American Express 2009 Annual Report Download - page 13

11
14 PERCENT
lower operating expenses
in 2009 vs. 2008
14
spending in the second half of the year. We funded
more brand advertising, new product launches and
other initiatives designed to grow our business in
the years ahead.
Reengineering and Expense Reduction
In this dicult economy, controlling expenses was
more important than ever. Cutting back, but not
cutting too far into muscle, we reduced operating
expenses by 14 percent from a year ago.
Reengineering played a large role in these eorts.
We examined our business processes to eliminate
inefficiencies and focus resources on activities
that would drive value for our customers and
shareholders. One outcome of this reengineering
was a net reduction of about 7,700 jobs over the
past year. As painful as those job cuts were, they
increased our financial strength and put us in a
better position to grow.
Here again, we took a long-term approach.
We didn’t just want to reduce expenses for 2009,
we wanted to prepare our expense base for the
conditions we foresee ahead, a period of relatively
weak economic growth aer the recession.
THE POST-RECESSION LANDSCAPE
While we expect the recovery that began to take
shape in recent months will continue, the rebound
is likely to be modest. High unemployment and
other risks will leave the economy vulnerable and
consumers cautious.
Even though the environment remains very
challenging, the economy and our company are
much better off now than a year ago when the
of allowing good spending and restricting credit
where we believe customers may be getting in over
their heads.
During the downturn, we reduced credit lines
and cancelled accounts for certain higher-risk
customers. Realizing that we couldn’t possibly
get every call right, we put a new process in
place for cardmembers to appeal decisions about
their accounts. We worked with thousands of
cardmembers to either revalidate or, in some cases,
revise decisions. We also independently increased
credit lines for some customers, and the $620
billion in spending we authorized during the year
was more than any other card issuer.
We also provided additional help to card-
members who were experiencing temporary
financial trouble. We expanded our customer
care programs, creating tailored solutions for
many thousands of people. For some, this meant
extending the time they could take to pay off
their balance, waiving delinquency fees, reducing
interest rates, or excusing portions of outstanding
debt. These efforts made a difference to our
customers and saved many valuable relationships
for the company.
Altogether, the steps we took helped us achieve
year-end credit results that were substantially
better than those of our major peers. In addition,
our reserve coverage and balance sheet continued
to be very strong.
As our credit performance improved and we
saw initial signs that spending by cardmembers
was stabilizing, we decided to increase investment
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