April 25 (Bloomberg) -- American Express Co., the biggest U.S. credit-card lender, rose in New York trading after first- quarter profit beat analysts' estimates on increased spending and borrowing by overseas customers.

Net income from continuing operations was $974 million, or 84 cents a share, the company said yesterday in a statement, exceeding the 80-cent average estimate of 17 analysts surveyed by Bloomberg. Total spending by customers rose 14 percent to $166.4 billion in the quarter, fueled by a 27 percent rise in overseas purchases, three times faster than in the U.S.

``International cardmember spending helped American Express through an otherwise difficult credit quarter,'' James Fotheringham, an analyst at Goldman Sachs Group Inc. in New York, said yesterday in a research note. He rates the company ``buy.''

American Express, Capital One Financial Corp. and Discover Financial Services shares dropped more than 25 percent in the year through yesterday on concern the slowing U.S. economy will hurt consumers' ability to repay debts. The first-quarter damage at New York-based American Express was cushioned by a 30 percent rise in overseas profit to $133 million.

The lender advanced $2.59, or 5.7 percent, to $47.77 as of 4:03 p.m. in New York Stock Exchange composite trading.

The number of cardholders outside the U.S. rose 15 percent to 35.1 million, outpacing a 7 percent gain at home. American Express cardholders each spent an average $2,984 in the quarter, 6 percent more than a year earlier.

`Cautious' Outlook

``While we continue to be cautious about the U.S. economy, we are encouraged by our performance internationally,'' Chief Executive Officer Kenneth Chenault said in a statement yesterday.

Net income, which included gains from the sale of American Express Bank Ltd., fell 6 percent from a year earlier to $991 million, the company said. Loss provisions in the company's U.S. card business rose 52 percent to $881 million, driving a 19 percent profit drop in the unit to $523 million.

Uncollectible debt in the U.S. credit-card unit rose to 5.5 percent of loans from 4.3 percent in the fourth quarter. Loans late by 30 days or more rose to 4.1 percent from 3.5 percent. Defaults worsened most in areas where U.S. home prices dropped by more than 5 to 10 percent, Chief Financial Officer Daniel Henry said yesterday in a conference call.

The company said last month it was buying General Electric Co.'s corporate charge-card unit for $1.1 billion to add business customers. The unit, which handled $14 billion in transactions last year, will help cushion declines in U.S. consumer spending, Fotheringham said in a March 28 note.

JPMorgan Chase

American Express ranked first by the total value of purchases and cash advances to U.S. cardholders in the first half of 2007, according to the Carpinteria, California-based Nilson Report, a trade publication. JPMorgan Chase & Co. and Bank of America Corp. are ranked second- and third-largest.

Billionaire Warren Buffett's Berkshire Hathaway Inc. owns the largest American Express stake with 151.6 million shares, or 13 percent of outstanding stock at the end of the year, according to Bloomberg data.

Visa Inc., the biggest credit-card network, has surged 71 percent since its initial public offering last month and No. 2 MasterCard Inc. has more than doubled in the past year. The companies process credit-card purchases for lenders and don't extend loans to consumers.

To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

Last Updated: April 25, 2008 16:14 EDT