UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 15, 2014
AMERICAN EXPRESS COMPANY
(Exact name of registrant as specified in its charter)
New York | 1-7657 | 13-4922250 | ||
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) | (IRS Employer Identification No.) |
200 Vesey Street New York, New York |
10285 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (212) 640-2000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition and Item 7.01 Regulation FD Disclosure |
The following information is furnished under Item 2.02 Results of Operations and Financial Condition and Item 7.01 Regulation FD Disclosure:
On October 15, 2014, American Express Company issued a press release regarding its financial results for the third quarter of 2014. A copy of such press release is attached to this report as Exhibit 99.1. In addition, American Express Company distributed a 2014 Third Quarter Earnings Supplement, which is attached to this report as Exhibit 99.2. Each exhibit is hereby incorporated herein by reference.
Exhibit | Description | |
99.1 | Press Release, dated October 15, 2014, of American Express Company regarding its financial results for the third quarter of 2014. | |
99.2 | 2014 Third Quarter Earnings Supplement of American Express Company. |
-2-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AMERICAN EXPRESS COMPANY | ||
(REGISTRANT) | ||
By: | /s/ Carol V. Schwartz | |
Name: | Carol V. Schwartz | |
Title: | Secretary |
Date: October 15, 2014
-3-
EXHIBIT INDEX
Exhibit No. |
Description | |
99.1 | Press Release, dated October 15, 2014, of American Express Company regarding its financial results for the third quarter of 2014. | |
99.2 | 2014 Third Quarter Earnings Supplement of American Express Company. |
-4-
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Media Contacts:
Caitlin Stefanik, caitlin.stefanik@aexp.com, +1.212.640.2921
Mike ONeill, mike.oneill@aexp.com, +1.212.640.5951
Investors/Analysts Contacts:
Ken Paukowits, ken.f.paukowits@aexp.com, +1.212.640.6348
Rick Petrino, richard.petrino@aexp.com, +1.212.640.5574
AMERICAN EXPRESS THIRD QUARTER EPS UP 12% TO $1.40
CARD MEMBER SPENDING AND LOANS CONTINUE TO GROW
CREDIT INDICATORS REMAIN STRONG
(Millions, except percentages and per share amounts)
Quarters Ended September 30, |
Percentage Inc/(Dec) |
Nine Months Ended September 30, |
Percentage Inc/(Dec) |
|||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
Total Revenues Net of Interest Expense |
$ | 8,329 | $ | 8,301 | | % | $ | 25,185 | $ | 24,427 | 3 | % | ||||||||||||
Adjusted Revenues Net of Interest Expense Excluding Business Travel Revenues in Q3 20131 |
$ | 7,905 | 5 | % | $ | 24,031 | 5 | % | ||||||||||||||||
Net Income |
$ | 1,477 | $ | 1,366 | 8 | % | $ | 4,438 | $ | 4,051 | 10 | % | ||||||||||||
Earnings Per Common Share Diluted: |
||||||||||||||||||||||||
Net Income Attributable to Common Shareholders2 |
$ | 1.40 | $ | 1.25 | 12 | % | $ | 4.17 | $ | 3.67 | 14 | % | ||||||||||||
Average Diluted Common Shares Outstanding |
1,047 | 1,081 | (3 | )% | 1,057 | 1,094 | (3 | )% | ||||||||||||||||
Return on Average Equity |
28.8 | % | 24.3 | % | 28.8 | % | 24.3 | % |
New York October 15, 2014 - American Express Company (NYSE: AXP) today reported third-quarter net income of $1.5 billion, up 8 percent from $1.4 billion a year ago. Diluted earnings per share was $1.40, up 12 percent from $1.25 a year ago.
Consolidated total revenues net of interest expense was $8.3 billion, in line with a year ago. Last years third quarter included revenue from the companys business travel operations, which were deconsolidated as a result of the previously announced joint venture transaction that closed on June 30, 2014. Excluding business travel revenues from the year-ago period, adjusted revenue rose 5 percent1 (6 percent when further adjusted for foreign currency translations3). The increase primarily reflected higher Card Member spending and higher net interest income.
1 | Adjusted revenue growth and adjusted expense growth are non-GAAP measures. Management believes these metrics are useful in evaluating the ongoing operating performance of the company. See Appendix V in the selected statistical tables for reconciliations to total revenues net of interest expense and total expenses on a GAAP basis. |
2 | Represents net income less earnings allocated to participating share awards of $11 million and $12 million for the three months ended September 30, 2014 and 2013, respectively, and $35 million and $36 million for the nine months ended September 30, 2014 and 2013, respectively. |
3 | As reported in this release, FX adjusted information, which constitute non-GAAP financial measures, assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the three months ended September 30, 2014 apply to the period(s) against which such results are being compared). The company believes the presentation of information on an FX adjusted basis is helpful to investors by making it easier to compare the companys performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates. |
-1-
Consolidated provisions for losses totaled $488 million, up 16 percent from $419 million, reflecting a larger credit reserve release in the year-ago period. Credit indicators continued to be at historically strong levels.
Consolidated expenses totaled $5.6 billion, down 5 percent from $5.9 billion last year. The decrease primarily reflected expenses related to business travel operations in the prior year. Excluding those expenses from the year-ago period, adjusted expenses rose 1 percent for the third quarter of 2014.1
The effective tax rate was 34 percent, up from 32 percent from a year ago.
The companys return on average equity (ROE) was 28.8 percent, up from 24.3 percent a year ago.
We delivered another solid quarter of financial results, said Kenneth I. Chenault, chairman and chief executive officer. Card Member spending was up 9 percent, a modest acceleration from last quarter, and loan balances grew 5 percent. Revenues continued to rise at a steady pace, but the growth rate is still below our long-term target.
On the cost side of the ledger, operating expense growth remained on track to come in well below our target for the full year and thats one of the factors that provided the flexibility to invest in both the core business as well as some newer initiatives.
We developed new partnerships and services with Uber, Apple Pay and McDonalds that are helping us to capitalize on the convergence of online and offline commerce. At the same time, initiatives like the Amex EveryDay Credit Card and OptBlue are helping to make our brand more welcoming and inclusive as we expand into markets not traditionally served by American Express.
Over the last couple of years we have delivered solid earnings through a combination of disciplined expense control, a strong balance sheet and targeted investments in growth initiatives. While the economy is stronger, it is not growing as fast or as steadily as most people would like, and those same levers will continue to be an important part of our strategy.
Our focus will be on delivering earnings growth in an environment that is characterized by rapidly changing technologies, intense competition, regulation and an economy that may continue to grow at only a modest pace.
-2-
Segment Results
U.S. Card Services reported third-quarter net income of $889 million, up 14 percent from $782 million a year ago.
Total revenues net of interest expense increased 6 percent to $4.5 billion, from $4.3 billion a year ago. The increase reflected a 9 percent increase in Card Member spending and a rise in net interest income, driven primarily by 6 percent growth in average Card Member loans.
Provisions for losses totaled $316 million, up 11 percent from $285 million a year ago. The increase reflected a larger reserve release in the prior year.
Total expenses increased 2 percent to $2.8 billion, primarily reflecting higher rewards expenses.
The effective tax rate was 37 percent, down from 38 percent from a year ago.
International Card Services reported third-quarter net income of $142 million, unchanged from a year ago.
