Ongoing challenges from the difficult economy continue to adversely affect the financial performance of American Express Co., which yesterday reported a 21.5% drop in third-quarter net income, to $640 million from $815 million during the same period a year ago. It was the company's eighth consecutive quarterly decline in net income, though AmEx that in a statement that credit-quality trends are improving, and losses are beginning to level off. Total third-quarter revenues declined by 16.7%, to $6 billion from $7.2 billion, while AmEx cut expenses sharply across all units. AmEx's U.S. Card Services unit reported net income of $109 million for the quarter ended Sept. 30, down 55.3% from $244 million a year ago, while revenues net of interest expense declined 17.1%, to $2.9 billion from $3.5 billion. U.S. sales volume totaled $85.2 billion, down 13% from $97.9 billion, while the number of basic cards in force declined by 11.1%, to 29.7 million from 33.4 million as AmEx closed approximately 2.7 million inactive accounts during the quarter. AmEx's provision for loan losses was $850 million, down 9.7% from $941 million a year ago. Total managed receivables were $51.9 billion, down 19.3% from $64.3 billion. The net managed charge-off rate on U.S. card receivables was 8.9%, up 300 basis points from 5.9% a year ago. AmEx's International Card Services unit reported third quarter net income of $127 million, up 89.6% from $67 million. Sales volume for international cards declined 12%, to $24.2 billion from $27.5 billion. Loan-loss provisions were down 20.9%, to $250 million from $316 million. AmEx's international unit reported 15.2 million basic cards in force as of the end of September, down 7.3% from 16.4 million a year earlier. Total managed receivables were $8.8 billion, down 20.7% from $11.1 billion. The net charge-off rate on international loans was 7.1% of international receivables, up 200 basis points compared with 5.1% a year ago. AmEx's Global Commercial Services unit contributed income of $116 million for the quarter, down 13.4% compared with $134 million. The company attributed the drop to reduced spending on corporate cards and to lower travel commissions and fees. Sales volume fell 13.6%, to $27.9 billion from $32.3 billion. The company's Global Network and Merchant Services unit reported income of $240 million, down 7% from $258 million. Sales volume for the global cards was $156.6 billion, down 10.8% from $175.5 billion. Kenneth I. Chenault, AmEx chairman and CEO, said in a statement that, while AmEx remains cautious about high unemployment levels, "we are seeing broad-based improvements in credit quality, the trends in cardmember spending are encouraging, and there are signs that the recession may be approaching an end."