American Express beats estimates as costs fall

Net income fell 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 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 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 stabilized 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 U.S. 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.

"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 percent 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 percent 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.

(Reporting by Juan Lagorio; Editing by Steve Orlofsky)