NEW YORK (Reuters) - American Express Co’s (AXP.N) shares fell to a 12-year low on Tuesday amid growing concerns about credit card losses, one day after news that the company was offering $300 to certain U.S. card holders who pay off their balances and close their accounts.
“It means that they are concerned about their credit portfolio and are trying to think of ways to reduce that risk,” said Stifel Nicolaus analyst Chris Brendler. “It is a little bit concerning on the surface. Why would you pay $300 to have someone close their accounts? It’s an eyebrow raiser.”
American Express, often seen as catering to relatively wealthy customers and companies, has been expanding its credit card business in recent years by reaching out to a wider range of clients.
But that strategy has backfired. The company’s earnings tumbled in the fourth quarter as credit losses jumped and debt-burdened consumers slashed spending.
In addition, American Express reported last week that credit card delinquencies rose in January more than analysts expected, as U.S. unemployment increased and the global economy deteriorated.
American Express shares fell 3.7 percent to $11.70 after touching a 12-year low of $11.44 in morning trading on the New York Stock Exchange. The shares have lost a third of their value this year.
Reporting by Juan Lagorio, editing by Lisa Von Ahn