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American Express profit tops projections

/ Source: The Associated Press

American Express Co. said Monday its third-quarter profit topped Wall Street projections, reflecting robust returns from its credit-card business and loan growth.

The New York-headquartered financial and travel services company reported net income of $967 million, or 79 cents per share, for the July-September period compared with $1.03 billion, or 82 cents per share, a year earlier.

The year-earlier quarter included results from Ameriprise Financial Inc., which American Express spun off as a separate company in September 2005.

Excluding the Ameriprise income and other discontinued operations, American Express profit was $956 million, or 78 cents per share, in the third quarter, up from $865 million, or 69 cents per share, a year earlier.

This easily topped Wall Street projections of earnings of 76 cents per share, according to analysts polled by Thomson Financial.

Revenue jumped 12 percent to $6.78 billion from $6.03 billion a year earlier. But this was slightly short of the Thomson Financial projection of $6.81 billion.

American Express shares fell in afternoon trading on the New York Stock Exchange.

“Bottom line results this quarter reflected a continuation of the strong trends we’ve seen throughout 2006,” Chairman and Chief Executive Kenneth I. Chenault said in a statement accompanying the results. “We are in an excellent position with growth in card member spending and borrowing that was again at the top of the industry.”

Chenault said American Express added more than 2 million cards during the quarter and 7.5 million since the start of the year.

The surge comes after a legal ruling last year allowed banks and other finance companies to begin issuing American Express cards, instead of being restricted by the card-issuing associations to just MasterCard and Visa.

American Express reported that net income from its U.S. card services business rose 31 percent to $580 million. However, profit at its international card and global commercial services declined 13 percent to $216 million.

The company’s global network and merchant services business posted a 50 percent jump in profit to $212 million. The business makes money from fees charged to financial companies that issue American Express cards, and merchants that accept them.

Card member spending rose 15 percent to $140.3 billion during the quarter.

American Express also reported a $33 million gain related to the sale of its card operations in Malaysia and Indonesia. The company also booked a $12 million charge to restructure its business-travel unit.