AXP American Express Company

By Anne Steele 

American Express Co. boosted its earnings guidance for the year as the credit card company's third-quarter results declined less than expected, driven by cost controls.

Shares added 5.3% to $64.50 after hours.

"Strong operating discipline and credit quality helped to keep us ahead" of the company's initial outlook, said Chief Executive Kenneth Chenault, adding loan growth remained healthy and net card fees rose 10% in the third quarter, reflecting strong performance across premium card portfolios.

He added the company's broad presence among smaller and mid-sized companies helped offset softness in spending by large corporate card accounts.

American Express now expects earnings, excluding restructuring charges, of $5.90 to $6 a share for the year, up from its prior estimate for $5.40 to $5.70.

The company has suffered from issues ranging from the loss of its 16-year exclusive relationship with warehouse-club retailer Costco Wholesale Corp., to heavy competition, to declines in corporate travel budgets.

The company, which earlier this year said it would cut $1 billion in costs, said its third-quarter expenses declined 3%.

In all, American Express reported a profit of $1.14 billion, or $1.20 a share, down from $1.27 billion, or $1.24 a share, a year earlier. Excluding restructuring charges, earnings were flat at $1.24 a share, beating analyst estimates for 97 cents a share, according to Thomson Reuters.

Revenue fell 5.1% to $7.78 billion. The top line increased 5%, however, excluding the impact of Costco-related revenue in the year earlier-period, reflecting a rise in card member spending, along with higher net interest income and net card fees.

Revenue at American Express has been in focus lately because it has fallen short of internal growth targets. Analysts were looking for $7.72 billion.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

October 19, 2016 17:22 ET (21:22 GMT)

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