
Despite the recovery in credit trends, the companies were cautious about the economy and the effects of a slew of new regulations facing the card industry.
“We remain cautious about the economy and the challenging regulatory environment,” Kenneth Chenault, chief executive of AmEx, said in a statement.
Card spending by AmEx’s rich customers and the company’s business customers is strong, but customers are borrowing less and paying back more of their outstanding debts, he explained.
Bank results season, Bank results week