American Express 1st-qtr profit declines

By Dan Wilchins

NEW YORK (Reuters) - American Express Co on Thursday posted a 6 percent decline in first-quarter profit, but results beat expectations and the company affirmed its full-year earnings forecast, lifting its shares after hours.

The fourth-largest U.S. credit card issuer said revenue rose 11 percent, and total spending on its cards rose 14 percent, with the biggest gains coming from outside the country.

However, American Express is cautious about the outlook for U.S. consumer spending, Chief Financial Officer Dan Henry said. And the company set aside another $881 million for credit losses during the quarter, up 52 percent from the year-ago period, citing higher write-off rates and rising business volumes.

"The biggest negative for anyone with a lending book is losses are going up," said Meredith Whitney, analyst at Oppenheimer & Co in New York. But American Express is better positioned than many banks, she added.

American Express said net income fell to $991 million, or 85 cents a share, from $1.06 billion, or 87 cents a share, in the same quarter last year.

Earnings from continuing operations were 84 cents a share, or 4 cents above analysts' average forecast, according to Reuters Estimates.

American Express said it still expects earnings per share to grow between 4 percent and 6 percent in 2008.

In a statement, Chief Executive Ken Chenault called the U.S. economy "weak and uncertain." CFO Henry said areas with significant decreases in housing values are seeing the greatest deterioration in credit performance.