Worries Underlie American Express Beat

Profit from the company's U.S. card services business dropped nearly 60% to $244 million for the quarter. Revenue in the company's largest segment fell 4% to $3.5 billion, driven by lower securitization income, but partially offset by higher net interest income and higher card member spending, American Express said.

Charge offs for so-called managed net loans in its U.S. card services arm rose to 5.9% from 5.3% in the second quarter. Managed loans, totaling $64.7 million for the third quarter, include those that were securitized.

The company took a total provision for loan losses of $1.4 billion, up by 51% from a year earlier. The majority of the provisioning related to American Express' card member lending business. The firm had pushed into offering consumer's cards where they could keep a revolving credit with the company as opposed to its traditional charge cards, in which customers had to pay off their balance in full every month.

Chenault said the firm was going ahead with a restructuring plan to reduce expenses and staffing levels. The firm will record a restructuring-related charge for the fourth quarter, he said.

"We remain confident in our ability to emerge from the downturn in a stronger competitive position and continue to see growth opportunities in the payments sector," Chenault said. "For now, though, we plan to be very selective with our investment dollars, balancing near term performance with longer term profitability.

Capital One's (COF Quote) third-quarter profit of $374.1 million, or $1 a share, narrowly missed estimates.

The McLean, Va.-based company, which reported last week, said in its U.S. card segment charge-offs fell 13 basis points to 6.13% from the second quarter, but rose from 3.85% in the year-earlier quarter. It expects U.S. card charge-offs to rise to around 7% for the fourth quarter, and in the mid-7% range for the first quarter of 2009.

Discover Financial Services (DFS Quote) reported last month that third-quarter profit fell 11% to $180 million, or 37 cents a share. Managed net charge-offs at Discover rose 21 basis points from the second quarter and 154 basis points from the year earlier period to 5.20%. .