Total revenues net of interest expense were $1.4 billion, up 3 percent (5 percent FX adjusted3). The increase primarily reflected higher revenues from the Loyalty Partner business and an increase in Card Member spending, partially offset by a decrease in net interest income.
Provisions for losses increased 2 percent to $98 million from $96 million a year ago.
Total expenses were $1.1 billion, up 4 percent (6 percent FX adjusted3) from a year ago. The increase primarily reflected higher rewards, marketing and operating expenses.4
The effective tax rate was 19 percent compared to 24 percent a year ago.
Global Commercial Services reported net income of $204 million, down 22 percent from $261 million a year ago. The segment previously included results from the companys business travel operations, which were deconsolidated as a result of the joint venture transaction referred to above. The companys proportional share of the joint ventures net income is now reported within Other Revenues. This change impacts growth rates for Global Commercial Services net income, revenues and expenses.
4 | Operating expenses represent salaries and employee benefits, professional services, occupancy and equipment, communications and other, net. |
-3-
Total revenues net of interest expense were $900 million, down 26 percent from $1.2 billion a year ago. Excluding business travel revenue from the year-ago period, adjusted revenues rose 9 percent (10 percent FX adjusted3) primarily reflecting higher Card Member spending.1
Provisions for losses totaled $49 million, up 69 percent from $29 million a year ago. The increase primarily reflected higher net write-offs in the current quarter.
Total expenses were $542 million, down 36 percent from $851 million. Excluding business travel expenses, third quarter adjusted expenses rose 5 percent.1 The increase reflected joint venture transaction-related costs and higher rewards expenses.
The effective tax rate was 34 percent compared to 23 percent from a year ago. The year-ago quarter benefited from the release of a valuation allowance in business travel.
Global Network & Merchant Services reported third-quarter net income of $427 million, up 9 percent from $391 million a year ago.
Total revenues net of interest expense were $1.5 billion, up 5 percent (6 percent FX adjusted3) from $1.4 billion a year ago. The increase reflected higher merchant-related revenues driven by an increase in global Card Member spending.
Total expenses of $756 million were in line with a year ago.
The effective tax rate was unchanged from 36 percent a year ago.
Corporate and Other reported third-quarter net loss of $185 million compared with net loss of $210 million in the year-ago period.
# # #
About American Express
American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. Learn more at americanexpress.com and connect with us on facebook.com/americanexpress, foursquare.com/americanexpress, linkedin.com/companies/american-express, twitter.com/americanexpress and youtube.com/americanexpress.
Key links to products and services: charge and credit cards, business credit cards, travel services, gift cards, prepaid cards, merchant services, corporate card and business travel.
-4-
The 2014 Third Quarter Earnings Supplement will be available today on the American Express web site at http://ir.americanexpress.com. An investor conference call will be held at 5:00 p.m. (ET) today to discuss third-quarter earnings results. Live audio and presentation slides for the investor conference call will be available to the general public at the same web site. A replay of the conference call will be available later today at the same web site address.
This release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the companys expected business and financial performance and are subject to risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements due to a variety of factors, including those contained in the companys Annual Report on Form 10-K for the year ended December 31, 2013, its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014 and June 30, 2014 and the companys other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The company undertakes no obligation to update or revise any forward-looking statements.
-5-
American Express Company | (Preliminary) | |
Consolidated Statements of Income | ||
(Millions, except percentages and per share amounts) |
Quarters Ended | % Change | Nine Months Ended | % Change | |||||||||||||||||||||||||||||||||
Sep 30, 2014 |
Jun 30, 2014 |
Mar 31, 2014 |
Dec 31, 2013 |
Sep 30, 2013 |
Sep 30, 2014 vs. Sep 30, 2013 |
Sep 30, | Sep 30, 2014 vs. Sep 30, 2013 |
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2014 | 2013 | |||||||||||||||||||||||||||||||||||
Revenues |
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Non-interest revenues |
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Discount revenue |
$ | 4,915 | $ | 4,945 | $ | 4,646 | $ | 4,869 | $ | 4,659 | 5 | $ | 14,506 | $ | 13,826 | 5 | ||||||||||||||||||||
Net card fees |
680 | 687 | 674 | 673 | 658 | 3 | 2,041 | 1,958 | 4 | |||||||||||||||||||||||||||
Travel commissions and fees |
104 | 500 | 423 | 491 | 490 | (79 | ) | 1,027 | 1,422 | (28 | ) | |||||||||||||||||||||||||
Other commissions and fees |
642 | 624 | 618 | 626 | 610 | 5 | 1,884 | 1,788 | 5 | |||||||||||||||||||||||||||
Other |
593 | 585 | 501 | 569 | 601 | (1 | ) | 1,679 | 1,705 | (2 | ) | |||||||||||||||||||||||||
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Total non-interest revenues |
6,934 | 7,341 | 6,862 | 7,228 | 7,018 | (1 | ) | 21,137 | 20,699 | 2 | ||||||||||||||||||||||||||
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Interest income |
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Interest on loans |
1,753 | 1,696 | 1,711 | 1,715 | 1,698 | 3 | 5,160 | 5,003 | 3 | |||||||||||||||||||||||||||
