American Express quarterly earnings rise 10 pct

NEW YORK (Reuters) - American Express Co (AXP.N), a credit card and travel services company, said on Monday that third-quarter earnings rose 10 percent, helped by increased spending among its consumer and corporate clients.

The results beat analysts' expectations on average, and overall credit losses edged higher, but were in line with recent quarters. The company's shares rose 3 percent in after hours trading.

"The credit performance was a relief to a lot of people, given what some of the banks had reported recently," said Gordon Marchand, a principal and portfolio manager at Sustainable Growth Advisers, which manages about $3.7 billion in equities.

Major banks including Bank of America Corp. (BAC.N) and Citigroup (C.N) reported higher loss ratios in their credit card businesses last week.

Investors are watching for signs that difficulty among U.S. subprime mortgage borrowers may be spreading elsewhere.

But American Express, which tends to focus on wealthier borrowers, has not seen any direct evidence that the U.S. subprime crisis was influencing its credit portfolio, the company's chief financial officer said on a conference call on Monday.

American Express said on Monday that third-quarter profit rose to $1.067 billion, or 90 cents a share, from $967 million, or 79 cents a share, a year earlier. Analysts had on average expected earnings of 86 cents a share, according to Reuters Estimates.

Revenue rose 11 percent to $6.945 billion.

American Express wrote off its managed loans globally at an annualized rate of 4.0 percent, up from 3.5 percent in the third quarter of last year, but identical to the write-off rate in the second and first quarters.

Managed accounts that were 30 days or more delinquent edged higher to 2.8 percent, from 2.7 percent the same quarter last year. The 2.8 percent level is identical to the level in the first quarter.

RISING LOAN VOLUME

The company's volume of outstanding loans at quarter end grew dramatically--American Express had managed loans of $72 billion at the end of the quarter, up 23 percent from the same quarter last year.

Big increases in a lenders' loan volumes can signal possible higher credit losses in the future.

When asked on the call, American Express CFO Dan Henry said the rise in customer balances was the result of the company's customers favoring credit card products over charge cards.

American Express has not seen any weakening in the credit quality of its clients, and monitors the macroeconomy carefully, Henry added.

Total cards outstanding rose to 84.7 million, from 82.2 million in the second quarter and 76.5 million in the third quarter last year.

Income from continuing operations rose to $1.1 billion, or 90 cents a share, from $934 million, or 76 cents a share the same quarter last year.

Discontinued operations include results from American Express Bank, which the company agreed in September to sell to Standard Chartered Plc (STAN.L) for $860 million.

Loan losses have been creeping higher at credit card companies, but it is unclear whether those increases are due to weakening consumer credit or are just previously low losses returning to more normal levels.

American Express shares have fallen about 6 percent so far this year through Monday's close, compared with a roughly 10 percent decline in the Dow Jones U.S. Consumer Finance index. .DJUSSF

(Reporting by Dan Wilchins)