American Express Q3 net income dips 21%

Global payment service provider American Express has reported a 21 per cent drop in its third quarter net income to $640 million with its revenue declining on lower consumer spending and loan volumes.

The credit card firm had registered a net income of $815 million in the year-ago period, it said in a statement.

Amex's revenues (net of interest expense) declined 16 per cent to $6.01 billion in the quarter under review from $7.2 billion in the same period last year.

"Third quarter revenues declined because card member spending and loan volumes were down from year-ago levels, while the overall billings have stabilised during the last few months and we saw indications that spending by corporate card members is beginning to pick up," American Express Chairman and Chief Executive Officer Kenneth I Chenault said.

In the US card service segment the company's Q3 net income declined to $109 million compared to $244 million a year ago. However, in the international card services segment the net income increased to $127 million in the reviewed quarter from $67 million in same period last year.

Moreover, card member loans have declined to $23.4 billion in the quarter ended September 30, from $36.3 billion a year ago.

In the US card service segment, provision for losses has narrowed to $850 million in the July-September quarter of 2009, as against a loss of $941 million in the year-ago period.

The company said the narrowing down of losses reflected lower loans and receivables as well as recent improvements in credit trends in both the charge and lending portfolios.

In addition, consolidated provisions for losses stood at $1.2 billion during the quarter, down 13 per cent from last year.

"Our results showed further progress in navigating through the most difficult economic environment in decades," Chenault added.

In the global commercial services segment, American Express Q3 net income fell to $116 million from $134 million a year ago.

Total revenues (net of interest expense) for global commercial services decreased 17 per cent to $997 million reflecting lower travel commissions and fees and reduced spending by corporate card members compared to year-ago levels.