Interest and dividends on investment securities |
45 | 45 | 46 | 48 | 48 | (6 | ) | 136 | 153 | (11 | ) | |||||||||||||||||||||||||
Deposits with banks and other |
17 | 18 | 19 | 19 | 21 | (19 | ) | 54 | 67 | (19 | ) | |||||||||||||||||||||||||
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Total interest income |
1,815 | 1,759 | 1,776 | 1,782 | 1,767 | 3 | 5,350 | 5,223 | 2 | |||||||||||||||||||||||||||
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Interest expense |
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Deposits |
91 | 91 | 94 | 110 | 111 | (18 | ) | 276 | 332 | (17 | ) | |||||||||||||||||||||||||
Long-term debt and other |
329 | 352 | 345 | 353 | 373 | (12 | ) | 1,026 | 1,163 | (12 | ) | |||||||||||||||||||||||||
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Total interest expense |
420 | 443 | 439 | 463 | 484 | (13 | ) | 1,302 | 1,495 | (13 | ) | |||||||||||||||||||||||||
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Net interest income |
1,395 | 1,316 | 1,337 | 1,319 | 1,283 | 9 | 4,048 | 3,728 | 9 | |||||||||||||||||||||||||||
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Total revenues net of interest expense |
8,329 | 8,657 | 8,199 | 8,547 | 8,301 | | 25,185 | 24,427 | 3 | |||||||||||||||||||||||||||
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Provisions for losses |
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Charge card |
196 | 183 | 215 | 174 | 159 | 23 | 594 | 474 | 25 | |||||||||||||||||||||||||||
Card Member loans |
265 | 282 | 250 | 290 | 248 | 7 | 797 | 825 | (3 | ) | ||||||||||||||||||||||||||
Other |
27 | 24 | 20 | 15 | 12 | # | 71 | 54 | 31 | |||||||||||||||||||||||||||
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Total provisions for losses |
488 | 489 | 485 | 479 | 419 | 16 | 1,462 | 1,353 | 8 | |||||||||||||||||||||||||||
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Total revenues net of interest expense after provisions for losses |
7,841 | 8,168 | 7,714 | 8,068 | 7,882 | (1 | ) | 23,723 | 23,074 | 3 | ||||||||||||||||||||||||||
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Expenses |
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Marketing and promotion |
809 | 985 | 613 | 809 | 827 | (2 | ) | 2,407 | 2,234 | 8 | ||||||||||||||||||||||||||
Card Member rewards |
1,695 | 1,773 | 1,582 | 1,717 | 1,619 | 5 | 5,050 | 4,740 | 7 | |||||||||||||||||||||||||||
Card Member services and other |
205 | 192 | 222 | 188 | 197 | 4 | 619 | 579 | 7 | |||||||||||||||||||||||||||
Salaries and employee benefits |
1,290 | 1,658 | 1,540 | 1,489 | 1,544 | (16 | ) | 4,488 | 4,702 | (5 | ) | |||||||||||||||||||||||||
Professional services |
731 | 817 | 692 | 830 | 793 | (8 | ) | 2,240 | 2,272 | (1 | ) | |||||||||||||||||||||||||
Occupancy and equipment |
432 | 467 | 462 | 510 | 462 | (6 | ) | 1,361 | 1,394 | (2 | ) | |||||||||||||||||||||||||
Communications |
91 | 101 | 93 | 97 | 94 | (3 | ) | 285 | 282 | 1 | ||||||||||||||||||||||||||
Other, net |
342 | (137 | ) | 302 | 448 | 342 | | 507 | 963 | (47 | ) | |||||||||||||||||||||||||
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Total |
5,595 | 5,856 | 5,506 | 6,088 | 5,878 | (5 | ) | 16,957 | 17,166 | (1 | ) | |||||||||||||||||||||||||
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Pretax income |
2,246 | 2,312 | 2,208 | 1,980 | 2,004 | 12 | 6,766 | 5,908 | 15 | |||||||||||||||||||||||||||
Income tax provision |
769 | 783 | 776 | 672 | 638 | 21 | 2,328 | 1,857 | 25 | |||||||||||||||||||||||||||
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Net income |
$ | 1,477 | $ | 1,529 | $ | 1,432 | $ | 1,308 | $ | 1,366 | 8 | $ | 4,438 | $ | 4,051 | 10 | ||||||||||||||||||||
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Net income attributable to common shareholders (A) |
$ | 1,466 | $ | 1,517 | $ | 1,420 | $ | 1,297 | $ | 1,354 | 8 | $ | 4,403 | $ | 4,015 | 10 | ||||||||||||||||||||
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Effective tax rate |
34.2 | % | 33.9 | % | 35.1 | % | 33.9 | % | 31.8 | % | 34.4 | % | 31.4 | % | ||||||||||||||||||||||
Earnings Per Common Share |
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BASIC |
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Net income attributable to common shareholders |
$ | 1.41 | $ | 1.44 | $ | 1.34 | $ | 1.22 | $ | 1.26 | 12 | $ | 4.19 | $ | 3.69 | 14 | ||||||||||||||||||||
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Average common shares outstanding |
1,041 | 1,052 | 1,060 | 1,067 | 1,074 | (3 | ) | 1,051 | 1,087 | (3 | ) | |||||||||||||||||||||||||
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DILUTED |
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Net income attributable to common shareholders |
$ | 1.40 | $ | 1.43 | $ | 1.33 | $ | 1.21 | $ | 1.25 | 12 | $ | 4.17 | $ | 3.67 | 14 | ||||||||||||||||||||
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Average common shares outstanding |
1,047 | 1,058 | 1,067 | 1,073 | 1,081 | (3 | ) | 1,057 | 1,094 | (3 | ) | |||||||||||||||||||||||||
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Cash dividends declared per common share |
$ | 0.26 | $ | 0.26 | $ | 0.23 | $ | 0.23 | $ | 0.23 | 13 | $ | 0.75 | $ | 0.66 | 14 | ||||||||||||||||||||
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# | Denotes a variance of more than 100 percent |
See Appendix VI for footnote references | ||||
-6- |
American Express Company | ||||
Condensed Consolidated Balance Sheets | (Preliminary | ) | ||
(Billions, except percentages, per share amounts and where indicated) |
Quarters Ended | % Change | |||||||||||||||||||||||
Sep 30, 2014 |
Jun 30, 2014 |
Mar 31, 2014 |
Dec 31, 2013 |
Sep 30, 2013 |
Sep 30, 2014 vs. Sep 30, 2013 |
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Assets |
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Cash & cash equivalents |
$ | 21 | $ | 18 | $ | 21 | $ | 19 | $ | 22 | (5 | ) | ||||||||||||
