American Express (NYSE: AXP) just posted $0.56 EPS on $7.484 Billion in revenues, although we would note that there are items in these results from continuing operations. 

First Call had estimates of $0.83 EPS on $7.6 Billion in revenues. 

It does not expect to meet or exceed its its financial targets until the economy improves. 

The company said it will trim overall costs and staffing levels aswell. 

We would also note that results included a $600 million grossaddition to U.S. lending credit reserves over a deterioration of creditindicators beyond expectation, and a $136 million gross charge to thefair market value of retained interest in securitized cardmember loans,and included a tax benefit of $101 million primarily related toresolution of certain prior years’ tax items.

Shares closed down 3% at $40.90 in normal trading, but shares are down 8% at $37.60 in the initial reaction after the close.

Unfortunately, this means that credit quality even in the high-end of the credit spectrum is going to get worse before it gets better.

Jon C. Ogg
July 21, 2008

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