American Express profit tumbles
Credit card giant reports a drop in revenue because of soft consumer spending and rising credit losses.
NEW YORK (Reuters) -- American Express Co. posted stronger-than-expected quarterly earnings Thursday as the credit card company trimmed costs, a decline in consumer spending stabilized and bad loans eased.
Net income fell 21% to $640 million, or 53 cents per share, from $815 million, or 70 cents per share, a year earlier, the largest U.S. credit card company by purchases said in a statement.
The third-quarter results included a $180 million non-recurring benefit associated with the company's accounting for a net investment in consolidated foreign subsidiaries
Excluding that benefit, American Express (AXP, Fortune 500) posted adjusted earnings from continuing operations of 44 cents per share.
On that basis, analysts expected earnings per share of 38 cents, according to Thomson Reuters I/B/E/S.
Total revenue fell 16% to $6.0 billion, but consolidated expenses declined 17% to $3.9 billion as the company trimmed jobs, marketing, and rewards costs.
Total card spending fell 11% in the United States from the third quarter of 2008. However, it showed an improvement against a 16% contraction in the second quarter.
"Overall billings have stabilized during the last few months and we saw indications that spending by corporate cardmembers is beginning to pick up," Chief Executive Kenneth Chenault said in a statement.
"We generated substantial earnings this quarter due, in part, to the reengineering efforts that have successfully lowered our expense base," he said.
In the U.S. card service business, net charge-offs -- a measure of bad loan write-offs -- fell to 8.9% from 10% in the previous quarter, although they were up compared with the third quarter of 2008.
"At the start of the year the economy appeared to be in a freefall ... Today, while there is still reason to be cautious about high unemployment levels, we are seeing broad-based improvements in credit quality," Chenault said.
Provisions for losses decreased 13% to $1.2 billion.
Analysts have said American Express, which relies on affluent and corporate customers more than its peers, is recovering faster from the financial meltdown as economic jitters ease.
American Express shares rose 1.1% to $36.83 in after-hours trading after closing at $36.44 on the New York Stock Exchange. The company is the biggest Dow component gainer so far in 2009. 
