DOW JONES NEWSWIRES
American Express Co.'s (AXP) third-quarter profit declined 21%, as the credit-card issuer posted results above analysts' expectations, as loan-loss provisions fell 13%, to $1.2 billion.
Chairman and Chief Executive Kenneth I. Chenault added that cost-cutting helped the company's results.
Shares were up 9 cents after-hours, at $36.53, after climbing 4% during regular trading.
American Express has been struggling with a cutback in spending by consumers, and with the fallout from an ill-timed expansion of credit-card lending undertaken shortly before the economic downturn. The company, which unlike most rivals issues cards and processes transactions, has reported lower quarterly profits over the last two years as customers fall behind on payments and cut back on credit-card spending.
Card issuers are also coping with sweeping legislation restricting certain fees and rate hikes that will bite into income. In response, many have tightened lending standards.
American Express reported earnings of $640 million, or 53 cents a share, down from $815 million, or 70 cents a share, a year earlier. Earnings from continuing operations excluding a 10-cent accounting benefit fell to 44 cents from 74 cents.
Revenue, net of interest expense, dropped 16%, to $6.02 billion.
Analysts polled by Thomson Reuters expected earnings of 38 cents on revenue of $5.92 billion.
At the U.S. lending portfolio segment, earnings slumped 55%, as the write-off rate on a managed basis, which assumes there have been no off-balance sheet securitization transactions, rose to 8.9% from 5.9% a year earlier, but fell from the second quarter's 10%.
-By John Kell and Kevin Kingsbury, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com