CORRECTED-UPDATE 1-American Express profit down on credit losses

(Corrects spelling of Chenault in paragraph three)

NEW YORK, July 21 (Reuters) - American Express Co, (AXP.N) a credit card issuer and processing network, said on Monday its quarterly profit fell 38 percent as it set aside more money to cover credit losses.

The company said it was no longer on track to boost earnings per share by 4 percent to 6 percent this year because the U.S. economy has slowed, particularly in June.

"While we have been able to generate substantial earnings and returns relative to many in the financial sector, we do not expect to meet or exceed our long-term financial targets until we see improvements in the economy," Kenneth Chenault, chairman and chief executive, said in a statement.

The fourth-largest U.S. card issuer said second-quarter earnings were $653 million, or 56 cents a share, compared with $1.057 billion, or 88 cents a share, in the same quarter last year.

Net income was hurt by a $600 million pre-tax addition to U.S. lending credit reserves, reflecting a deterioration of credit beyond what American Express had expected.

American Express is often seen as catering to higher-end consumers compared to most other credit card issuers. But delinquencies on its cards have crept higher as the U.S. mortgage crisis has weighed on the ability of some wealthy consumers to pay their bills.

American Express' shares have fallen about 21 percent so far this year, compared with a roughly 14 percent decline in the Standard & Poor's 500 index. .SPX (Reporting by Dan Wilchins; editing by Carol Bishopric)