1st Quarter Results-Pt1

RNS Number:4574C
American Express Co
23 April 2001

PART 1

Contact:     Michael J. O'Neill
             212/640-5951
             mike.o'[e-mail]

             Molly Faust
             212/640-7453
             [e-mail]


                  AMERICAN EXPRESS COMPANY REPORTS 
               FIRST QUARTER NET INCOME OF $538 MILLION

             Results In-Line with Forecast for First Quarter
 
                    (millions, except per share amounts)

                                       Quarter Ended       Percentage 
                                          March 31          Inc/(Dec)
                                     2001         2000 
       
Net Income                           $  538      $  656      (18%) 
Net Revenues*                        $5,381      $5,259        2% 
Per Share 
  Net Income        
     Basic                           $0.41       $0.49       (16%) 
     Diluted                         $0.40       $0.48       (17%) 

Average Common 
  Shares 
  Outstanding       
     Basic                           1,323       1,331        (1%) 
     Diluted                         1,344       1,362        (1%) 

Return on 
     Average 
     Equity                           23.5%       25.4%         -  

*Net revenues are presented on a managed basis.

NEW YORK, April 23, 2001 -- American Express Company today reported first
quarter net income of $538 million, down 18 percent from $656 million in the
same period a year ago. Diluted earnings per share declined 17 percent to $.40
from $.48. Net revenues on a managed basis totaled $5.4 billion, up 2 percent
from $5.3 billion. The Company's return on equity was 23.5 percent.

These results are in-line with the forecast discussed in the Company's April 2
announcement of expected first quarter earnings. As previously announced, the
results reflect higher losses on American Express Financial Advisors' (AEFA)
high-yield portfolio, as well as the impact of a weaker economy and equity
market declines. Excluding the losses on AEFA's high-yield investments, the
Company's net income would have been flat and earnings per share would have been
2 percent higher than last year.

Also, as previously announced, the Company said that earnings per share growth
for the full year is unlikely to meet its earlier target of 12 percent due to
the weakened economy and equity markets.

Travel Related Services (TRS) reported quarterly net income of $522 million, up
16 percent from $448 million a year ago.

TRS' net revenues increased 8 percent, reflecting growth in loans, higher billed
business and additional cards in force. The growth in billed business, which was
slower than in recent periods, also reflected weaker economic conditions and a
slowdown in spending by corporations. The net interest yield on U.S. lending
activities increased from the prior year, reflecting a smaller percentage of
loan balances on introductory rates and a benefit from declining interest rates
during the quarter.

The provision for losses on the lending portfolio grew as a result of higher
volumes and an increase in U.S. lending write-off and delinquency rates. Charge
card interest expense grew as a result of a higher effective cost of funds and
higher volumes. Marketing and promotion expenses were lower as TRS scaled back
certain marketing efforts in light of the weaker business environment. Other
operating expenses were flat, as the cost of Cardmember loyalty programs and
business growth were offset by the benefit of reengineering and cost-control
efforts.

The above discussion presents TRS' results "on a managed basis" as if there had
been no securitization transactions, which conforms to industry practice. The
attached financials present TRS' results on both a managed and reported basis.
Net income is the same in both formats.

On a reported basis, TRS' results included securitization gains of $42 million
pre-tax ($27 million after-tax) and $36 million pre-tax ($23 million after-tax)
in the first quarters of 2001 and 2000, respectively. These gains were offset by
expenses related to card acquisition activities and therefore had no material
impact on net income or total expenses.

American Express Financial Advisors (AEFA) reported quarterly net income of $51
million, down 79 percent from $245 million a year ago. Net revenues decreased 21
percent. These declines reflected a pre-tax loss of $182 million from the
write-down and sale of certain high-yield securities, continued weakness in
equity markets, and narrower spreads on the investment portfolio. The weakened
equity markets led to lower asset levels and slower growth in sales of
investment products. As a result, management and distribution fees fell 7
percent.

The high-yield losses reflect the continued deterioration of the high-yield
portfolio and losses associated with selling certain bonds. The recognition of
these losses followed the quarterly analysis of the portfolio, which reviews
items such as: recent defaults on interest payments, financial data from
issuers, assessments of anticipated future cash flows and the overall trends in
the high-yield sector. Approximately $34 million of the high-yield losses noted
above relate to the early implementation of a new FASB accounting rule involving
certain structured investments.