Accounts receivable |
47 | 49 | 47 | 47 | 46 | 2 | ||||||||||||||||||
Investment securities |
5 | 5 | 5 | 5 | 5 | | ||||||||||||||||||
Loans |
66 | 66 | 63 | 67 | 62 | 6 | ||||||||||||||||||
Other assets |
15 | 14 | 15 | 15 | 15 | | ||||||||||||||||||
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Total assets |
$ | 154 | $ | 152 | $ | 151 | $ | 153 | $ | 150 | 3 | |||||||||||||
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Liabilities and Shareholders Equity |
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Customer deposits |
$ | 43 | $ | 42 | $ | 43 | $ | 42 | $ | 42 | 2 | |||||||||||||
Short-term borrowings |
3 | 3 | 3 | 5 | 3 | | ||||||||||||||||||
Long-term debt |
56 | 55 | 54 | 55 | 53 | 6 | ||||||||||||||||||
Other liabilities |
32 | 32 | 31 | 32 | 33 | (3 | ) | |||||||||||||||||
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Total liabilities |
134 | 132 | 131 | 134 | 131 | 2 | ||||||||||||||||||
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Shareholders Equity |
20 | 20 | 20 | 19 | 19 | 5 | ||||||||||||||||||
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Total liabilities and shareholders equity |
$ | 154 | $ | 152 | $ | 151 | $ | 153 | $ | 150 | 3 | |||||||||||||
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Selected Statistical Information | ||||||||||||||||||||||||
Quarters Ended | % Change | |||||||||||||||||||||||
Sep 30, 2014 |
Jun 30, 2014 |
Mar 31, 2014 |
Dec 31, 2013 |
Sep 30, 2013 |
Sep 30, 2014 vs. Sep 30, 2013 |
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Return on average equity (B) |
28.8 | % | 28.8 | % | 28.3 | % | 27.8 | % | 24.3 | % | ||||||||||||||
Return on average common equity (B) |
28.6 | % | 28.5 | % | 28.1 | % | 27.6 | % | 24.1 | % | ||||||||||||||
Return on average tangible common equity (B) |
35.6 | % | 35.8 | % | 35.4 | % | 34.9 | % | 30.6 | % | ||||||||||||||
Common shares outstanding (millions) |
1,035 | 1,046 | 1,059 | 1,064 | 1,071 | (3 | ) | |||||||||||||||||
Book value per common share (dollars) |
$ | 19.54 | $ | 19.32 | $ | 18.87 | $ | 18.32 | $ | 17.94 | 9 | |||||||||||||
Shareholders equity |
$ | 20.2 | $ | 20.2 | $ | 20.0 | $ | 19.5 | $ | 19.2 | 5 |
See Appendix VI for footnote references | ||||
-7- |
American Express Company | ||||
Financial Summary | (Preliminary | ) | ||
(Millions) |
Quarters Ended | % Change | Nine Months Ended | % Change | |||||||||||||||||||||||||||||||||
Sep 30, 2014 |
Jun 30, 2014 |
Mar 31, 2014 |
Dec 31, 2013 |
Sep 30, 2013 |
Sep 30, 2014 vs. Sep 30, 2013 |
Sep 30, | Sep 30, 2014 vs. Sep 30, 2013 |
|||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||||||||||
Total revenues net of interest expense |
||||||||||||||||||||||||||||||||||||
U.S. Card Services |
$ | 4,527 | $ | 4,477 | $ | 4,290 | $ | 4,388 | $ | 4,286 | 6 | $ | 13,294 | $ | 12,607 | 5 | ||||||||||||||||||||
International Card Services |
1,394 | 1,391 | 1,352 | 1,429 | 1,356 | 3 | 4,137 | 3,972 | 4 | |||||||||||||||||||||||||||
Global Commercial Services |
900 | 1,269 | 1,194 | 1,238 | 1,221 | (26 | ) | 3,363 | 3,615 | (7 | ) | |||||||||||||||||||||||||
Global Network & Merchant Services |
1,450 | 1,455 | 1,365 | 1,447 | 1,379 | 5 | 4,270 | 4,066 | 5 | |||||||||||||||||||||||||||
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|
|||||||||||||||||||||||
8,271 | 8,592 | 8,201 | 8,502 | 8,242 | | 25,064 | 24,260 | 3 | ||||||||||||||||||||||||||||
Corporate & Other |
58 | 65 | (2 | ) | 45 | 59 | (2 | ) | 121 | 167 | (28 | ) | ||||||||||||||||||||||||
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|||||||||||||||||||||||
CONSOLIDATED TOTAL REVENUES NET OF INTEREST EXPENSE |
$ | 8,329 | $ | 8,657 | $ | 8,199 | $ | 8,547 | $ | 8,301 | | $ | 25,185 | $ | 24,427 | 3 | ||||||||||||||||||||
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|
|||||||||||||||||||||||
Pretax income (loss) |
||||||||||||||||||||||||||||||||||||
U.S. Card Services |
$ | 1,411 | $ | 1,200 | $ | 1,406 | $ | 1,292 | $ | 1,257 | 12 | $ | 4,017 | $ | 3,702 | 9 | ||||||||||||||||||||
International Card Services |
176 | 69 | 203 | 108 | 186 | (5 | ) | 448 | 535 | (16 | ) | |||||||||||||||||||||||||
Global Commercial Services |
309 | 865 | 285 | 287 | 341 | (9 | ) | 1,459 | 957 | 52 | ||||||||||||||||||||||||||
Global Network & Merchant Services |
670 | 578 | 702 | 632 | 608 | 10 | 1,950 | 1,837 | 6 | |||||||||||||||||||||||||||
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|
|||||||||||||||||||||||
2,566 | 2,712 | 2,596 | 2,319 | 2,392 | 7 | 7,874 | 7,031 | 12 | ||||||||||||||||||||||||||||
Corporate & Other |
(320 | ) | (400 | ) | (388 | ) | (339 | ) | (388 | ) | (18 | ) | (1,108 | ) | (1,123 | ) | (1 | ) | ||||||||||||||||||
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|
|||||||||||||||||||||||
PRETAX INCOME |
$ | 2,246 | $ | 2,312 | $ | 2,208 | $ | 1,980 | $ | 2,004 | 12 | $ | 6,766 | $ | 5,908 | 15 | ||||||||||||||||||||
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|
|||||||||||||||||||||||
Net income (loss) |
||||||||||||||||||||||||||||||||||||
U.S. Card Services |
$ | 889 | $ | 770 | $ | 876 | $ | 864 | $ | 782 | 14 | $ | 2,535 | $ | 2,329 | 9 | ||||||||||||||||||||
International Card Services |
142 | 77 | 159 | 103 | 142 | | 378 | 528 | (28 | ) | ||||||||||||||||||||||||||
Global Commercial Services |
204 | 561 | 184 | 182 | 261 | (22 | ) | 949 | 678 | 40 | ||||||||||||||||||||||||||
Global Network & Merchant Services |
427 | 373 | 443 | 399 | 391 | 9 | 1,243 | 1,176 | 6 | |||||||||||||||||||||||||||
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|
|
|||||||||||||||||||||||
1,662 | 1,781 | 1,662 | 1,548 | 1,576 | 5 | 5,105 | 4,711 | 8 | ||||||||||||||||||||||||||||
Corporate & Other |
(185 | ) | (252 | ) | (230 | ) | (240 | ) | (210 | ) | (12 | ) | (667 | ) | (660 | ) | 1 | |||||||||||||||||||
|
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|
|
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|
