This summary is based on the second quarter fiscal 2008 earnings call conducted by American Express Co. (AXP: chart) on July 21, 2008.

Management:

- Chairman and Chief Executive Officer: Kenneth Chenault
- Chief Financial Officer & Executive Vice President: Daniel T. Henry
- Senior Vice President of Investor Relations: Ron Stovall

Key Investors Issues

- Revenues grew 8% to $7.5 billion from $6.9 billion in 2007.
- Income was $655 million or 56 cents a share, down 38% from $1.1 billion or 88 cents a share in the prior year.
- The company''s return on equity (ROE) was 31.1%, down from 37.5% a year ago.

Half Year Highlights:

- Revenues increased 9% to $14.7 billion.
- Net income declined 22% to $1.6 billion or $1.43 a share, from $2.1 billion or $1.75 a share.

Second Quarter Highlights

Revenues grew 8% to $7.5 billion from $6.9 billion in 2007 despite interest and securitization income decreased by 7% which reflects the higher credit losses.

- Growth was spurred by card fee growth reflecting customers’ recognition of the value proposition of the products.
- Other revenue reflects the corporate purchase of the GE Commercial Portfolio which helped that growth rate by about 600 basis points.

Income was $655 million or 56 cents a share, down 38% from $1.1 billion or 88 cents a share in the prior year, reflecting higher credit losses in U.S. card services.

- Total expense increased 6% and was very well controlled, while rewards expense grew with volume.
- HR and other included increased investment in the merchant sales force.
- Charge card provision grew modestly which reflects the lower U.S. consumer spending as well as credit actions.
- Despite the higher credit losses, the firm earned in excess of $600 million and ROE remained strong.
- The addition to the lending credit reserves was $374 million after tax or $600 million pre-tax, a result of higher write offs and deterioration of loan rates and reflects the inherent risk in the portfolio and higher anticipated write offs in the balance of the year.

The firm generated $756 million at the combination of income in the period as well as funds received related to either option or RSA activity.

- Business-to-business grew 12% or 10% on an FX adjusted basis, down only 100 basis points from the first quarter.
- Cards in force increased by 10% reflecting investments in the proprietary business and growth in G&S cards.
- Global growth moderated to 12% down from 19% in the first quarter based on a slow down in consumer spending and travel sales remained very positive.

Segment Highlights:

- U.S. Consumer Services billed business grew 6% down from 8% in the first quarter.
- Small business or opened held up very well at 11%, however, consumer continues to decline.
- Cards in force growth are down slightly as the firm shifted some investment to the international consumer segment.
- Average spend was flat reflecting the economy and its impact on spending while loan growth slowed.

- International Consumer Services billed business held up very well increasing 20% or 10% on an FX adjusted basis.
- Card acquisition focused on the premier sector as average spend grew by 17%.
- Card member loans grew volume and travel sales were strong.

- Global Network and Merchant Services had strong billed business growth outside the U.S. and everyday spending grew at 9%.
- The discount rate held up very well only down 1% year-over-year and G&S, billed business and cards in force growth continues to be very impressive.

Strategic Insights:

- Given the credit deterioration and the continued moderation in U.S. volume growth, he ultimate goal is to ensure that American Express navigates through these challenging conditions in the best position possible relative to payment competitors.
- Growth opportunities continue to exist in the marketplace but over the coming quarters the firm will be even more selective with the investment dollars moving them to areas of current opportunity.
- Throughout this decade re-engineering has resulted in a well controlled operating expense base but in light of the desire to maximize ability to invest in the business, the firm is further intensifying re-engineering efforts with an eye towards reducing cost structure and staffing levels.

Card member spending particularly among consumers slowed sharply during the latter part of the quarter and current indicators deteriorated beyond expectations as the U.S. economy and business environment remain weaker.

- Given the environment, the firm will continue to scale back some card acquisition efforts and reduce credit line selectively in the U.S.
- At the same time, however, it also plans to take advantage of growth opportunities particularly in international and in the business-to-business markets.
- The firm has lowered its risk profile by divesting a number of businesses in recent years and is well positioned to execute against growth opportunities in a manner that balances the short, medium and long-term objectives.