By Lisa Beilfuss

American Express Co. said its quarterly profit declined 6.5% amid higher spending by the card company to overhaul its business.

The results, however, topped Wall Street expectations and sent shares up 3.8% in after-hours trading.

At the start of this year, Chief Executive Kenneth Chenault said AmEx would take "significant actions" to change the trajectory of its business after posting a slide in 2015 earnings and issuing a bleak outlook for 2016. The company had a rough go last year, under growing competitive pressure that was highlighted by the loss of its 16-year exclusive relationship with warehouse-club retailer Costco Wholesale Corp. That deal expired at the end of March.

Mr. Chenault on Wednesday said competition across the payments industry remains strong, but he said AmEx's initiatives to grow its card base helped investment spending rise "significantly." The company added 3 million new cards during the quarter, and AmEx's underlying loan portfolio grew 11%.

The company said card member spending rose 6%, but that was partly offset by a lower merchant discount rate and higher costs tied to cash-back rewards.

"Our priorities for this year and next continue to be accelerating revenue growth, resetting our cost base and optimizing the investments we're making in the business," Mr. Chenault said, and he reaffirmed AmEx's previously issued forecasts for this year and next.

AmEx is targeting $1 billion in expense cuts by 2017. In the first quarter, the company booked an $84 million charge stemming from the related restructuring efforts. Its expenses in the period rose 4.9% to $5.47 billion,.

In all, American Express reported a profit of $1.43 billion, or $1.45 a share, down from $1.53 billion, or $1.48 a share, a year earlier.

Revenue edged up 1.7% to $8.09 billion, or 4% excluding currency fluctuations. The company credited higher net interest income, card member spending and net card fees.

Analysts projected $1.35 in earnings per share on $8 billion in revenue, according to Thomson Reuters.

Fellow card company Discover Financial Services has similarly taken strides to improve its business after a rocky end of the year, hurt by prolonged low interest rates and cautious consumer spending. Earlier this week, Discover reported better-than-expected first-quarter results as it made good on a promise to accelerate loan growth.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

(END) Dow Jones Newswires

April 20, 2016 17:00 ET (21:00 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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