For the period ended Sept. 30, American Express said earnings after accounting for preferred stock dividends and other items totaled $632 million, or 53 cents per share. That is down from $810 million, or 70 cents per share, a year earlier.

Results included a one-time benefit of $180 million due to an accounting adjustment.

Excluding the gain, the company earned 43 cents per share. Analysts, who typically exclude unusual items from their estimates, had forecast a profit of 38 cents per share.

In its U.S. card business, the percentage of loans AmEx considers won't be repaid rose to 8.9 percent from 5.9 percent a year earlier. However, the rate of losses slowed from 10 percent in the second quarter.

Nearly all lenders have seen more customers fall behind on their monthly payments as the economy falters and unemployment rises. But AmEx, which has traditionally catered to a more affluent clientele, has been weathering the economic downturn better than many of its peers.

Rival credit card issuer Capital One Financial Corp. said Thursday the rate of losses on its credit cards was higher than both the year-ago period and the second quarter. Delinquent card payments also rose. However, the McLean, Va.-based company posted its first quarterly profit in a year, boosted by sales in its investment portfolio and lower funding costs.

Billed business, or the amount charged on American Express cards, also declined, but improved from the second quarter. Cardholder spending fell 11 percent during the quarter to $156.6 billion. That was slightly better than the 13 percent decline in the second quarter, the company said.

In the U.S., average cardholder spending fell 5 percent to $2,898. On a foreign exchange adjusted basis, spending declined 3 percent.

Total managed loans, which includes American Express-owned loans as well as securitized loans, fell 20 percent to $60.7 billion.

As cardholder spending and loan volume declined, total revenue fell 17 percent to $4.84 billion, short of the average analyst estimate of $5.9 billion.

Lower credit costs and expenses partially offset the ongoing slump in business activity.

American Express said it set aside $1.18 billion during the quarter to cover bad loans, 13 percent less than the $1.36 billion provision in the year-ago period and 26 percent less than the $1.58 billion provision in the second quarter.

Expenses fell 17 percent from the third quarter of last year to $3.92 billion. However, the company said it has begun to increase its spending on marketing and promotional activities.

American Express' report comes as legislators consider moving up the enactment of a federal law that aims to protect consumers by imposing strict new rules on lenders, including a limitation on when and how banks hike rates. As of now, most of the rules will take effect in mid-February, a date set by Congress to give banks time to prepare for the changes.

But Rep. Barney Frank, who chairs the House Financial Services Committee, has introduced legislation that would move up the enactment date to Dec. 1, upset that some lenders have raised rates ahead of the new rules.

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