American Express profit falls, but beats estimates
American Express Co, a credit card issuer and processing network, reported on Monday a 23 percent drop in third-quarter income from continuing operations as it set aside more money to cover credit losses, but nevertheless beat analysts estimates.
The company's stock was up 8 percent at $26.3 in electronic trading after the bell, reports Reuters.
But American Express warned it expected a further deterioration of credit in 2009 as the global economic outlook erodes.
The fourth-largest U.S. card issuer's third-quarter earnings from continuing operations fell to $861 million from $1.1 billion in the same quarter last year.
Diluted earnings per share from continuing operations were down 21 percent to 74 cents. Analysts had on average expected 59 cents a share before items, according to Reuters Estimates.
"I was expecting such a bad quarter. There's a sense of relief now," Andrew Boord, an equity research analyst covering financial stocks at Fenimore Asset Management, which owns American Express shares.
"The economy is slowing demand for credit and it looks like they're also clamping down on credit."
Third-quarter net income fell 24 percent to $815 million.
American Express, a Dow Jones industrial average .DJI component, said consolidated provisions for losses increased 51 percent to $1.4 billion.