American Express has posted a 6 per cent 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 US credit card issuer said revenue rose 11 per cent, and total spending on its cards rose 14 per cent, with the biggest gains coming from outside the country.
However, American Express is cautious about the outlook for US consumer spending, chief financial officer Dan Henry said. And the company set aside another $881 million for credit losses during the quarter, up 52 per cent 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 per cent and 6 per cent in 2008.
In a statement, chief executive Ken Chenault called the US economy "weak and uncertain."