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American Express profit rises as corporate spending picks up

By Aman Shah

(Reuters) - American Express Co posted a better-than-expected 9 percent rise in quarterly profit as spending by corporate card users began to pick up after more than a year of sluggish growth.

A relatively affluent customer base has helped to insulate American Express from tepid consumer spending that has led to an overall decline in credit card usage in the United States.

The company, which has fewer defaulting customers than rival credit card issuers, said on Wednesday that it had not suffered any direct impact from the U.S. government shutdown.

"They largely cater to a consumer base who would likely be less sensitive to the fallout from what's going on in Washington DC," said Sameer Gokhale, an analyst at Janney Capital Markets.

For the third quarter ended September 30, American Express said spending on its cards rose 9 percent after adjusting for foreign currency translations -- the biggest jump in five quarters.

The company, which lends directly to consumers and competes with Visa Inc and MasterCard Inc to process credit card transactions, said its U.S.-billed business rose 8 percent to $158.2 billion.

Chief Financial Officer Jeff Campbell said he was encouraged by the reversal of a trend that had seen growth in corporate card spending lose momentum since the second quarter of 2012.

Speaking on his first post-earnings conference call since taking over from Daniel Henry, Campbell also said it was important that a deal be reached soon to resolve the U.S. budget impasse.

"The alternative is an outcome that would erode consumer confidence and jeopardize a still-uncertain economic recovery," he said.

U.S. lawmakers are set to vote late Wednesday on a bipartisan Senate deal to break the fiscal impasse in Washington and avert a historic debt default, hours before the government's borrowing authority is set to run out.

CREDIT QUALITY IMPROVES

American Express has the lowest delinquency rate among the biggest credit card issuers, which include JPMorgan Chase, Discover Financial, Capital One, Bank of America and Citigroup.

Its net-lending write-off rate for the quarter dropped to a low of 1.7 percent, compared with 1.9 percent in the year-earlier period, indicating that more customers were keeping up with card payments.

Net profit rose to $1.37 billion, or $1.25 per share, for the quarter ended September 30, above analysts' expectations of $1.22 per share, according to Thomson Reuters I/B/E/S.

Total revenue, net of interest expense, rose 6 percent to $8.30 billion, beating average Wall Street estimates for the first time in five quarters.

Shares of American Express, which has a market valuation of $81.2 billion, have risen about 30 percent this year, outperforming a 19 percent rise on the broader S&P 500 Index.

They were up marginally in extended trading after closing at $76.32 on Wednesday on the New York Stock Exchange.

(Editing by Anthony Kurian and Robin Paxton)

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