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|
|
|
|
|
|||||||||||||||||||||||
NET INCOME |
$ | 1,477 | $ | 1,529 | $ | 1,432 | $ | 1,308 | $ | 1,366 | 8 | $ | 4,438 | $ | 4,051 | 10 | ||||||||||||||||||||
|
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|
|
|
See Appendix VI for footnote references | ||||
-8- |
American Express Company | (Preliminary) | |
Selected Statistical Information (continued) | ||
(Billions, except percentages and where indicated) |
Quarters Ended | % Change | Nine Months Ended | % Change | |||||||||||||||||||||||||||||||||
Sep 30, 2014 |
Jun 30, 2014 |
Mar 31, 2014 |
Dec 31, 2013 |
Sep 30, 2013 |
Sep 30, 2014 vs. Sep 30, 2013 |
Sep 30, | Sep 30, 2014 vs. Sep 30, 2013 |
|||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||||||||||
Card billed business (C): |
||||||||||||||||||||||||||||||||||||
United States |
$ | 173.0 | $ | 173.4 | $ | 159.2 | $ | 169.1 | $ | 158.2 | 9 | $ | 505.6 | $ | 467.9 | 8 | ||||||||||||||||||||
Outside the United States |
85.1 | 84.7 | 78.9 | 84.9 | 78.0 | 9 | 248.7 | 230.5 | 8 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total |
$ | 258.1 | $ | 258.1 | $ | 238.1 | $ | 254.0 | $ | 236.2 | 9 | $ | 754.3 | $ | 698.4 | 8 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total cards-in-force (D) (millions): |
||||||||||||||||||||||||||||||||||||
United States |
54.5 | 54.1 | 53.5 | 53.1 | 52.8 | 3 | 54.5 | 52.8 | 3 | |||||||||||||||||||||||||||
Outside the United States |
56.6 | 55.8 | 54.7 | 54.1 | 52.6 | 8 | 56.6 | 52.6 | 8 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total |
111.1 | 109.9 | 108.2 | 107.2 | 105.4 | 5 | 111.1 | 105.4 | 5 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Basic cards-in-force (D) (millions): |
||||||||||||||||||||||||||||||||||||
United States |
42.2 | 42.0 | 41.5 | 41.1 | 40.9 | 3 | 42.2 | 40.9 | 3 | |||||||||||||||||||||||||||
Outside the United States |
46.3 | 45.6 | 44.6 | 44.0 | 42.6 | 9 | 46.3 | 42.6 | 9 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total |
88.5 | 87.6 | 86.1 | 85.1 | 83.5 | 6 | 88.5 | 83.5 | 6 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Average discount rate (E) |
2.49 | % | 2.48 | % | 2.52 | % | 2.48 | % | 2.52 | % | 2.49 | % | 2.52 | % | ||||||||||||||||||||||
Average basic Card Member spending (dollars) (F) |
$ |
4,223 |
|
$ |
4,288 |
|
$ |
3,991 |
|
$ |
4,292 |
|
$ |
4,037 |
|
|
5 |
|
$ |
12,504 |
|
$ |
12,040 |
|
|
4 |
| |||||||||
Average fee per card (dollars) (F) |
$ | 40 | $ | 41 | $ | 40 | $ | 41 | $ | 40 | | $ | 41 | $ | 40 | 3 | ||||||||||||||||||||
Average fee per card adjusted (dollars) (F) |
$ | 45 | $ | 45 | $ | 45 | $ | 44 | $ | 44 | 2 | $ | 45 | $ | 44 | 2 | ||||||||||||||||||||
Worldwide Card Member receivables: |
||||||||||||||||||||||||||||||||||||
Total receivables |
$ | 45.1 | $ | 45.3 | $ | 44.7 | $ | 44.2 | $ | 43.5 | 4 | $ | 45.1 | $ | 43.5 | 4 | ||||||||||||||||||||
Loss reserves (millions): |
||||||||||||||||||||||||||||||||||||
Beginning balance |
$ | 413 | $ | 414 | $ | 386 | $ | 396 | $ | 386 | 7 | $ | 386 | $ | 428 | (10 | ) | |||||||||||||||||||
Provisions (G) |
196 | 183 | 215 | 174 | 159 | 23 | 594 | 474 | 25 | |||||||||||||||||||||||||||
Net write-offs (H) |
(168 | ) | (182 | ) | (177 | ) | (162 | ) | (149 | ) | 13 | (527 | ) | (507 | ) | 4 | ||||||||||||||||||||
Other (I) |
(9 | ) | (2 | ) | (10 | ) | (22 | ) | | | (21 | ) | 1 | # | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Ending balance |
$ | 432 | $ | 413 | $ | 414 | $ | 386 | $ | 396 | 9 | $ | 432 | $ | 396 | 9 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
% of receivables |
1.0 | % | 0.9 | % | 0.9 | % | 0.9 | % | 0.9 | % | 1.0 | % | 0.9 | % | ||||||||||||||||||||||
Net write-off rate (principal only) - USCS/ICS (J) |
1.6 | % | 1.8 | % | 1.9 | % | (L | ) | (L | ) | 1.8 | % | (L | ) | ||||||||||||||||||||||
Net write-off rate (principal and fees) - USCS/ICS (J) |
1.8 | % | 2.0 | % | 2.1 | % | (L | ) | (L | ) | 2.0 | % | (L | ) | ||||||||||||||||||||||
30 days past due as a % of total - USCS/ICS |
1.6 | % | 1.5 | % | 1.7 | % | (L | ) | (L | ) | 1.6 | % | (L | ) | ||||||||||||||||||||||
Net loss ratio (as a % of charge volume) - GCS |
0.09 | % | 0.09 | % | 0.09 | % | 0.08 | % | 0.06 | % | 0.09 | % | 0.07 | % | ||||||||||||||||||||||
90 days past billing as a % of total - GCS |
0.8 | % | 0.7 | % | 0.7 | % | 0.9 | % | 0.8 | % | 0.8 | % | 0.8 | % | ||||||||||||||||||||||
Worldwide Card Member loans: |
||||||||||||||||||||||||||||||||||||
Total loans |
$ | 66.1 | $ | 66.3 | $ | 64.0 | $ | 67.2 | $ | 63.0 | 5 | $ | 66.1 | $ | 63.0 | 5 | ||||||||||||||||||||
Loss reserves (millions): |
||||||||||||||||||||||||||||||||||||
Beginning balance |
$ | 1,170 | $ | 1,191 | $ | 1,261 | $ | 1,281 | $ | 1,342 | (13 | ) | $ | 1,261 | $ | 1,471 | (14 | ) | ||||||||||||||||||
Provisions (G) |
265 | 282 | 250 | 290 | 248 | 7 | 797 | 825 | (3 | ) | ||||||||||||||||||||||||||
Net write-offs - principal (H) |
(245 | ) | (267 | ) | (274 | ) | (253 | ) | (275 | ) | (11 | ) | (786 | ) | (888 | ) | (11 | ) | ||||||||||||||||||
Net write-offs - interest and fees (H) |
(40 | ) | (42 | ) | (42 | ) | (37 | ) | (36 | ) | 11 | (124 | ) | (113 | ) | 10 | ||||||||||||||||||||
Other (I) |
(4 | ) | 6 | (4 | ) | (20 | ) | 2 | # | (2 | ) | (14 | ) | (86 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Ending balance |
$ | 1,146 | $ | 1,170 | $ | 1,191 | $ | 1,261 | $ | 1,281 | (11 | ) | $ | 1,146 | $ | 1,281 | (11 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Ending reserves - principal |
$ | 1,093 | $ | 1,114 | $ | 1,135 | $ | 1,212 | $ | 1,234 | (11 | ) | $ | 1,093 | $ | 1,234 | (11 | ) | ||||||||||||||||||
Ending reserves - interest and fees |
$ | 53 | $ | 56 | $ | 56 | $ | 49 | $ | 47 | 13 | $ | 53 | $ | 47 | 13 | ||||||||||||||||||||
% of loans |
1.7 | % | 1.8 | % | 1.9 | % | 1.9 | % | 2.0 | % | 1.7 | % | 2.0 | % | ||||||||||||||||||||||
