American Express profit rises 14 percent

American Express Co. said Monday quarterly earnings rose 14 percent, matching analysts’ expectations, on record cardholder spending, increased card borrowing and lower loan losses.

The New York-based financial services company reported net income of $879 million, or 69 cents a share, in the third quarter, compared with $770 million, or 59 cents, a year earlier.

Earnings per share rose 17 percent, reflecting a boost from stock buybacks during the quarter. The results matched the average analyst estimate of 69 cents, according to Reuters Estimates.

Quarterly revenue rose 12 percent to $7.20 billion, slightly below the average forecast, on stronger card usage, higher travel and brokerage sales and increased client assets.

Revenues benefited from past investments and marketing, Chairman and Chief Executive Kenneth Chenault said in a statement. To fund the next round of growth plans, he said, “we plan to continue re-engineering initiatives for the remainder of this year and next.”

Indeed, while revenue soared, operating expenses rose a hefty 11 percent to $5.4 billion on marketing, promotion, rewards and card services.

In other news, American Express announced it would extend its credit card marketing partnership with Delta Air Lines . The issuer of charge and credit cards agreed to prepay $500 million to Delta for the Skymiles frequent flier program.

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American Express also agreed to lend the airline $100 million as part of a new credit facility agreement under negotiation with a number of banks.

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Delta is on the verge of declaring bankruptcy after getting slammed by record-high fuel prices, competition from low-cost carriers, hurricane disruption and price wars. American Express is a key stakeholder and has an interest in helping Delta restructure and avoid bankruptcy.

American Express’ credit strength, by contrast, is improving. The total provision for loan losses fell by 3 percent.

“Other provisions” increased, though, reflecting a reconciliation of accounts packaged into asset-backed securities, resulting in a charge of $115 million for balances accumulated over the prior five years. American Express blamed the change on a computational error.