American Express Co posted stronger-than-expected quarterly earnings on October 22 as the credit card company trimmed costs, a decline in consumer spending stabilised and bad loans eased. Net income fell to $640 million, or 53 cents per share, from $815 million, or 70 cents per share, a year earlier, the largest US 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 posted adjusted earnings from continuing operations of 44 cents per share. Total revenue fell 16 percent to $6.0 billion, but consolidated expenses declined 17 percent to $3.9 billion as the company trimmed jobs, marketing, and rewards costs.
Total card spending fell 11 percent in the United States from the third quarter of 2008. However, it showed an improvement against a 16 percent contraction in the second quarter. "Overall billings have stabilised during the last few months and we saw indications that spending by corporate card members 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 US card service business, net charge-offs - a measure of bad loan write-offs - fell to 8.9 percent from 10.0 percent in the previous quarter, although they were up compared with the third quarter of 2008.