Citing a significant decrease in consumer spending, American Express (AXP) posted a 79% drop in profit in the fourth quarter after Monday’s closing bell.

The credit card company reported fourth-quarter net earnings of $172 million, or 15 cents per share, compared to $831 million, or 71 cents per share, in the same quarter of last year.

Analysts from Thomson Reuters expected the company to report a profit of 22 cents a share on sales of $7.22 billion.

On an adjusted basis, excluding discontinued operations, the company earned $238 million. Sales fell 11% $6.5 billion compared to $7.364 billion reported last year.

“Our fourth quarter results reflect an operating environment that was among the harshest we have seen in decades,” said Kenneth I. Chenault, chairman and chief executive officer in a statement. “Nevertheless, we met our near term goals -- staying liquid, staying profitable, and investing selectively to strengthen our competitive position over the longer term.”

Cardmember spending declined 10% year-over-year, or 5% after adjusting for foreign exchange rates.

Chenault painted a less-than-rosy picture for 2009 saying he expects the number of late payments to climb.

"We remain cautious about the economic outlook through 2009, and expect card-member spending to remain soft with past-due loans and write-offs rising from current levels," he said in a statement.

At the end 2008 American Express was granted bank holding status by the Federal government to help strengthen its position in the market turmoil. The credit card giant has received $3.39 billion from the Treasury Department so far.

Shares of the company jumped 2% in after-hours trading.

Visa (V) and MasterCard (MA) are scheduled to release their earnings in early February.