American Express 2001 Annual Report Download - page 13

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As is the case with consumer spending, companies tend to continue purchasing
everyday goods and services (such as office and industrial supplies, computer
equipment and software) during tough economic times, while tightening their
belts on discretionary business travel and entertainment expenses.
WE HAVE DIVERSIFIED OUR PRODUCT PORTFOLIO AND GROWN OUR
CARD LENDING BUSINESS. Since late 1994, when we set our sights on aggres-
sively expanding our credit card business, our lending balance growth has been
among the top tier of issuers. Today, about 19 percent of our U.S. card billings
come from our lending products, as compared with just 4 percent in 1995. This
change in product mix has shifted our overall card revenue base and helped to
make it less volatile. Revenues from our charge card products are derived from
current spending and are more sensitive to short-term economic swings.
Lending products, on the other hand, produce revenues as customers build up
loan balances and pay them down over time. When credit exposure is managed
prudently, the interest revenue from these products tends to be a less volatile
source of earnings.
At year-end 2001, our worldwide lending balances on a managed basis were
more than $36 billion, up 14 percent from 2000. With $32 billion of receivables
in the United States, our growth rate continued to exceed that of most of our
competitors.
Much of this growth has been due to the breadth of our lending products – such
as our popular Blue from American ExpressSM – and to the value we provide our
cardmembers. We have also increased the number of charge cardmembers who
are taking advantage of our “lending on charge” options such as Sign & Travel®,
when they occasionally choose to revolve.
WE HAVE ACCELERATED OUR REENGINEERING INITIATIVES THROUGH-
OUT THE COMPANY. The reengineering actions we took during 2001 enabled
us to deliver more than $1 billion in gross realized benefits during the year.
The benefits generated by these initiatives serve not only to support earnings
but also to establish the foundation for sustainable, long-term growth. Thus,
while a portion of the savings from reengineering has gone into improving our
axp_11
U.S. BILLINGS ON
REVOLVING CREDIT CARDS
19%
4%
About 19 percent of total U.S.
spending on American Express
Cards last year was on one of
the company’s revolving credit
card products. Attractive terms
and cobrand relationships have
helped to raise this amount from
only 4 percent in 1995.
in 2001
in 1995