American Express 2009 Annual Report Download - page 9

07
AMERICAN EXPRESS COMPANY
125
125 OUR VISION:
To become the world’s most
respected service brand
PERCENT
Total return on AXP stock
for 2009
the Capital Purchase Program. At the time, the
nancial system was in disarray, and even healthy
institutions were accessing capital to increase the
market’s condence in their stability. By the end of
July, we fully repaid the investment, providing a 26
percent return to U.S. taxpayers.
A number of factors, including the market’s
increasing condence in our position, our stock’s
low valuation early in the year, and the broad
rebound for equities in 2009, fueled strong gains in
our share price. American Express delivered a 125
percent total return for the year, compared with 26
percent for the S&P 500 and 17 percent for the S&P
Financials. is gain in 2009 still le us well short
of our pre-crash high. We are well aware of this
fact, and are working hard to deliver the kind of
performance that justies our investors’ condence.
A TOUGH ROAD
Let’s take a closer look at some of the factors that
drove our performance in 2009 and the steps
we’ve taken to get through and beyond a series of
huge challenges.
High unemployment, diminished household
wealth, and low consumer confidence hurt our
customers and, therefore, our business. We
experienced a 14 percent drop in revenues for the
year, as individuals and companies cut back on
spending and travel. We also faced higher credit
losses as more cardmembers had trouble paying
their bills. ese developments had a direct impact
on our bottom line.
We earned $2.14 billion in income from continuing
operations for the year. While a 26 percent decline
in earnings is no cause for celebration, we stayed
consistently profitable when many card-issuing
businesses suffered major losses. In a severe
nancial crisis, when survival was not a given for
some rms, our ability to generate quality earnings
says a great deal about the strength and exibility
of our business model.
We developed new sources of funding and bolstered
our capital base aer the credit markets froze. Our
retail deposit program, launched from a standing
start, raised more than $26 billion, a tremendous
achievement in this market. For the year, we
generated additional capital and maintained strong
ratios that exceeded all regulatory benchmarks.
We continued to put money into business-building
investments: rewards, cardmember services, enhanced
products, emerging payment technologies, online
capabilities, marketing and brand promotion.
Spending was below 2008 levels due to the
environment, but was substantial nevertheless.
The progress we made throughout the year also
enabled us to keep an important commitment to
our shareholders — continuing to pay our dividend
without interruption. We viewed this as a key
dividing line between nancial services companies,
and were very pleased to be among the few who
could take this course.
We were also among the first companies to
repay the U.S. government’s equity investment.
In January, we received $3.4 billion as part of