Reportable Operating Segments and Geographic Operations

12 Months Ended

Dec. 31, 2019

Reportable Operating Segments and Geographic Operations

REPORTABLE OPERATING SEGMENTS AND GEOGRAPHIC OPERATIONS

REPORTABLE OPERATING SEGMENTS

We consider a combination of factors when evaluating the composition of our reportable operating segments, including the results reviewed by the chief operating decision maker, economic characteristics, products and services offered, classes of customers, product distribution channels, geographic considerations (primarily United States versus outside the United States), and regulatory environment considerations.

The following is a brief description of the primary business activities of our three reportable operating segments:

•Global Consumer Services Group (GCSG) primarily issues a wide range of proprietary consumer cards globally. GCSG also provides services to consumers, including travel and lifestyle services and non-card financing products, and manages certain international joint ventures and our partnership agreements in China.

•Global Commercial Services (GCS) primarily issues a wide range of proprietary corporate and small business cards and provides payment and expense management services globally. In addition, GCS provides commercial financing products.

•Global Merchant and Network Services (GMNS) operates a global payments network that processes and settles card transactions, acquires merchants and provides multi-channel marketing programs and capabilities, services and data analytics, leveraging our global integrated network. GMNS manages our partnership relationships with third-party card issuers, merchant acquirers and a prepaid reloadable and gift card program manager, licensing the American Express brand and extending the reach of the global network. GMNS also manages loyalty coalition businesses in certain countries.

Corporate functions and certain other businesses and operations are included in Corporate & Other.

During 2019, we moved intercompany assets and liabilities, previously recorded in the operating segments, to Corporate & Other. Prior period amounts have been revised to conform to the current period presentation.

The following table presents certain selected financial information for our reportable operating segments and Corporate & Other as of or for the years ended December 31, 2019, 2018 and 2017:


(Millions, except where indicated)	GCSG		GCS		GMNS		Corporate & Other^(a)		Consolidated
2019
Non-interest revenues	$	15,972	$	12,623	$	6,252	$	89	$	34,936
Revenue from contracts with customers^(b)	11,041		10,891		6,215		12		28,159
Interest income	9,413		1,900		28		743		12,084
Interest expense	1,806		995		(365)		1,028		3,464
Total revenues net of interest expense	23,579		13,528		6,645		(196)		43,556
Total provisions	2,636		917		20		—		3,573
Pretax income (loss) from continuing operations	4,024		3,066		3,148		(1,809)		8,429
Income tax provision (benefit)	762		590		736		(418)		1,670
Net income (loss)	3,262		2,476		2,412		(1,391)		6,759
Total assets (billions)	$	106	$	53	$	18	$	21	$	198
2018
Non-interest revenues	$	14,675	$	11,882	$	6,069	$	49	$	32,675
Revenue from contracts with customers^(b)	10,294		10,309		5,988		16		26,607
Interest income	8,323		1,621		30		632		10,606
Interest expense	1,542		827		(294)		868		2,943
Total revenues net of interest expense	21,456		12,676		6,393		(187)		40,338
Total provisions	2,430		899		22		1		3,352
Pretax income (loss) from continuing operations	3,714		2,895		2,844		(1,331)		8,122
Income tax provision (benefit)	637		555		704		(695)		1,201
Net income (loss)	3,077		2,340		2,140		(636)		6,921
Total assets (billions)	$	102	$	51	$	16	$	20	$	189
2017
Non-interest revenues	$	13,378	$	10,942	$	6,025	$	82	$	30,427
Revenue from contracts with customers^(b)	9,448		9,471		5,846		15		24,780
Interest income	6,789		1,361		42		371		8,563
Interest expense	1,047		595		(188)		658		2,112
Total revenues net of interest expense	19,120		11,708		6,255		(205)		36,878
Total provisions	1,996		743		16		5		2,760
Pretax income (loss) from continuing operations	3,645		2,843		2,645		(1,708)		7,425
Income tax provision	1,053		914		857		1,853		4,677
Net income (loss)	2,592		1,929		1,788		(3,561)		2,748
Total assets (billions)	$	95	$	49	$	20	$	17	$	181

(a)Corporate & Other includes adjustments and eliminations for intersegment activity.

(b)Includes discount revenue, certain other fees and commissions and other revenues from customers.

Total Revenues Net of Interest Expense

We allocate discount revenue and certain other revenues among segments using a transfer pricing methodology. Within the GCSG and GCS segments, discount revenue generally reflects the issuer component of the overall discount revenue generated by each segment’s Card Members; within the GMNS segment, discount revenue generally reflects the network and acquirer component of the overall discount revenue.

Net card fees and other fees and commissions are directly attributable to the segment in which they are reported.

Interest and fees on loans and certain investment income is directly attributable to the segment in which it is reported. Interest expense represents an allocated funding cost based on a combination of segment funding requirements and internal funding rates.

Provisions for Losses

The provisions for losses are directly attributable to the segment in which they are reported.

Expenses

Marketing and business development expense is included in each segment based on the actual expenses incurred. Global brand advertising is primarily reflected in Corporate & Other and may be allocated to the segments based on the actual expense incurred. Rewards and Card Member services expenses are included in each segment based on the actual expenses incurred within the segment.

Salaries and employee benefits and other operating expenses reflect expenses such as professional services, occupancy and equipment and communications incurred directly within each segment. In addition, expenses related to support services, such as technology costs, are allocated to each segment primarily based on support service activities directly attributable to the segment. Certain other overhead expenses are allocated from Corporate & Other to the segments based on the relative levels of revenue and Card Member loans and receivables.

Income Taxes

An income tax provision (benefit) is allocated to each reportable operating segment based on the effective tax rates applicable to various businesses that comprise the segment. The charge of $2.6 billion related to the Tax Act in the fourth quarter of 2017 was allocated in full to Corporate & Other.

GEOGRAPHIC OPERATIONS

The following table presents our total revenues net of interest expense and pretax income (loss) from continuing operations in different geographic regions based, in part, upon internal allocations, which necessarily involve management’s judgment:


(Millions)	United States		EMEA^(a)		JAPA^(a)		LACC^(a)		Other Unallocated^(b)		Consolidated
2019
Total revenues net of interest expense	$	32,557	$	4,465	$	3,915	$	2,816	$	(197)	$	43,556
Pretax income (loss) from continuing operations	7,262		1,243		833		903		(1,812)		8,429
2018
Total revenues net of interest expense	$	29,864	$	4,419	$	3,656	$	2,584	$	(185)	$	40,338
Pretax income (loss) from continuing operations	6,696		1,212		764		782		(1,332)		8,122
2017
Total revenues net of interest expense	$	27,187	$	3,927	$	3,464	$	2,505	$	(205)	$	36,878
Pretax income (loss) from continuing operations	6,412		1,150		763		806		(1,706)		7,425

(a)EMEA represents Europe, the Middle East and Africa; JAPA represents Japan, Asia/Pacific and Australia; and LACC represents Latin America, Canada and the Caribbean.

(b)Other Unallocated includes net costs which are not directly allocated to specific geographic regions, including costs related to the net negative interest spread on excess liquidity funding and executive office operations expenses.