Yesterday (4/22/2010) American Express released their first quarter numbers… net income for the company more than doubled from the same period one year ago – $437 million then to $885 million now. This is largely due to the increase in cardholder spending – up 16% for this quarter
Now if we take a closer look at just their U.S. card business, it made $428 million during the first quarter, compared to losing $7 million during that time last year.
Doubled earnings with record charge-offs?
Ironically – just one day later – Moody’s announces that credit card charge-offs have reached an all time record high… 11.12% of debt was written off during the first quarter. It is the highest level ever since they started their credit card index twenty years ago. Moody’s stated they expect that to be the peak quarter, but on a monthly basis, the peak may be seen in April or May.
Not surprisingly, the charge-off rate a number which closely corresponds to unemployment. Once that plateaus and the job market starts improving, charge-offs should too.