NEW YORK ( TheStreet) -- American Express ( AXP) reported better than expected fourth quarter earnings late Thursday boosted by substantially lower credit costs. American Express said net income tripled from the year-earlier quarter to $716 million. Net income attributable to shareholders came in at 60 cents a share, beating Wall Street estimates of 57 cents a share. Income from continuing operations totaled $710 million, or 59 cents a share. The year-earlier quarter saw income from continuing operations of $306 million, or 26 cents a share. Income from last year's fourth quarter included two significant items -- a $421 million ($273 million after-tax) of re-engineering costs, primarily related to severance and other costs associated with staff reductions, and a $106 million ($66 million after-tax) increase in the company's Membership Rewards reserve, in connection with the company's extension of its partnership agreement with Delta Air Lines, American Express said. Revenue, net of interest expense, totaled $6.49 billion, down slightly from the year-earlier quarter's revenue figure. American Express said it recorded a $748 million provision for credit losses, down 47% from the year-earlier period. The decline reflected continued improvement in credit quality during the latter part of 2009, American Express said. The company said loans on a managed basis in its U.S. card services business, which includes securitized and on-balance sheet loans, had a net loan write-off rate of 7.5%, down from 8.9% in the third quarter, but up from 6.7% a year ago. Net write-offs on an owned basis were 8.0% in the quarter, consistent with earlier expectations. That number was down from 9.8% in the third quarter, but up from 7.0% in the year-earlier period.
Card member spending rose 8% in 2009, the company said. "Fourth quarter results reflected the diversity of our business model that includes issuing cards, building business for merchants, operating a global payments network and delivering high-value services to our customers," Kenneth I. Chenault, chairman and chief executive officer of American Express, said in a statement. "Earnings were well above the depressed levels of 2008, capping a year when we delivered on each of our three main priorities. We stayed consistently profitable, built a more liquid funding base and invested selectively in the business. "We still face the challenge of high unemployment levels, depressed real estate values, and shrunken household balance sheets, but the overall economy and our company are in stronger shape than they were a year ago," Chenault added. "While the economic recovery now underway is likely to be modest, we expect it to continue and have begun to shift our focus to growing American Express for the longer term." Initiatives include expanding its payments business, offering new fee-based services, and "accelerate our progress in the world of emerging payments," Chenault noted. American Express was one of the top stock performers in 2009. Shares have risen an additional 6.5% so far this year, based on Wednesday's closing price. The stock finished on Thursday at $42.16, down 1.9%, and it was ticking slightly lower in after-hours trades. Meantime, Capital One ( COF) also released its quarterly numbers, reporting net income of $375.6 million, or 83 cents a share, for the final three months of 2009.
The performance was well ahead of Wall Street estimates, also on lower provisioning levels for loan losses. Capital One shares ended Thursday's session down 0.74% at $42.70, but the stock was looking higher after the close, quoted up more than 3% at $44.21 following the report. --Written by Laurie Kulikowski in New York.