American Express Co.'s (AXP) net interest costs will likely rise by $150 million to $200 million in 2009, Chief Financial Officer Dan Henry said at the company's financial community meeting Wednesday.

The additional cost stems from the difference between the company's investments of its excess cash in low-risk, low-yielding securities and the higher borrowing costs the company faces while fulfilling its funding requirements, Henry said.

AmEx will invest excess cash in securities such as U.S. government debt, mortgage securities backed by Fannie Mae (FNM) and Freddie Mac (FRE), money-market funds and the debt of companies that is insured by the Federal Deposit Insurance Corporation, said Henry.

The company had $21 billion in cash balances as of the end of the fourth quarter.

AmEx reported at the end of January fourth-quarter net income of $172 million, or 15 cents a share, compared with $831 million, or 71 cents a share, a year earlier. The results included a $273 million after-tax charge related to severance programs tied to previously announced layoffs.

Looking beyond 2009, through 2011, return on equity, an important measure for investors, will decline, said Henry, because of moderate growth and potentially higher capital requirements. In addition, the company also has to pay a 5% dividend until 2011 on the government's three-year preferred stock investment in AmEx. The company received $3.4 billion in January from the U.S. Treasury's Troubled Asset Relief Program in exchange for the stake in the company.

Henry declined to provide a range or a number as an estimate of the return on equity during this period. Return on equity will total at least 20% after AmEx has completed its dividend payments to the government in 2011, Henry said. This measure stood at 33.4% as of Dec. 31.

The company issues charge cards, which must be paid off each month, as well as credit cards that allow customers to carry a balance. Unlike other card companies, which either issue plastic or process the transactions, AmEx does both. AmEx earns the bulk of its income from card fees it charges consumers and processing fees it charges merchants such as grocery stores and gas stations.

In recent trading after the market close Wednesday, AmEx shares were up 1% to $16.56.

-By Aparajita Saha-Bubna, Dow Jones Newswires; 617-654-6729; aparajita.saha-bubna@dowjones.com