American Express 2001 Annual Report Download - page 11

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decreased 24 percent and sales of our annuity products decreased 4 percent.
Net new money flowing into managed accounts continued to remain positive,
however, despite the difficult economic environment.
AMERICAN EXPRESS BANK
AEB reported a 2001 net loss of $13 million in 2001, compared with net income
of $29 million a year ago. Excluding its portion of the restructuring charges, AEB’s
net income would have been $52 million, up 82 percent from the prior year.
The Bank’s results for 2001 reflect a 10 percent growth in revenues, which were
driven by higher net interest income, as well as higher foreign exchange and
other revenue. These improvements were partially offset by lower commissions
and fees. AEB’s results benefited from lower funding costs and lower operat-
ing expenses that resulted from ongoing reengineering efforts. However, these
benefits were offset in part by higher provisions for losses, primarily due to
higher personal loan volumes.
The Bank’s overall results were driven by strong performance in both the
Personal Financial Services (PFS) and Private Banking groups, which together
accounted for 46 percent of AEB’s total 2001 net revenue, compared with 37
percent in 2000. Private Banking client holdings rose 19 percent and client
volumes in PFS increased 9 percent. The Private Bank’s client holdings stood
at $12.4 billion at year-end.
Improving the Company’s Competitive Position
Earlier, I referred to three major initiatives: strengthening our business models,
lowering our risk profile, and investing in key growth opportunities. Let me
now explain how these initiatives are improving our competitive position for
the future.
STRENGTHENING BUSINESS MODELS
Our efforts to improve margins are not focused on fixing weakness. Instead,
they are focused on strengthening the performance of our businesses and pro-
viding greater flexibility so that we are less dependent on a robust economic
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