Revenue GrowthBillings and cards in force helped drive our top line growth of 9%, which achieved our on average andover time target, despite weakness in the environment.I’m very pleased with our revenue performance this year. To me it’s indicative of the continued success of our multi-year investment strategy and is also evidence of our continued focus on growth. I believe itshows the diversity of our payments business and also demonstrates that, even as we’re dealing with the weaker U.S. environment, we’re not distracted by it.Return On Equity (ROE)On the plus side I also put our ROE performance. While our performance was below our long-termtarget, and down from our recent trends, our absolute return of 31% continues to be best in the industry – by a sizable margin.Balance Sheet Strength Another plus is the strength of our balance sheet. I believe we’re in an excellent position to meet ourongoing business requirements. We have access to diversified sources of funding, our current cashposition, cash flow and liquidity profile provide us with added protection in volatile times, and we’vestrengthened our charge card and lending credit reserves to provide for appropriate coverage given theenvironment.Competitive Position The final positive I’d note is our overall competitive position, which I believe remains strong. The creditlosses we booked in the 2
quarter were sizable. But our relative position remains strong:
Our billings growth of 12% was the best among our five major issuing peers, a trend that hascontinued for 6 quarters. Our growth rate has moderated, but we remain the largest global player interms of spend. To put it in perspective, despite the weakness in the U.S., our second quarter worldwide volume of $181 billion was still the highest quarterly billings number in our history.
Our year to date growth in marketing and promotion also exceeds those in this group reporting thisexpense. While a number of competitors have reduced their marketing, or held flat, we continued toinvest.
And finally, as you’ll hear from Al, while our U.S. lending loss rates rose at a faster pace than in priorquarters, we continue to outperform the industry in terms of both delinquencies and writeoffs. Using reported numbers through June only one of these peers had lower absolute rates for these metrics.In looking at this list it’s clear that not every item has equal weight. As I noted earlier, the slower U.S.consumer spend and higher credit losses on the left side of the slide have had an outsized impact on ourresults. But at a time when many financial companies have few, if any, positives to point to in theirperformance, we continue to have a number of major growth elements working to our benefit.
Generating long-term shareholder value is a goal we strive to achieve regardless of the economicenvironment. This goal requires that we navigate through near-term issues, while also keeping a firm focuson longer-term growth.