American Express Co. withdrew its forecast for growth in earnings per share of 4% to 6% this year and said it would accelerate efforts to cut staff and other costs.
The company reported Monday after that market closed that its net income fell 38% from a year earlier to $653 million, or 56 cents a share, in the second quarter. The per-share profit was 27 cents less than the average analyst estimate.
The New York company's credit card loss provision increased 141% from a year earlier and 90% from the first quarter to $1.5 billion.
Amex had said in late June that credit indicators had deteriorated beyond expectations during the month.
In Monday's earnings report, Amex's chief executive, Kenneth Chenault, said the old earnings per share growth forecast "was based on business and economic conditions in line with, or moderately worse than, January 2008. The environment has weakened significantly since then, particularly during the month of June."
Hence, "we do not expect to meet or exceed our long-term financial targets until we see improvements in the economy," he said.
Amex said it expects the cost cuts "to result in restructuring-related charges during the second half" that it has not yet quantified.
"We remain focused on gaining profitable share but, as you would expect in this environment, we will be very selective with our investment dollars," Mr. Chenault said.
"While we are obviously disappointed in the impact that the higher reserves had on earnings, our coverage levels are now substantially higher than at any point during the last three years. The current reserves reflect our expectation that write-offs will continue to rise" for the rest of the year, he said.