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American Express reported a profit that fell from a year ago but topped Wall Street's expectations as the credit card company trimmed costs, a decline in consumer spending stabilized 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 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.
Sales in the most recent quarter came in at $6 billion, compared with revenue of $7.164 billion in the same period a year ago.
Analysts who follow American Express, a component of the Dow Jones Industrial Average, expected the company to turn in a profit of 38 cents a share on a topline of $5.922 billion.
The percentage of loans the company considers won't be repaid dropped to 8.9 percent in the quarter from 10 percent in the second period. However, that is still well above the 5.9 percent rate a year earlier.
American Express shares traded slightly lower in late trading. Get after-hours stock quotes for American Express here.
The stock saw a boost of almost 4 percent during the regular trading session [AXP
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], closing at $36.44.
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 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 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.
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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.
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Clarification: An earlier version of this story reported American Express' earnings from continuing operations of 54 cents a share as the number to be compared with analysts' estimates. But the appropriate number for comparison is the adjusted earnings from continuing operations of 44 cents a share.
- AP and Reuters contributed to this report.
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