American Express 2009 Annual Report Download - page 12

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CARDMEMBERS
MERCHANTS
AXP
MERCHANTS
AXP
Past-due and net write-o rates improved in the second half of 2009, but remained at high levels compared to prior years. ese charts
show results on a managed basis. On a GAAP basis, 30-day past-due rates were 3.6% for 4Q 2009, 4.0% for 3Q 2009, 4.3% for 2Q 2009,
4.9% for 1Q 2009 and 4.4% for 4Q 2008; while the net write-o rates were 7.4%, 9.1%, 9.6%, 8.0% and 6.5% for the same periods.
MANAGED LOANS 30 DAYS PAST-DUE
AS A PERCENT OF TOTAL
4Q
09
3Q
09
2Q
09
1Q
09
5.0%
4.3%
4.0%
3.6%
4Q
08
4.6%
WORLDWIDE CARDMEMBER LENDING
MANAGED BASIS NET WRITE-OFF RATE
4Q
09
3Q
09
2Q
09
1Q
09
8.2%
9.7%
8.6%
7.3%
4Q
08
6.5%
MONEY MANAGER
helps cardmembers gain
more control over their
personal nances
OUR CLOSED LOOP
network helps us analyze
market trends to better serve
cardmembers and merchants
10
and network services carries comparatively
lower credit risk and capital requirements than
consumer lending.
Clearly, lending is still an important part of our
business. Our customers want the ability to extend
payments, and we want to grant credit wisely and
responsibly. Making credit decisions is not a perfect
science, but we have sophisticated tools to guide
us. We’ve spent a great deal of time examining
how we make decisions, building new capabilities,
integrating new housing and commercial data
into our models, and developing a broad set of
programs to manage high-risk customers. We
have learned from our experiences and improved
our credit and fraud operations
—
all with the goal
Not surprisingly, credit quality in our charge
card portfolio outperformed our lending portfolio.
Write-off rates for charge card receivables were
well controlled. Past-due rates improved from a
year ago.
One key distinction between American Express
and other card issuers is that our business model
relies less on lending. Most of our revenue
comes from spending on cards rather than from
interest income and credit fees. In fact, only 13
percent of our cardmember spending takes
place on proprietary lending cards (excluding
co-brands) in the U.S., and the percentage is
lower in international markets. In addition, our
strong presence in business-to-business payments
AMERICAN EXPRESS COMPANY