American Express Earnings Increase 17% in 3rd Quarter

American Express Co. said Monday that third-quarter profit rose 17% to $1.03 billion as it sought to expand the number of cardholders and retailers that accept the card as payment.

Net income rose 82 cents a share from 69 cents, or $879 million, a year earlier, the company said. Expenses rose 12% to $5 billion, outpacing revenue, which rose 11% to $6.1 billion.

Chief Executive Kenneth Chenault, 54, has moved to increase cardholder spending by allowing the card’s use at fast-food chains and grocery stores. The company funded an advertising campaign with testimonials from Hollywood stars to increase card applications.

The initiatives come amid an increase in total credit card payments worldwide, which climbed to $1.7 trillion last year from $1.3 trillion in 2001.

American Express shares rose 5%, or $2.39, to $49.54.

The net income figure included results of Ameriprise Financial Inc., which was spun off Sept. 30. Excluding Ameriprise and other discontinued operations as well as one-time items, earnings per share were 68 cents.

Analysts surveyed by Thomson Financial expected earnings of 66 cents.

American Express reported a tax benefit of $105 million that it used to offset $86 million in pretax expenses for revamping business travel, finance, technology and international operations. The company set aside $49 million for costs related to Hurricane Katrina.

Spending on American Express cards rose 12% to $2,610 per card in the quarter, compared with the previous period. The average fee charged to merchants declined 0.03% to 2.57%, the company said.

Travel sales rose 4.9% to $4.8 billion.