Aug. 7 (Bloomberg) -- American Express Co., the largest U.S. credit-card company by purchases, may have its credit ratings downgraded by Moody's Investors Service after the lender's second-quarter profit fell 37 percent.

The New York-based company is under review to have its A1 rating lowered by one level because of future losses from soured credit-card loans, Moody's said today in a statement. A downgrade would affect about $89 billion in securities and deposits.

American Express may suffer further loan losses, ``particularly within geographic markets in the United States that have experienced sharp home price declines,'' analyst Blaine Frantz said in the note.

The credit-card company has dropped by more than a third in the past year as consumers struggled to repay debt of all types. Late and unpaid loans were worse than expected in the second quarter and will rise this year, Chief Executive Officer Kenneth Chenault said July 21. Even the lender's wealthier cardholders were affected by the slowing U.S. economy, he said.

The company fell $1.59, or 4.2 percent, to $36.40 at 4 p.m. in New York Stock Exchange composite trading.

American Express last month withdrew an earnings-per-share growth forecast of 4 percent to 6 percent this year and said it wouldn't meet longer-term targets until the U.S. economy improves. The firm's second-quarter profit from continuing operations dropped 37 percent to $655 million as it added $600 million to reserves for U.S. loan losses.

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

Last Updated: August 7, 2008 16:07 EDT