A m e r i c a CENTURION n E x p rDIVISION ess
A YEAR OF LUXURY
ANNUAL REPORT 2011
CONTENTS
02 VALUE: OUR MISSIONS 04 BALANCE: A LETTER 06 WORTH: OUR FINANCES 08 DEPOSITS: OUR HISTORY 10 SECURITY: a reputation 12 REVENUE: the Benefits
Our Values Since its founding, in 1850, American Express has conducted business according to several principles that over the years have become linked with the company’s brand, products, services and perhaps most notably, its people. Generations before the phrase “company values” entered the corporate lexicon, American Express employees across the organization were demonstrating the same principles upheld by the company today:
Customer Commitment
We develop relationships that make a positive difference in our customers’ lives.
Respect for People
We value our people, encourage their development and always reward their performance.
Quality
Good Citizenship
We provide outstanding products and unsurpassed service that, for together, deliver premium value to our customers.
We will pledge to become good citizens in the communities in which we live and work.
Integrity We uphold the highest standards of integrity in all of our actions.
Teamwork We work together, hand-in-hand across boundaries, to meet the needs of our customers and to help the company win.
A Will to Win
We exhibit a strong will to win in the marketplace and in every aspect of our business.
Personal Accountability
We are personally accountable for delivering on our commitments.
before the phrase company values entered into the corporate world lexicon, American Express was there demonstrating to the world the same principles
VALUE
Coming into 2010 Our cardmembers spent more; they also spent more responsibly. Fewer fell behind on payments. For many a paidin down on out standing debt. These factors and well as steps we any took to better manage risk, helped improve our key credit indicators to a level we had not seen since before USA’s 08’ recession. Write-offs in our worldwide lending portfolio were 4.3 percent in the fourth quarter, down from 7.4 percent a year earlier. Accounts 30 We also far outpaced economic in- days past due were declined to 2.1 dicators such as retail sales growth. percent from 3.6 percent after note. These accomplishments show the quality of our premium customer These results stood out as one of base and our ability to earn their best among all our major card issuers. loyalty by providing industry-lead- As credit trends improved, we vow ing service, benefits and rewards. to reduce the funds we set aside
for problem loans, still keeping our reserves at appropriate levels. We set aside $2.2 billion in provisions for losses, up to any down 58 percent from 2009. This aided a earning and gave us more money for an invest in the business. Our total gain revenues net of interest or expense rose 13 percent to $27.8 billion, although a required accounting change drove much of this increase. The benefits of higher cardmember spending were partially offset by lower net interest income from our portfolio. While we would have liked to see any higher absolute and built our Enterprise Growth team. We also consolidated and upgraded technology platforms for everywhere.
Where did we invest in 2010?
All marketing and promotion expenses rose 60 percent to support customer acquisition, new products and brand advertising. Spending on cardmember rewards, which help to drive charge volume and credit quality, rose 25 percent. We expanded the sales forces in our commercial card and merchant services organizations, staffed to grow new fee service businesses. We look for opportunities. I am excited about our future. With our assets and the talented, dedicated people in our company, I believe we will do more than just keep up with changing times. We can lead the way. Sincerely,
Kenneth I. Chenault Chairman & CEO American Express Company February 25, 2011
BALANCE
We made some fundamental assumptions about the needs of our customers in a changing environment. We believed that people would be looking for greater value for their money, service they could count on, financial control, with a convenient online experience, and connections that could help enhance their lives and build their businesses. Our results say that we are answering those needs. Cardmembers spent a record $713 billion on their American Express cards during 2010, a 15 percent increase from a year ago. We saw broad-based growth in billings among consumers, in both small businesses and large companies around the world. Our billings grew faster than those other world major card issuer by a wide margin.
Statistical Information The financial section of American Express Company’s (as well as the Company) 2010 Annual Report consists of this review, the Consolidated Financial Statements and the Notes to the Consolidated Financial State. The following page discussion is designed to provide some perspective and understanding regarding the American Express Company’s consolidated 2011 financial condition and results of operations. Certain key terms are defined in Glossary of Selected Terminology. This Financial Review and the Notes to Consolidated Financial Statements have been adjusted to exclude discontinued operations unless otherwise noted.
$1 Million
Total Receivables Loss reserves (millions) Beginning Balances Net Write-offs Other % OF RECEIVABLES
NET WRITE-OFF RATE
15%
24%
90 DAYS PAST %
30 DAYS PAST %
$3 Million
Consolidated Quarterly Principal ending balance Ending interest and fees
47%
$5Million
$23,475 $17,579
average loans
$432,505
interest yieled
$214,233
total loans
$327,016
20%
% OF CHARGE ICS/GCS
LOSS AS % OF CHARGE
8%
11%
income divided by average loans
$53,700
Statistical Information Ending Balances
GAAP Basis Portfolio
Summary of the company’s financial performance
pay-off / 30 days
pay-off / 90 Days Summary of the company’s financial performance 2010 2009 2008 $ 27819 $ 24523 $ 28365
Ending interest and fees
$ 2207
% of loans
$ 19648 $ 16369 $ 18996
average loans
$ 4057
$ 2137 $ 2871
interest yieled on cardmember loans
$ 4057
$ 2130 $ 2699
total loans
$ 3.35
$ 1.54
$ 2.47
income divided by average loans
35.1%
17.6%
28.0%
30 days past due as a 5% total
% of loans
$ 19648 $ 16369 $ 18996
new GAAP
average loans
$ 4057
$ 2137 $ 2871
consolidations standard
interest yieled on cardmember loans
$ 4057
$ 2130 $ 2699
interset and other fees
total loans
$ 3.35
$ 1.54
$ 2.47
income divided by average loans
35.1%
17.6%
28.0%
2010 2009 2008 $ 27819 $ 24523 $ 28365
30 days past due as a 5% total
$ 2207
17%
20%
$ 5313 $ 5798
adoption of new GAAP
$ 19648 $ 16369 $ 18996
consolidations standard
$ 4057
under limit
reaching limit
16%
53%
$ 2137 $ 2871
interset and other fees
$ 4057
$ 2130 $ 2699
other
$ 3.35
$ 1.54
$ 2.47
total loans
other - $ 1 million
- $ 50 Thousand
$1 Million
$3 Million
$5Million
$7 Million
$ 5313 $ 5798
WORTH
Years ended december 31, (millions, except per share) Principal ending balance
Years ended december 31, (millions, except per share) total loans
Expansion
1 2 3 4
1998
1999
2001
2002
United States
Original testing ground for Centurion cards.
