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2000 was a good year for American Express. Our financial performance was very
solid, we continued to increase share, and we continued to make progress on our
growth strategies. We completed - ahead of schedule - the transition of chief
executive responsibilities that we announced nearly two years ago. And,
throughout the year, employees around the world celebrated the 150th anniversary
of the company's founding in 1850.
Among the many highlights of 2000:
- Financial performance met or exceeded our long-term targets of 12-to-15
percent growth in earnings per share, return on equity of 18-to-20 percent and
revenue growth of at least eight percent, on average and over time. We were
particularly pleased with the double-digit revenue growth that came from progress
in nearly all of our major businesses.
- Within our Travel Related Services (TRS) business, we achieved strong growth
in both our card and lending businesses. We surpassed 50 million cards in force
worldwide. While final year-end statistics for the card industry as a whole were
not available at press time, we believe that the strong growth in business billed
on American Express
 Card products and the increases in our lending balances
worldwide enabled us to gain share in the United States, as well as in many of
our most important international markets.
- Our worldwide lending balances on a managed basis grew to almost $32 billion
at year-end 2000, up 24 percent from 1999. We have now surpassed our Year 2000
goal of $30 billion set five years ago - a target which, when we set it, we
considered to be more aspirational than achievable.
- American Express Financial Advisors (AEFA) reported earnings growth across
most business lines for the year, with increases in overall asset levels, sales
and the number of advisors.
- Earnings also rose at American Express Bank (AEB), as we gained momentum in
shifting the focus of our business from corporate clients to individuals and
financial institutions.
- We implemented a new structure to help grow American Express on a global basis.
Our four major groups are: Global Financial Services, led by Jim Cracchiolo; U.S.
Consumer and Small Business Services, led by Al Kelly; Global Corporate Services,
led by Ed Gilligan; and Global Establishment Services and Travelers Cheque, led
by David House. In the discussion of business results that follows, we will
provide some additional details on these businesses and their achievements during
2000.
While we are pleased with these accomplishments, we also had some
disappointments. Our expenses grew as rapidly as our revenues. Results at AEFA
were below our expectations - and below the levels AEFA traditionally has
delivered. We also faced a number of external challenges - including weaker
economic and market conditions later in the year - that negatively affected
several of our businesses, especially AEFA.
We expect those conditions will continue to have a negative effect in 2001,
particularly during the first half of the year. As a result, we announced last
month that we expect earnings per share growth in 2001 will be at the low end of
our targeted range of 12 to 15 percent. We will say more about those factors and
how we are dealing with them later in this letter.
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