American Expressreported a profit that fell from last year as it set aside more money to cover credit losses, but the shares rose in late trading as earnings blew past analysts' estimates.
American Express said its earnings from continued operations came in at 74 cents a share in the third quarter, on revenue of $7.16 billion.
The credit card firm reported a profit of 90 cents a share on revenue of $6.945 billion last year.
Analysts polled by Thomson Reuters, on average, forecast earnings of 59 cents per share for the quarter. Analysts typically exclude special items from their estimates.
Analysts put American Express's topline at $7.309 billion, according to the consensus estimate.
"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.''
Shares of the company jumped about 8 percent in extended trading after closing 4.37 percent higher at $24.35 Monday.
American Express, a Dow Jones industrial average component, said consolidated provisions for losses increased 51 percent to $1.4 billion.
Delinquencies on American Express cards have crept higher as the financial crisis has weighed on the ability of some consumers to pay their bills.
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American Express is selectively scaling back credit lines from some U.S. customers, cutting expenses and reducing efforts to gain new customers domestically.
(Craig Maurer, Calyon Securities equity analyst, talks about the Amex results in the video)
"We saw clear signs earlier this year of a weakening environment and the recent volatility in the financial markets has reinforced our view that consumer and business sentiment is likely to deteriorate further, translating into weaker economies around the globe well into 2009," said CEO Kenneth Chenault in a statement.
"Cardmember spending is likely to remain soft," Chenault added. "Loan growth will be restrained, in part because of the steps we are taking to reduce credit risks, and credit indicators are likely to reflect the continued downturn in the economy and throughout the housing sector.
American Express' shares have fallen about 53 percent so far this year through Monday's close, compared with a roughly 33 percent decline in the Standard & Poor's 500 index.
- Wire services contributed to this report.