Amex's Chenault Comments On Opportunities In T&E Mgmt.

On top of noting that card delinquencies were stabilizing and that in his view, American Express is relatively protected from new card legislation because of lower dependence on revolving consumer credit cards, American Express chairman and CEO Ken Chenault this week emphasized the company's "power alleys" of premium, reward and co-brand products as well as corporate services. Here are some of his other comments at Wednesday's Keefe, Bruyette & Woods conference: [more]

• "Our premium pricing has also held. Our merchant discount rate remained relatively flat last year and we were able to actually grow our cardmember fees by 12 percent. To me this is clear evidence of the value we deliver, as well as evidence that our customers and merchants recognize--and are willing to pay for--that value. In a range of industries from retail to hotels to car companies, we’ve seen reports of premium companies having to discount prices to generate volume. In fact, we had to take similar action during the downturn of the early 1990s when merchants and cardmembers found our value to be lacking. Being able to sustain our pricing during this challenging time has been a big plus for us and is one of the drivers we'll be able to leverage going forward."

• "We’re also leveraging our investments in Concur Technologies and Rearden Commerce, which have expanded our information and reporting capabilities, and have enhanced the services we provide corporate customers. This year we’ll look to fully leverage these relationships for account acquisition, as well as to further penetrate the spend of our existing base."

• "The second advantage provided by this trend toward leaner cost structures is the business opportunity it provides.  Within our B2B businesses, one of our major selling points is the expense management assistance we can provide companies. The tools we provide can help companies manage a range of expense categories from T&E to cost of goods to indirect expenses. At a time when companies large and small are looking for ways to aid their profitability, we have a unique portfolio of products that help business customers identify and control their costs. As you can imagine, there has been a great deal of interest in this area from both existing clients and from prospects, and our corporate sales force is succeeding at capitalizing on this growth opportunity. This has provided us with benefits in the short-term but, once the economy recovers, I believe the full potential of our progress will be realized over the moderate to long-term."

• "We are a customer-driven company and our customers want the ability to revolve, so we will continue to offer lending products. But our focus will be on our power alleys of premium and reward segments, such as those served by our Delta co-brand and the many other co-brands we have around the world with partners such as Starwood, British Airways and BMW. These segments continue to have significant profit potential, but this focus will likely lead to lending playing less of a role from an aggregate standpoint in terms of the percentage of earnings it will generate in the future."

• "I believe we'll also see further consolidation among financial services companies and a change in their scope. There has already been one round of acquisitions, with issuers such as Wachovia and WaMu being absorbed by larger players, and I believe more will come. Bank failures, particularly of smaller and medium-sized institutions, will continue, widening the gaps between strong and weak players. The firms remaining will likely need to narrow their focus. The move toward business diversity that took place across financial services over the last decade led to increased complexity, increased dependencies across products and markets, and substantially higher levels of risk. As a result of the high losses incurred by major firms on mortgage securities and credit derivatives, many are exiting these riskier businesses and portfolios, which will no doubt leave a sizeable gap in their future earnings streams."