Oct. 22 (Bloomberg) -- American Express Co. Chief Executive Officer Kenneth Chenault probably will say earnings rose more than 10 percent for the 11th straight quarter, the best performance of all the companies in the Dow Jones Industrial Average.

Profits at the fourth-largest credit-card company likely increased 16 percent in the third-quarter, boosted by higher client spending on travel as the economy expands. American Express is expected to report Monday that net income climbed to $894 million, or 69 cents a share, according to the average estimate of 19 analysts surveyed by Thomson Financial.

A U.S. Supreme Court decision may help Chenault keep his streak going. The court ruled on Oct. 4 that New York-based American Express can distribute credit cards through banks that were previously limited to offering Visa and MasterCard. The finding may boost the company's revenue by partnering with banks such as MBNA Corp.

``The decision provides an avenue for American Express to sustain itself,'' said Michael Cohen, an analyst at Susquehanna Financial Group LLP in New York, who has a ``hold'' rating on American Express.

Shares of American Express gained an average of 14 percent a year since touching a five-year low in the week after the Sept. 11, 2001, terrorist attacks. The 80-member American Stock Exchange Financial Select Sector Index, which includes American Express, rose 10 percent in the same period. The company's shares advanced 18 cents to $52.29 yesterday in New York Stock Exchange composite trading.

Profit at 3M Co. of St. Paul, Minnesota, has increased at least 10 percent for 10 straight quarters, including the 17 percent gain in third-quarter net income reported Oct. 18.

MBNA

Chenault, 53, was named CEO in April 2001 and received $15.4 million in compensation last year, 26 percent less than $20.9 million in 2002. He declined to comment.

The Supreme Court left intact rulings by lower courts that bank-owned associations Visa International Inc. and MasterCard International Inc. violated antitrust laws by barring 34,000 member banks from distributing competitors' cards.

The decision paves the way for American Express's partnership with Wilmington, Delaware-based MBNA, announced in January. The companies plan to issue cards under both brand names, with transactions processed through American Express's electronic network and outstanding credit balances, marketing and billing handled by MBNA, the world's biggest independent credit-card lender.

``MBNA is going to bring a customer base that American Express probably couldn't have cracked,'' said Susquehanna's Cohen.

Card Growth

American Express may see an annual earnings gain of about 5 cents a share for every 10 percent of MBNA credit card transactions that switch to its network, Moshe Orenbuch, an analyst at Credit Suisse First Boston, wrote in a research report. MBNA's credit card loans amounted to $11.7 billion in 2003.

``The opportunity is substantial,'' Chenault said in an interview the day the court decision was announced. ``I'm confident that we will, in fact, win in the marketplace against Visa and MasterCard.''

Revenue at American Express's travel-related services unit, which includes cards, probably rose 17 percent in the third quarter from a year ago to $5.6 billion, Bruce Harting, an analyst at Lehman Brothers Holdings Inc., said in a research report.

The business accounted for about 75 percent of total revenue, said Harting, who has a ``buy'' recommendation on American Express shares and expects them to rise to $59. An increase in U.S. retail sales in September suggests ``robust business growth'' and more use of credit cards, according to his report.

The anticipated increase in American Express's revenue parallels a projected 5.9 percent spending increase by U.S. travelers this year, according to the Travel Industry Association of America in Washington.

World Travel

American Express forecasts that economy fares on short trips will rise by as much as 3 percent and international business fares will increase by as much as 5 percent. On the hotel side, room rates for both mid-range and upper-range properties will climb by as much as 3 percent, the company said on Oct. 18.

Susquehanna's Cohen said the company probably had about 63.3 million cardholders at the end of September, up 6 percent from a year ago.

American Express may report third-quarter revenue from its financial advisory unit, with 12,000 representatives, of about $1.77 billion, up 16 percent from a year ago, according to Lehman's Harting. The division probably generated about 24 percent of the company's total revenue.

The company's banking subsidiary had about $206 million of revenue, or about 2.8 percent of overall revenue, he said.

Billionaire Warren Buffett's Berkshire Hathaway Inc. is American Express's biggest shareholder, with 151.6 million shares, a 12 percent stake, as of June 30. Buffett was traveling and unavailable for interviews, his assistant Debbie Bosanek said.

To contact the reporter on this story: George Stein in New York ghstein@bloomberg.net

Last Updated: October 22, 2004 01:18 EDT