01—Abstract
Summary
Summary of the 10-K filed February 28, 2011. Cited figures are marked; the original filing is the authoritative source.
American Express Company (AXP) demonstrated a significant recovery in 2010, with income from continuing operations up 90% year-over-year to $4.1 billiona, translating to diluted earnings per share of $3.35, a substantial increase from $1.54 in 2009.
This performance was driven by robust spending growth across all business segments and improved credit performance, which led to lower write-offs and reduced loss reserves compared to the previous year. Cardmember spending reached record levels by year-end, reflecting a strengthening economic environment.
Looking ahead, the company outlined key strategic priorities for 2011, including enhancing merchant value, expanding its customer base to include more diverse demographics, accelerating international growth, and capitalizing on the Enterprise Growth Group's potential. While acknowledging ongoing economic challenges and regulatory uncertainties, including the impact of the CARD Act and Dodd-Frank legislation, American Express remains focused on leveraging its "spend-centric" business model and strong brand to drive long-term growth.
02—Key points
Key Highlights
- Total revenues net of interest expense grew 13% to $27.8 billion in 2010.
- Income from continuing operations surged by 90% to $4.1 billion in 2010.
- Diluted earnings per share (EPS) increased significantly to $3.35 in 2010, up from $1.54 in 2009.
- Return on average equity improved dramatically to 27.5% in 2010, compared to 14.6% in 2009.
- Cardmember spending volumes reached record levels by the end of 2010, indicating a strong recovery in consumer and business spending.
- Improved credit trends contributed to reduced loan and receivable write-offs and lower loss reserve levels compared to 2009.
- The company plans to focus on strategic initiatives in 2011, including enhancing merchant value, expanding customer base, accelerating international growth, and developing new fee-based services.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 28, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $27.82B$24.52B | +13.4% |
| Operating Income | $4.06B$2.84B | +42.8% |
| Interest Expense | $2.42B$2.21B | +9.8% |
| Net Income | $4.06B$2.13B | +90.5% |
| EPS (Basic) | $3.37$1.54 | +118.8% |
| EPS (Diluted) | $3.35$1.54 | +117.5% |
| Shares Outstanding (Basic) | 1.19B1.17B | +1.7% |
| Shares Outstanding (Diluted) | 1.20B1.17B | +2.0% |
05—Questions
Frequently Asked Questions
What was American Express's financial performance in 2010 compared to 2009?
American Express experienced a substantial financial rebound in 2010. Total revenues net of interest expense increased by 13% to $27.8 billion. More notably, income from continuing operations grew by 90% to $4.1 billion, and diluted earnings per share rose to $3.35 from $1.54 in 2009. The return on average equity also saw a significant improvement, reaching 27.5% in 2010 compared to 14.6% in the prior year.
What drove the strong financial results in 2010?
The company's strong performance was primarily driven by robust growth in cardmember spending volumes, which reached record levels by the end of 2010. Additionally, improved credit trends contributed to a reduction in loan and receivable write-offs and a decrease in loss reserve levels compared to 2009.
What are American Express's key strategic priorities for 2011?
For 2011, American Express is focusing on several key initiatives: providing greater value to merchants, expanding its customer base to include more women, minorities, and younger adults, accelerating growth outside the U.S., making significant progress in its Enterprise Growth Group, and increasing its share of online spending. The company also aims to increase fee-based revenues.
What regulatory challenges and economic factors is American Express facing?
American Express is navigating several challenges, including weak job creation, volatile consumer confidence, an uncertain housing market, and a complex regulatory environment. Key legislative impacts include the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) and the Dodd-Frank Wall Street Reform and Consumer Protection Act. The company also faces potential impacts from an antitrust lawsuit brought by the Department of Justice and certain state attorneys general, as well as the cessation of litigation payments from MasterCard and Visa in 2011, which will make year-over-year comparisons more difficult.
06—Continue