Excluding losses in the high-yield sector, first quarter earnings at AEFA are
down approximately 29 percent from year-ago levels.

Total expenses increased by $72 million from a year ago due primarily to a $67
million adjustment to the amortization of Deferred Acquisition Costs (DAC)* for
variable insurance and annuity products as a result of the steep decline in
equity markets. This DAC adjustment, coupled with higher costs associated with
the new advisor compensation structure, were partially offset by slower growth
in volume-related compensation and by reengineering and cost-control
initiatives.

American Express Bank (AEB) reported quarterly net income of $9 million compared
with $7 million a year ago. The results reflect strong performance in Personal
Financial Services, higher foreign exchange revenue, security gains, and lower
operating expenses as a result of AEB's reengineering efforts. These were partly
offset by higher provisions for losses, which reflect an increase in
non-performing corporate loans and lower revenue from Corporate Banking as the
Company continues to shift its focus to Personal Financial Services and Private
Banking.

Corporate and Other reported net expenses of $44 million, which was unchanged
from a year ago. Results for both years include a preferred stock dividend based
on earnings from Lehman Brothers. The dividend was offset by expenses related to
business-building initiatives.

American Express Company (www.americanexpress.com), founded in 1850, is a global
travel, financial and network services provider.

*DACs are the costs of acquiring new business, which are deferred and amortized
according to a schedule that reflects a number of factors, the most significant
of which are the anticipated profits and persistency of the product. The
amortization schedule must be adjusted periodically to reflect changes in those
factors.

Note: The 2001 First Quarter Earnings Supplement is being made available this
morning on the american Express Web site at http://ir.americanexpress.com.  In
addition, an investor conference call to discuss first quarter earnings results,
operating performance and other topics that may be raised during the discussion
will be held at 12:00 p.m. ET today.  Live audio of the conference call will be
accessible to the general public on the American Express Web site at
http://ir.americanexpress.com.  A replay of the conference call will be
available today at the same Web address.

The statements in this press release relating to the company's expected
financial performance in 2001 are forward-looking statements, which are subject
to risks and uncertainties.  Factors that could cause actual results to differ
materially from these forward-looking statements include, but are not limited
to, the following:

Fluctuation in the equity markets, which can affect the amount and types of
investment products sold by AEFA, the market value of its managed assets, and
management and distribution fees received based on those assets; potential
deterioration in the high-yield sector, which could result in further losses in
AEFA's investment portfolio; developments relating to AEFA's new platform
structure for financial advisors, including the ability to increase advisor
productivity, moderate the growth of new advisors and create efficiencies in the
infrastructure; AEFA's ability to effectively manage the economics in selling a
growing volume of non-proprietary products to clients; investment performance in
AEFA's mutual fund business; the success and financial impact of reengineering
initiatives being implemented at the Company, including cost management,
structural and strategic measures such as vendor and process consolidation,
outsourcing and using lower cost internal distribution channels; the ability to
control and manage operating, infrastructure, advertising and promotion and
other expenses as business expands or changes, including balancing the need for
longer term investment spending; consumer and business spending on the Company's
travel related services products, particularly credit and charge cards and
growth in card lending balances, which depend in part on the ability to issue
new and enhanced card products and increase revenues from such products, attract
new cardholders, capture a greater share of existing cardholder's spending,
sustain premium discount rates, increase merchant coverage, retain Cardmembers
after low introductory lending rates have expired, and expand the global network
services business; successfully expanding the Company's on-line and off-line
distribution channels and cross-selling financial, travel, card and other
products and services to its customer base, both in the U.S. and abroad;
effectively leveraging the Company's assets, such as its brand, customers and
international presence, in the Internet environment; investing in and competing
at the leading edge of technology across all businesses; increasing competition
in all of the company's major businesses; fluctuations in interest rates, which
impacts the Company's borrowing costs, return on lending products and spreads in
the investment and insurance businesses' credit trends and the rate of
bankruptcies, which can affect spending on card products, debt payments by
individual and corporate customers and returns on the Company's investment
portfolios; foreign currency exchange rates; political or economic instability
in certain regions or countries, which could affect commercial lending
activities, among other businesses; legal and regulatory developments, such as
in the areas of consumer privacy and data protection; acquisitions; and outcomes
in litigation.  A further description of these and other risks and uncertainties
can be found in the Company's 10-K Annual Report for the fiscal year ending
December 31, 2000 and other reports filed with the SEC.

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