% of past due |
165 | % | 171 | % | 159 | % | 169 | % | 179 | % | 165 | % | 179 | % | ||||||||||||||||||||||
Average loans |
$ | 66.4 | $ | 65.2 | $ | 64.5 | $ | 64.4 | $ | 63.0 | 5 | $ | 65.4 | $ | 62.8 | 4 | ||||||||||||||||||||
Net write-off rate (principal only) (J) |
1.5 | % | 1.6 | % | 1.7 | % | 1.6 | % | 1.7 | % | 1.6 | % | 1.9 | % | ||||||||||||||||||||||
Net write-off rate (principal, interest and fees) (J) |
1.7 | % | 1.9 | % | 2.0 | % | 1.8 | % | 2.0 | % | 1.9 | % | 2.1 | % | ||||||||||||||||||||||
30 days past due loans as a % of total |
1.1 | % | 1.0 | % | 1.2 | % | 1.1 | % | 1.1 | % | 1.1 | % | 1.1 | % | ||||||||||||||||||||||
Net interest income divided by average loans (K) |
8.5 | % | 8.1 | % | 8.4 | % | 8.1 | % | 8.1 | % | 8.1 | % | 7.9 | % | ||||||||||||||||||||||
Net interest yield on Card Member loans (K) |
9.3 | % | 9.2 | % | 9.5 | % | 9.3 | % | 9.4 | % | 9.3 | % | 9.3 | % |
# | Denotes a variance of more than 100 percent. |
See Appendix VI for footnote references | ||||
-9- |
U.S. Card Services | (Preliminary | ) | ||
Selected Income Statement Data | ||||
(Millions, except percentages) |
Quarters Ended | % Change | Nine Months Ended | % Change | |||||||||||||||||||||||||||||||||
Sep 30, 2014 |
Jun 30, 2014 |
Mar 31, 2014 |
Dec 31, 2013 |
Sep 30, 2013 |
Sep 30, 2014 vs. Sep 30, 2013 |
Sep 30, | Sep 30, 2014 vs. Sep 30, 2013 |
|||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||||||||||
Revenues |
||||||||||||||||||||||||||||||||||||
Discount revenue, net card fees and other |
$ | 3,214 | $ | 3,222 | $ | 3,017 | $ | 3,132 | $ | 3,050 | 5 | $ | 9,453 | $ | 8,991 | 5 | ||||||||||||||||||||
Interest income |
1,465 | 1,408 | 1,423 | 1,417 | 1,408 | 4 | 4,296 | 4,148 | 4 | |||||||||||||||||||||||||||
Interest expense |
152 | 153 | 150 | 161 | 172 | (12 | ) | 455 | 532 | (14 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Net interest income |
1,313 | 1,255 | 1,273 | 1,256 | 1,236 | 6 | 3,841 | 3,616 | 6 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total revenues net of interest expense |
4,527 | 4,477 | 4,290 | 4,388 | 4,286 | 6 | 13,294 | 12,607 | 5 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Provisions for losses |
316 | 339 | 342 | 319 | 285 | 11 | 997 | 931 | 7 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total revenues net of interest expense after provisions for losses |
4,211 | 4,138 | 3,948 | 4,069 | 4,001 | 5 | 12,297 | 11,676 | 5 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Expenses |
||||||||||||||||||||||||||||||||||||
Marketing, promotion, rewards, Card Member services and other |
1,790 | 1,865 | 1,582 | 1,789 | 1,756 | 2 | 5,237 | 5,036 | 4 | |||||||||||||||||||||||||||
Salaries and employee benefits and other operating expenses |
1,010 | 1,073 | 960 | 988 | 988 | 2 | 3,043 | 2,938 | 4 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total |
2,800 | 2,938 | 2,542 | 2,777 | 2,744 | 2 | 8,280 | 7,974 | 4 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Pretax segment income |
1,411 | 1,200 | 1,406 | 1,292 | 1,257 | 12 | 4,017 | 3,702 | 9 | |||||||||||||||||||||||||||
Income tax provision |
522 | 430 | 530 | 428 | 475 | 10 | 1,482 | 1,373 | 8 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Segment income |
$ | 889 | $ | 770 | $ | 876 | $ | 864 | $ | 782 | 14 | $ | 2,535 | $ | 2,329 | 9 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Effective tax rate |
37.0 | % | 35.8 | % | 37.7 | % | 33.1 | % | 37.8 | % | 36.9 | % | 37.1 | % | ||||||||||||||||||||||
Selected Statistical Information |
||||||||||||||||||||||||||||||||||||
(Billions, except percentages and where indicated) |
||||||||||||||||||||||||||||||||||||
Card billed business |
$ | 136.2 | $ | 136.5 | $ | 124.3 | $ | 134.1 | $ | 124.6 | 9 | $ | 397.0 | $ | 366.9 | 8 | ||||||||||||||||||||
Total cards-in-force (millions) |
45.2 | 44.7 | 44.1 | 43.7 | 43.4 | 4 | 45.2 | 43.4 | 4 | |||||||||||||||||||||||||||
Basic cards-in-force (millions) |
33.7 | 33.3 | 32.8 | 32.5 | 32.2 | 5 | 33.7 | 32.2 | 5 | |||||||||||||||||||||||||||
Average basic Card Member spending (dollars) |
$ | 4,069 | $ | 4,133 | $ | 3,805 | $ | 4,138 | $ | 3,882 | 5 | $ | 12,008 | $ | 11,547 | 4 | ||||||||||||||||||||
U.S. Consumer Travel: |
||||||||||||||||||||||||||||||||||||
Travel sales (millions) |
$ | 956 | $ | 1,027 | $ | 974 | $ | 865 | $ | 900 | 6 | $ | 2,957 | $ | 3,102 | (5 | ) | |||||||||||||||||||
Travel commissions and fees/sales |
7.4 | % | 7.4 | % | 6.5 | % | 7.4 | % | 7.9 | % | 7.1 | % | 7.0 | % | ||||||||||||||||||||||
Total segment assets |
$ | 103.3 | $ | 101.1 | $ | 98.9 | $ | 103.5 | $ | 95.2 | 9 | $ | 103.3 | $ | 95.2 | 9 | ||||||||||||||||||||
Segment capital (M) |
$ | 9.9 | $ | 9.9 | $ | 9.7 | $ | 9.3 | $ | 9.1 | 9 | $ | 9.9 | $ | 9.1 | 9 | ||||||||||||||||||||
Return on average segment capital (N) |
35.5 | % | 35.3 | % | 35.6 | % | 35.6 | % | 30.8 | % | 35.5 | % | 30.8 | % | ||||||||||||||||||||||
Return on average tangible segment capital (N) |
36.6 | % | 36.5 | % | 36.9 | % | 37.0 | % | 32.0 | % | 36.6 | % | 32.0 | % | ||||||||||||||||||||||
Card Member receivables: |
||||||||||||||||||||||||||||||||||||
Total receivables |
$ | 21.3 | $ | 21.2 | $ | 20.7 | $ | 21.8 | $ | 20.3 | 5 | $ | 21.3 | $ | 20.3 | 5 | ||||||||||||||||||||
30 days past due as a % of total |
1.6 | % | 1.5 | % | 1.8 | % | 1.6 | % | 1.7 | % | 1.6 | % | 1.7 | % | ||||||||||||||||||||||
Average receivables |
$ | 21.4 | $ | 21.3 | $ | 20.6 | $ | 21.2 | $ | 20.5 | 4 | $ | 21.1 | $ | 20.3 | 4 | ||||||||||||||||||||
Net write-off rate (principal only) (J) |
1.5 | % | 1.8 | % | 1.8 | % | 1.5 | % | 1.4 | % | 1.7 | % | 1.8 | % | ||||||||||||||||||||||
Net write-off rate (principal and fees) (J) |
1.7 | % | 2.0 | % | 2.0 | % | 1.7 | % | 1.6 | % | 1.9 | % | 1.9 | % | ||||||||||||||||||||||
Card Member loans: |
||||||||||||||||||||||||||||||||||||
Total loans |
