Tuesday November 10, 07:52 PM
UPDATE 3-American Express spending volume up, boosts stock
By Juan Lagorio
NEW YORK, Nov 10 (Reuters) - American Express Co said credit card spending increased in October from September in another sign that the worst of the financial crisis may have passed for the largest U.S. credit-card company, sending its shares up 1.5 percent to a 14-month high.
American Express (NYSE: AXP - news) card spending, adjusted for foreign exchange factors, was down just 1 percent in October compared with a year earlier, Chief Executive Kenneth Chenault said on Tuesday.
That showed improvement from a decline of a bit more than 5 percent in September and almost 10 percent in August.
'The trends in spending are encouraging, and there are signs that the recession may be approaching an end,' Chenault said at a financial services conference organized by Bank of America Merrill Lynch.
Spending volume rose in October to the highest level since last December. 'We view this performance as positive,' Chenault said.
Chief Financial Officer Dan Henry in October said spending volumes had been stable since May and forecast spending could decline in the low single digits or be flat in the fourth quarter compared with a year earlier.
Total (FP.NX - news) card spending fell 11 percent in the third quarter from a year earlier but showed an improvement against a 16 percent contraction in the second quarter.
American Express was the fastest growing credit card company between 2003 and 2007 as it relaxed lending standards. But it paid a heavy price in the financial meltdown, and bad loans rose to record highs.
The company cut 11,000 jobs and reduced spending to save $2.5 billion, part of which it will invest now to grow. It also converted itself into a bank holding company to get access to government bailout funds, which it has repaid.
Analysts have said American Express, which relies on affluent and corporate customers more than its peers, is recovering faster from the recession as economic jitters ease.
American Express shares were up 59 cents, or 1.5 percent, to $39.64 in afternoon trading on the New York Stock Exchange, a 14-month high. The shares have more than doubled in price this year.
(Reporting by Juan Lagorio, Editing by Gerald E. McCormick and John Wallace) Keywords: AMERICANEXPRESS/
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