Currency Exchange / Rub

USD	31.1582
EUR	39.8077
GBP	49.2611

www.amcham.ru/events/ceo/chenault

Printer-friendly version

Jul 07, 2005: CEO Forum with Kenneth Chenault of American Express

American Express’ top executive was the featured speaker at the July 7, 2005, AmCham Russia CEO Forum, a series promoting dialogue between CEOs of American blue-chip companies and senior executives of leading Russian, American and international companies working in Russia. Chenault, whose career at American Express began in 1981, has headed the company since April 2001. The following are excerpts from his opening remarks to participants in the AmCham Russia CEO Forum.

Opportunities in Russia

Let me start off first talking a little bit about the opportunities in Russia. Similar to most of you around the table, as we look at the opportunities in Russia, we are enthusiastic. We see a country that is generally very strong in economic growth; we see a rising middle class, an affluent class. We see one characteristic that I particularly like, which is very low penetration levels of plastic (card use). When you look at economic characteristics that exist in Russia and a low penetration level, you see a tremendous set of opportunities.

We believe that to pursue a global approach and to establish local relevance in the market, you need to build through a set of proprietary business opportunities. Also very importantly, you need to build through a set of partnership opportunities, because in the world that we live in today, we all know that you have to manage what seems to be conflicting objectives. How do we establish global scale and relevance? And how do we establish local relevance? Our view, very frankly, is that it is difficult to just pick one avenue to go down, (and) that partnerships are very important. For example, in ... Russia, we are launching a partnership with the Russian Standard Bank, and we are quite excited about that opportunity, because it’s going to allow us to offer a range of card products that we think will be very relevant in the marketplace and will marry the resources and capabilities of our company with the Russian Standard Bank.

Broadly, for our company, we see business travel as a very attractive opportunity in Russia. We’re the market leader and we intend to remain the market leader. We intend to grow substantially. This is a terrific market for the travelers cheques business and we are investing substantial resources. Our correspondent banking business is experiencing good growth.... If we continue to not only stay focused but increase the level of investment, I think we can take advantage of what are clearly very strong economic drivers for our business going forward. I believe that Russia could, over time, be one of our top markets in the world. That’s the intent, and that’s the focus, and that’s one of the reasons for my visit.

Future Plans

We decided to spin off a very important component of the company, our financial advisors unit, which is one of the leading providers of financial planning services, not because we believe it’s not a good business. We believe it is a very good business. We thought that that unit could operate better on an independent basis. And so our plan is to spin (it) off sometime in the third quarter of this year. Our return on equity will go up from 18-20 percent to 28-30 percent. We believe that we will have revenue growth well in excess of 8 percent and our earnings per share will be in the 12-15 percent range. That will put us close to the Top Five companies in the world in terms of overall financial performance.

Staying on Top

The challenge is staying (near the Top Five) on a consistent basis and, in fact, improving. We have to be very focused.… What is going to be critical is to take advantage of the opportunities in countries like Russia that are experiencing very strong growth and that provide very strong opportunities for our products and services.

Parting Words

So what I would leave you with is: I think these are incredibly challenging times. People talk a lot about the uncertainty. One of the questions I always ask people is, “Given the uncertainty, how are you changing your business model?” Because if your business model hasn’t changed – and you’re saying that the environment has changed – you are going to have a big problem. All of us are trying to bring about constant change in our business model, while not losing sight of the core vision for our companies. And that is an increasingly difficult challenge. That said, I firmly believe that you’re going to see a real demarcation between winners and losers over the next 5-8 years because of all the dynamic change that is occurring in the marketplace.

As a business leader, I think this is one of the most exciting times to be in business. I’ve always been a believer that the greatest opportunities present themselves during times of change. And you have two choices: You can either be afraid of that change, or you can embrace that change. We’re open to the change and we’re open to the opportunity. We’re very excited about the opportunities in Russia.