$ | 58.0 | $ | 57.7 | $ | 55.8 | $ | 58.4 | $ | 54.5 | 6 | $ | 58.0 | $ | 54.5 | 6 | ||||||||||||||||||||
30 days past due loans as a % of total |
1.0 | % | 0.9 | % | 1.1 | % | 1.1 | % | 1.1 | % | 1.0 | % | 1.1 | % | ||||||||||||||||||||||
Average loans |
$ | 58.0 | $ | 56.8 | $ | 56.1 | $ | 55.8 | $ | 54.7 | 6 | $ | 57.0 | $ | 54.2 | 5 | ||||||||||||||||||||
Net write-off rate (principal only) (J) |
1.4 | % | 1.6 | % | 1.7 | % | 1.5 | % | 1.7 | % | 1.6 | % | 1.9 | % | ||||||||||||||||||||||
Net write-off rate (principal, interest and fees) (J) |
1.6 | % | 1.8 | % | 1.9 | % | 1.7 | % | 1.9 | % | 1.8 | % | 2.1 | % | ||||||||||||||||||||||
Net interest income divided by average loans (O) |
9.1 | % | 8.9 | % | 9.2 | % | 8.9 | % | 9.0 | % | 9.0 | % | 8.9 | % | ||||||||||||||||||||||
Net interest yield on Card Member loans (O) |
9.2 | % | 9.1 | % | 9.4 | % | 9.2 | % | 9.3 | % | 9.3 | % | 9.2 | % |
See Appendix VI for footnote references | ||||
-10- |
International Card Services | (Preliminary | ) | ||
Selected Income Statement Data | ||||
(Millions, except percentages) |
Quarters Ended | % Change | Nine Months Ended | % Change | |||||||||||||||||||||||||||||||||
Sep 30, 2014 |
Jun 30, 2014 |
Mar 31, 2014 |
Dec 31, 2013 |
Sep 30, 2013 |
Sep 30, 2014 vs. Sep 30, 2013 |
Sep 30, | Sep 30, 2014 vs. Sep 30, 2013 |
|||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||||||||||
Revenues |
||||||||||||||||||||||||||||||||||||
Discount revenue, net card fees and other |
$ | 1,206 | $ | 1,208 | $ | 1,157 | $ | 1,229 | $ | 1,161 | 4 | $ | 3,571 | $ | 3,415 | 5 | ||||||||||||||||||||
Interest income |
273 | 275 | 277 | 288 | 281 | (3 | ) | 825 | 830 | (1 | ) | |||||||||||||||||||||||||
Interest expense |
85 | 92 | 82 | 88 | 86 | (1 | ) | 259 | 273 | (5 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Net interest income |
188 | 183 | 195 | 200 | 195 | (4 | ) | 566 | 557 | 2 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total revenues net of interest expense |
1,394 | 1,391 | 1,352 | 1,429 | 1,356 | 3 | 4,137 | 3,972 | 4 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Provisions for losses |
98 | 90 | 87 | 110 | 96 | 2 | 275 | 278 | (1 | ) | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total revenues net of interest expense after provisions for losses |
1,296 | 1,301 | 1,265 | 1,319 | 1,260 | 3 | 3,862 | 3,694 | 5 | |||||||||||||||||||||||||||
|
|
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|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Expenses |
||||||||||||||||||||||||||||||||||||
Marketing, promotion, rewards, Card Member services and other |
532 | 577 | 496 | 585 | 498 | 7 | 1,605 | 1,428 | 12 | |||||||||||||||||||||||||||
Salaries and employee benefits and other operating expenses |
588 | 655 | 566 | 626 | 576 | 2 | 1,809 | 1,731 | 5 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total |
1,120 | 1,232 | 1,062 | 1,211 | 1,074 | 4 | 3,414 | 3,159 | 8 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Pretax segment income |
176 | 69 | 203 | 108 | 186 | (5 | ) | 448 | 535 | (16 | ) | |||||||||||||||||||||||||
Income tax provision/(benefit) |
34 | (8 | ) | 44 | 5 | 44 | (23 | ) | 70 | 7 | # | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Segment income |
$ | 142 | $ | 77 | $ | 159 | $ | 103 | $ | 142 | | $ | 378 | $ | 528 | (28 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Effective tax rate |
19.3 | % | (11.6 | )% | 21.7 | % | 4.6 | % | 23.7 | % | 15.6 | % | 1.3 | % | ||||||||||||||||||||||
Selected Statistical Information |
||||||||||||||||||||||||||||||||||||
(Billions, except percentages and where indicated) |
||||||||||||||||||||||||||||||||||||
Card billed business |
$ | 33.9 | $ | 34.1 | $ | 31.9 | $ | 35.5 | $ | 32.5 | 4 | $ | 99.9 | $ | 96.2 | 4 | ||||||||||||||||||||
Total cards-in-force (millions) |
15.8 | 15.7 | 15.7 | 15.7 | 15.5 | 2 | 15.8 | 15.5 | 2 | |||||||||||||||||||||||||||
Basic cards-in-force (millions) |
10.9 | 10.9 | 10.9 | 10.7 | 10.6 | 3 | 10.9 | 10.6 | 3 | |||||||||||||||||||||||||||
Average basic Card Member spending (dollars) |
$ | 3,100 | $ | 3,137 | $ | 2,942 | $ | 3,336 | $ | 3,076 | 1 | $ | 9,185 | $ | 9,094 | 1 | ||||||||||||||||||||
International Consumer Travel: |
||||||||||||||||||||||||||||||||||||
Travel sales (millions) |
$ | 362 | $ | 354 | $ | 353 | $ | 367 | $ | 359 | 1 | $ | 1,069 | $ | 1,053 | 2 | ||||||||||||||||||||
Travel commissions and fees/sales |
6.9 | % | 6.8 | % | 6.2 | % | 7.1 | % | 7.0 | % | 6.6 | % | 6.8 | % | ||||||||||||||||||||||
Total segment assets |
$ | 31.1 | $ | 31.6 | $ | 30.4 | $ | 31.1 | $ | 30.4 | 2 | $ | 31.1 | $ | 30.4 | 2 | ||||||||||||||||||||
Segment capital (M) |
$ | 3.0 | $ | 3.0 | $ | 3.0 | $ | 3.1 | $ | 3.1 | (3 | ) | $ | 3.0 | $ | 3.1 | (3 | ) | ||||||||||||||||||
Return on average segment capital (N) |
15.8 | % | 15.7 | % | 20.0 | % | 20.9 | % | 20.8 | % | 15.8 | % | 20.8 | % | ||||||||||||||||||||||
Return on average tangible segment capital (N) |
28.9 | % | 28.8 | % | 36.8 | % | 38.8 | % | 39.1 | % | 28.9 | % | 39.1 | % | ||||||||||||||||||||||
Card Member receivables: |
||||||||||||||||||||||||||||||||||||
Total receivables |
$ | 7.3 | $ | 7.5 | $ | 7.2 | $ | 7.8 | $ | 7.2 | 1 | $ | 7.3 | $ | 7.2 | 1 | ||||||||||||||||||||
30 days past billing as a % of total |
1.4 | % | 1.3 | % | 1.4 | % | (L | ) | (L | ) | 1.4 | % | (L | ) | ||||||||||||||||||||||
Net write-off rate (principal only) (J) |
1.9 | % | 1.9 | % | 2.2 | % | (L | ) | (L | ) | 2.0 | % | (L | ) | ||||||||||||||||||||||
Net write-off rate (principal and fees) (J) |
2.1 | % | 2.0 | % | 2.3 | % | (L | ) | (L | ) | 2.1 | % | (L | ) | ||||||||||||||||||||||
90 days past billing as a % of total |
(L | ) | (L | ) | (L | ) | 1.1 | % | 1.1 | % | (L | ) | 1.1 | % | ||||||||||||||||||||||
Net loss ratio (as a % of charge volume) |
(L | ) | (L | ) | (L | ) | 0.19 | % | 0.21 | % | (L | ) | 0.20 | % | ||||||||||||||||||||||
Card Member loans: |
