American Express Co. reported a 79% drop in fourth-quarter net income amid restructuring charges and as loan delinquencies and writeoffs rose, though the company's provision for loan losses was smaller than in the prior year.

"Our fourth-quarter results reflect an operating environment that was among the harshest we have seen in decades," Chief Executive Kenneth I. Chenault said in a statement. He noted overall card-member spending fell 10% year over year, or 5% excluding the impact of foreign-exchange rates.

Chenault added that the credit-card issuer remains cautious about the economic outlook through 2009, with expectations for card-member spending "to remain soft with past-due loans and writeoffs rising from current levels."

The bleak results and forecast come as American Express, after expanding its credit-card lending business in recent years, has been struggling amid declining consumer spending.

Shares rose 5.1% in after-hours trading to $15.93.

The card company, which was approved in November for bank-holding status to partake in the government's Troubled Asset Relief Program, posted net income of $172 million, or 15 cents a share, down from $831 million, or 71 cents a share, a year earlier. Earnings from continuing operations fell to 21 cents a share from 73 cents.

The latest results include $273 million in charges related to job cuts and restructuring and $66 million in charges related to the extension of a partnership with Delta Air Lines Inc. Prior-year results included a $700 million gain from a settlement with Visa Inc., offset by charges.

Revenue, net of interest expense, slid 11% to $6.51 billion.

Analysts polled by Thomson Reuters were expecting earnings of 22 cents a share on $7.22 billion in revenue.

The company's total provisions for loan losses, representing money put away to cover soured loans, slid 6.7% from a year earlier — which included a credit-related charge — to $1.4 billion. The U.S. card division saw an 8% decrease in its provision. The global division's provision climbed 10%, reflecting higher past-due and writeoff rates.

Return on equity, an important measure of profitability for financial companies, slid to 21.7% from 37.3% in the prior year.

Delinquencies of 90 days or more rose to 3.1% of American Express' managed U.S. lending portfolio from 1.8% in the prior year. The portfolio's writeoff rate climbed to 6.7% from 5.9% in the third quarter and 3.4% in the prior year.

At a time when consumers have been increasingly cutting back spending, the company was led in late October to announce plans to cut nearly 10% of its work force as part of a major cost-cutting effort.

However, even with the company's $3.4 billion investment from TARP, investors' concerns are deepening. JPMorgan Chase said earlier this month it expects credit-card losses this year to worsen more than previously expected.

Last month, Standard & Poor's Ratings services cut its credit rating on American Express one notch to A, saying it was concerned about the weakening environment for consumer lenders as consumers are tightening their discretionary spending. S&P also cited concerns about the company's credit-card loan portfolio.

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