American Express 2003 Annual Report Download - page 50

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The following discussion of TRS’ results is presented on a managed basis.
In 2003, TRS’ net revenues were up 8 percent primarily due to greater cardmember spending, higher lending balances,
increased cards-in-force and greater travel and other commissions and fees. Net revenues in 2002 were 3 percent higher
than 2001 as a result of greater net finance charge and discount revenue, partially offset by lower travel commissions and
fees, Travelers Cheque investment income and other revenues.
Revenues and expenses are affected by changes in the relative values of non-U.S. currencies to the U.S. dollar. The currency
rate changes had a favorable effect on revenue growth of approximately 3 percentage points in 2003 and negligible effect
on revenue in 2002. Currency rate changes increased expenses by approximately 3 percentage points in 2003 and had a
negligible impact on expenses in 2002.
Discount revenue rose 11 percent compared to a year ago as a result of a 13 percent increase in billed business partially off-
set by a lower discount rate that primarily reflects the cumulative impact of stronger than average growth in the lower rate
retail and other “everyday spend” merchant categories (i.e., supermarkets, discounters, etc.). Based on the Company’s busi-
ness strategy, it expects to see continued changes in the mix of business. This, along with volume-related pricing discounts
and selective repricing initiatives, will probably continue to result in some discount rate erosion over time. Discount rev-
enue rose 3 percent during 2002 as a result of a 4 percent increase in billed business partially offset by a lower discount
rate. The 13 percent increase in billed business in 2003 resulted from 6 percent growth in cards-in-force on higher card
acquisitions and an improved average customer retention level and 9 percent growth in spending per basic cardmember
worldwide. U.S. cards-in-force rose 4 percent and 2 percent in 2003 and 2002, respectively, reflecting the continued bene-
fit of increased card acquisition spending within the consumer and small business segments and, in 2003, a return to growth
within corporate services. International cards-in-force increased 9 percent and 8 percent in 2003 and 2002, respectively,
due to growth in both proprietary and network partnership cards.
U.S. billed business rose 12 percent reflecting 13 percent growth within the consumer card business, 16 percent growth in
small business services volume and a 4 percent increase within corporate services. U.S. non-T&E related volume categories,
which represented approximately 65 percent of U.S. billed business during 2003, increased 16 percent over 2002 while U.S.
T&E volumes rose 4 percent reflecting continued strengthening across all T&E industries as the year progressed. Total billed
business outside the U.S., excluding the impact of foreign exchange translation, grew 5 percent reflecting mid double-digit
improvement in Latin America, high single-digit growth in both Canada and Asia and low single-digit growth in Europe.
Worldwide airline volumes, which represented 13 percent of total volumes during 2003, increased 4 percent as a result of
a 5 percent growth in transaction volumes partially offset by a 1 percent decrease in the average airline charge.
(p.48_axp_ financial review)