Two of the US’s largest credit companies yesterday reported rebounding profits, raising hopes the American consumer is spending again.
American Express yesterday reported profits for the last quarter of 2009 had quadrupled thanks to increased consumer spending and reduced losses on defaults.
The credit card lender and payment network beat forecasts by posting net income of $716m (£442m), up from $240m in the same period last year. The firm has suffered big credit losses over the past two years, but yesterday said the amount it was setting aside to cover bad loans was falling. Provisions for losses were 47 per cent lower in the last quarter at $748m.
It is now focusing its efforts on charge cards, where customers have to pay off the balance every month.
Capital One also posted earnings above Wall Street forecasts, returning to profit after heavy losses at the height of the financial crisis. The company reported fourth-quarter net income of $376m, up from a $1.4bn loss a year earlier.
Capital One said its credit card business was the biggest profit driver for the quarter. Net income in this unit in the last three months of the year was up 74 per cent compared to the previous quarter.