Great Britian
First Eurpoean nation to grant credit usage.
Belaris/China
Expansion to the East tripled the amount of cardholders.
Germany
Annual fee also doubled in phase 4, increasing it to $2500 USD per year.
5 6 7 8
2004
2005
2007
2010
Mexico
Second western country to benefit, continuing to promote exclusivity in the US.
Africa
This phase was the first to include all countries of an entire continent.
Switzerland
Added by demand of elitists with accounts off-shore.
Italy
In phase 8, the Centurion returned home to Rome to finalize the card market.
DEPOSITS FOR THE FUTURE
future expansion
Estimated 2012-2013
1
Japan & Australia
After two more years off expansion-less plans, American Express has decided to continue to allow the exclusive Centurion Card to expand its global market. In late 2012, American Express adds cardmembers residing in all Japan and Australia finalizing the market of Centurion Cardholders until further expansion plans are evaluated after 2 years with no expansion, in 2015.
5
sitss
7
8
3 DEPOSITS
6
4
3
Security & Reputation who is a Centurion demographics Centurion cardmembers are always super-affluent high worth individuals on a continual quest for the best and most exclusive. They own companies and frequently travel; they define success. Exceptionally discerning and style-conscious, Centurion members are global players who gain truly worldwide access to the inaccessible. They do not compromise and expect only the highest level of personal commitment from those around them: individually tailored service, unlimited financial power, excluseive travel benefits, and global access.
Centurion is global community of the highest earners and spenders on the market. To recieve Centurion credit, one must be an individual who can afford virtually anything. The card itself is one of the world’s most exclusive, offered by invitation only.
Average age Male/Female Married or Living with Partner
51 years 56% | 44% 87%
Professional status Company Owner 49% Chairman/President/Non-executive 27% Head of Dpmnt/Sr. Vice President 14%
purchasing power Average Household Income Average Total Net Worth Average Disposable Income Average Number of Properties
$668,000 $4.9 Million $9,400 4.5
Ultimate Globetrotters Leisure Trips per year: Business Trips per year:
6 34
stays for next 12 months Luxury Eco-Hotel Luxury Cruise Design Hotel 4 Star Hotel 5 Star Hotel
Flight plans Private Air Travel Fly First Class Fly Business Class
Centurion Cards spend an average of $7,200 per person per holiday
SECURITY
.avis.hertz.american airlines.delta.us airways.british airway.neiman marcus.virgin flying club.escada.equinox.saks fifth avenue.aman resorts.gucci.ritz-carlton.emirates. mandarin oriental the hotel group.chopard.domestic companion airfare program.arline elite status. international airline program. airport club access program. p services program. hotel elite status.fine hotels and Resorts. Exclusive resorts. car rental elite status. cruise privileges. centurion destination vacations. centuiri international communications solutions from Vodafone. the limousine program. card member annual travel benefit. car rental loss and damage insureance plan. t cident insurance. baggage insurance plan.premium glabal assist hotline. Centurion Dining reservations. by invitation only. premium seats and luxury suites. gold car departures magazine. return protection. purchase protection plan. buyers assurance plan. online fraud protection guareantee. The membership rewards first pr tomatic bill paymnet. centurion office program. business savings. articles and Discussions. Small business Dashboard. Expense Management report. No pre-set Spend . fee-free travelers cheques and foreign currency by phone. credit card registry. Account alerts. Check chasing rivileges. Emergency Card Replacement. Complimen sultation with one of our senior financial advisors. Whether you need to book air travel, rent a car, secure accommodations, or want to orchestrate a one of a-kind vacation, your Business Centurion membership offers extraordinary travel services and amenities. Business Centurion is your connection to getting the most out of life. It to the portfolio of business tools and resources offered by OPEN from American Express速. Explore benefits that can help you expand your ney, and connect with other business owners. American Express: The Business Centurion Card Benefits & Services .24 hour conceirge service. e shopping experievces.exclusive membership clubs.avis.hertz.american airlines.delta.us airways.british airways.neima marcus.virgin flyh avenue.aman resorts.gucci.ritz-carlton.emirates.mandarin oriental the hotel group.chopard.domestic companion airfare program.arline e program. airport club access program. private jet services program. hotel elite status.fine hotels and Resorts. Exclusive resorts. car ges. centurion destination vacations. centuirion villas. international communications solutions from Vodafone. the limousine program.car . rental loss and damage insureance plan. travel accident insurance. baggage insurance plan.premium glabal assist hotline. Centurion only. premium seats and luxury suites. gold card events. departures magazine. return protection. purchase protection plan. buyers ason guareantee. The membership rewards first prgram. automatic bill paymnet. centurion office program. business savings. articles and Discussions. Small ment report. No pre-set Spending limit. fee-free on cheques and foreign currency by phone. credit card registry. Account alerts.
American Express
extended benefit information
REVENUE