American Express took a major, coronavirus-related hit to quarterly profit as the credit card giant set aside $1.7 billion to cover possible card holder delinquencies.

AmEx’s net income for the first quarter fell 76% to $367 million, or 41 cents per share, from $1.55 billion, or $1.80 per share, while consolidated provisions for losses rose to $2.6 billion from $809 million.

“The first two months of 2020 continued the strong momentum we have delivered over the past two years, but we’re now in a different world,” CEO Stephen Squeri said Friday in a news release. “The deterioration in the economy due to COVID-19 impacts that began in the first quarter and accelerated in April has dramatically impacted our volumes.”

He said AmEx is addressing the pandemic by “aggressively reducing costs across the enterprise.” It expects operating expenses to be down about $1 billion year over year during the next three quarters.

As Reuters reports, AmEx is joining several large U.S. banks that “have already stowed away billions of dollars to cover future losses as coronavirus-led layoffs and pay cuts would make it difficult for consumers to make loan payments.”

“With American Express both lending to its card holders, as well as processing the transactions, the card giant is vulnerable to risks from defaults as unemployment soars and the global economy enters a recession,” Investor’s Business Daily noted.

AmEx had warned in March of a drop in spending as the travel and entertainment industries reel under the impact of global lockdowns. “T&E, which was roughly 30% of our proprietary volumes in 2019, is down almost 95%”, CFO Jeffrey Campbell said on Friday.

First-quarter total revenue, excluding interest expense, fell to $10.3 billion from $10.4 billion as spending by customers using AmEx cards during the first quarter fell 3% in the U.S. and 11% in overseas markets.

The company said softness in spending volumes began in the last few days of February and “significantly accelerated in March as a result of COVID-19 impacts.”

“We entered this crisis with particularly strong capital and liquidity positions that will enable us to remain financially strong,” Squeri said.

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