American Express Co., the credit-card issuer grappling with the loss of its biggest partner, posted third- quarter profit that missed analysts' estimates as expenses rose and revenue declined.

Net income fell 14 percent to $1.27 billion, or $1.24 a share, from $1.48 billion, or $1.40, a year earlier, the New York-based company said Wednesday in a statement. The average estimate of 29 analysts surveyed by Bloomberg was for profit of $1.31 a share. Revenue fell 1.3 percent to $8.19 billion, missing estimates.

Shares of American Express have fallen 18 percent this year as Chief Executive Officer Ken Chenault struggles to overcome the departure of its biggest co-brand partner, Costco Wholesale Corp. Expenses are poised to accelerate and quarterly results will be uneven as the company seeks to overcome the Costco loss, Amex has said.

"The issues weighing on Amex today raise broader fundamental questions at the company level regarding the sustainability" of its competitive advantage, Bill Carcache, a Nomura Holdings Inc. analyst, said in a Sept. 28 note. This year is Amex's most challenging "in the past decade," he said.

Chenault, 64, is boosting spending on marketing to convince Costco shoppers to use other Amex cards, as well as investing in new products and bolstering existing card rewards. The lender announced new deals with retailers including Sam's Club, a division of Wal-Mart Stores Inc., and a venture with Charles Schwab Corp. to create two co-brand credit cards.

American Express said in February it will end its agreement with Costco in the U.S. next year, a relationship that accounted for 20 percent of Amex's worldwide loans and 8 percent of customer spending. Also in February, a federal judge ruled that Amex's policies prohibiting merchants from steering customers to cheaper cards violated antitrust laws. The company is appealing.

"Steering will take time to play out, but the fact pattern suggests that the impact will be bigger than most currently expect," Ben Chittenden, an Oppenheimer & Co. analyst, said in Sept. 30 note.

Discover Financial Services, the fourth-biggest U.S. payments network, posted profit Tuesday that beat analysts' estimates as the firm bought back about 8 million shares and set aside less money for bad loans.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry