American Express shares fell by 3.62% on Friday despite the company exceeding profit estimates for the third quarter. The decline followed the announcement of a restructuring plan that includes cutting 5% of its 77,000-person global workforce. The company expects to incur a restructuring charge of $336 million related to these staff reductions.
CFO Christophe Le Caillec stated that the layoffs are intended to streamline operations and improve agility before implementing AI technologies. The company aims to optimize internal processes by reducing management layers and increasing spans of control. This strategy is designed to facilitate the integration of AI tools in the upcoming quarters and years.
The market reaction was influenced by concerns over the quality of earnings. While earnings per share increased by 13%, the underlying pretax profit grew by only 1.6%. Much of the growth was attributed to share buybacks and a lower tax bill rather than core business performance. Additionally, revenue missed analyst expectations, and the improved annual profit forecast was largely driven by a one-time gain from the sale of a business stake.
American Express is part of a broader trend in the financial sector. Barclays recently announced plans to cut 5,000 jobs, representing 5% of its staff, to manage costs. Furthermore, six major US banks collectively reduced their headcount by 15,000 employees while reporting an 18% increase in first-quarter profits to $47 billion.
