American Express CEO Says Company Addressing Challenges
American Express Co. Chief Executive Officer Kenneth Chenault said the company is addressing its recent challenges with "a strong sense of urgency" and assured investors that the company's business model isn't broken.
Speaking at an afternoon meeting with investors and analysts, Mr. Chenault said that the company is well aware that its 2015 financial performance was "disappointing" and "not what we would have liked."
"We know it is driving a number of concerns about our future growth. I can assure you we are not standing still," Mr. Chenault said.
Mr. Chenault also said the company won't pursue a strategy that it calls "asset light" in which it would potential sell a portion of its card loans to another buyer. Such an idea has been floated by investors recently and has been discussed among company executives.
"We have not chosen to pursue this alternative," Mr. Chenault said, adding "we're not against the concept of asset light in principle but it doesn't represent a silver bullet."
AmEx is facing a long list of challenges, including the end of a 16-year partnership with Costco Wholesale Corp., increased competition from other card issuers, new fee limits in Europe, and an uncertain economic environment. The company has also fallen short of its revenue growth targets.
"I believe the foundation in our growth can be found in what hasn't changed," Mr. Chenault said, noting significant growth opportunities among consumers and businesses.
Mr. Chenault also said that the company will make a bigger push into lending in the U.S., describing it as "a major strategic thrust."
The company's board of directors is "fully supportive," he said, of the company's plans to improve its performance. In addition to expanding lending to consumers and businesses, he said the company plans to accelerate its acceptance by merchants.
Such efforts, however, are expected to reduce the company's discount rate, which is the price that AmEx charges to merchants for each transaction.
By Robin Sidel