||||||||||||||||||||||||||||||||||||
Total loans |
$ | 8.0 | $ | 8.6 | $ | 8.2 | $ | 8.8 | $ | 8.4 | (5 | ) | $ | 8.0 | $ | 8.4 | (5 | ) | ||||||||||||||||||
30 days past due loans as a % of total |
1.6 | % | 1.6 | % | 1.7 | % | 1.4 | % | 1.5 | % | 1.6 | % | 1.5 | % | ||||||||||||||||||||||
Average loans |
$ | 8.3 | $ | 8.3 | $ | 8.3 | $ | 8.5 | $ | 8.3 | | $ | 8.3 | $ | 8.5 | (2 | ) | |||||||||||||||||||
Net write-off rate (principal only) (J) |
1.9 | % | 2.0 | % | 2.0 | % | 1.8 | % | 1.9 | % | 2.0 | % | 1.9 | % | ||||||||||||||||||||||
Net write-off rate (principal, interest and fees) (J) |
2.4 | % | 2.4 | % | 2.4 | % | 2.2 | % | 2.4 | % | 2.4 | % | 2.3 | % | ||||||||||||||||||||||
Net interest income divided by average loans (O) |
9.1 | % | 8.8 | % | 9.5 | % | 9.3 | % | 9.3 | % | 9.1 | % | 8.7 | % | ||||||||||||||||||||||
Net interest yield on Card Member loans (O) |
9.9 | % | 9.6 | % | 10.1 | % | 10.0 | % | 10.4 | % | 9.9 | % | 9.8 | % |
# | Denotes a variance of more than 100 percent |
See Appendix VI for footnote references | ||||
-11- |
Global Commercial Services | (Preliminary | ) | ||
Selected Income Statement Data | ||||
(Millions, except percentages) |
Quarters Ended | % Change | Nine Months Ended | % Change | |||||||||||||||||||||||||||||||||
Sep 30, 2014 |
Jun 30, 2014 |
Mar 31, 2014 |
Dec 31, 2013 |
Sep 30, 2013 |
Sep 30, 2014 vs. Sep 30, 2013 |
Sep 30, | Sep 30, 2014 vs. Sep 30, 2013 |
|||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||||||||||
Revenues |
||||||||||||||||||||||||||||||||||||
Discount revenue, net card fees and other |
$ | 957 | $ | 1,332 | $ | 1,249 | $ | 1,298 | $ | 1,277 | (25 | ) | $ | 3,538 | $ | 3,787 | (7 | ) | ||||||||||||||||||
Interest income |
4 | 3 | 4 | 4 | 3 | 33 | 11 | 9 | 22 | |||||||||||||||||||||||||||
Interest expense |
61 | 66 | 59 | 64 | 59 | 3 | 186 | 181 | 3 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Net interest expense |
(57 | ) | (63 | ) | (55 | ) | (60 | ) | (56 | ) | 2 | (175 | ) | (172 | ) | 2 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total revenues net of interest expense |
900 | 1,269 | 1,194 | 1,238 | 1,221 | (26 | ) | 3,363 | 3,615 | (7 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Provisions for losses |
49 | 43 | 38 | 36 | 29 | 69 | 130 | 93 | 40 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total revenues net of interest expense after provisions for losses |
851 | 1,226 | 1,156 | 1,202 | 1,192 | (29 | ) | 3,233 | 3,522 | (8 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Expenses |
||||||||||||||||||||||||||||||||||||
Marketing, promotion, rewards, Card Member services and other |
161 | 177 | 166 | 162 | 148 | 9 | 504 | 442 | 14 | |||||||||||||||||||||||||||
Salaries and employee benefits and other operating expenses |
381 | 184 | 705 | 753 | 703 | (46 | ) | 1,270 | 2,123 | (40 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total |
542 | 361 | 871 | 915 | 851 | (36 | ) | 1,774 | 2,565 | (31 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Pretax segment income |
309 | 865 | 285 | 287 | 341 | (9 | ) | 1,459 | 957 | 52 | ||||||||||||||||||||||||||
Income tax provision |
105 | 304 | 101 | 105 | 80 | 31 | 510 | 279 | 83 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Segment income |
$ | 204 | $ | 561 | $ | 184 | $ | 182 | $ | 261 | (22 | ) | $ | 949 | $ | 678 | 40 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Effective tax rate |
34.0 | % | 35.1 | % | 35.4 | % | 36.6 | % | 23.5 | % | 35.0 | % | 29.2 | % | ||||||||||||||||||||||
Selected Statistical Information |
||||||||||||||||||||||||||||||||||||
(Billions, except percentages and where indicated) |
||||||||||||||||||||||||||||||||||||
Card billed business |
$ | 46.5 | $ | 47.6 | $ | 45.5 | $ | 45.0 | $ | 43.2 | 8 | $ | 139.6 | $ | 130.4 | 7 | ||||||||||||||||||||
Total cards-in-force (millions) |
6.9 | 7.0 | 7.1 | 7.1 | 7.1 | (3 | ) | 6.9 | 7.1 | (3 | ) | |||||||||||||||||||||||||
Basic cards-in-force (millions) |
6.9 | 7.0 | 7.1 | 7.1 | 7.1 | (3 | ) | 6.9 | 7.1 | (3 | ) | |||||||||||||||||||||||||
Average basic Card Member spending (dollars) |
$ | 6,691 | $ | 6,781 | $ | 6,429 | $ | 6,361 | $ | 6,139 | 9 | $ | 19,905 | $ | 18,564 | 7 | ||||||||||||||||||||
Global Corporate Travel: |
||||||||||||||||||||||||||||||||||||
Travel sales (millions) |
$ | 80 | $ | 4,882 | $ | 4,698 | $ | 4,793 | $ | 4,469 | (98 | ) | $ | 9,660 | $ | 14,076 | (31 | ) | ||||||||||||||||||
Travel commissions and fees/sales |
10.0 | % | 8.2 | % | 7.2 | % | 8.3 | % | 8.8 | % | 7.7 | % | 8.0 | % | ||||||||||||||||||||||
Total segment assets |
$ | 20.6 | $ | 20.8 | $ | 21.6 | $ | 19.2 | $ | 20.5 | | $ | 20.6 | $ | 20.5 | | ||||||||||||||||||||
Segment capital (M) |
$ | 3.8 | $ | 3.8 | $ | 3.8 | $ | 3.7 | $ | 3.6 | 6 | $ | 3.8 | $ | 3.6 | 6 | ||||||||||||||||||||
Return on average segment capital (N) |
30.3 | % | 32.0 | % | 23.2 | % | 23.6 | % | 20.4 | % | 30.3 | % | 20.4 | % | ||||||||||||||||||||||
Return on average tangible segment capital (N) |
56.0 | % | 60.3 | % | 44.4 | % | 45.8 | % | 39.9 | % | 56.0 | % | 39.9 | % | ||||||||||||||||||||||
Card Member receivables: |
||||||||||||||||||||||||||||||||||||
Total receivables |
$ | 16.4 | $ | 16.5 | $ | 16.6 | $ | 14.4 | $ | 15.9 | 3 | $ | 16.4 | $ | 15.9 | 3 | ||||||||||||||||||||
90 days past billing as a % of total |
0.8 | % | 0.7 | % | 0.7 | % | 0.9 | % | 0.8 | % | 0.8 | % | 0.8 | % | ||||||||||||||||||||||
Net loss ratio (as a % of charge volume) |
0.09 | % | 0.09 | % | 0.09 | % | 0.08 | % | 0.06 | % | 0.09 | % | 0.07 | % |
See Appendix VI for footnote references | ||||
-12- |
(Preliminary)
Global Network & Merchant Services
Selected Income Statement Data
(Millions, except percentages)
Quarters Ended | % Change | Nine Months Ended | % Change | |||||||||||||||||||||||||||||||||
Sep 30, 2014 |
Jun 30, 2014 |
Mar 31, 2014 |
Dec 31, 2013 |
Sep 30, 2013 |
Sep 30, 2014 vs. Sep 30, 2013 |
Sep 30, | Sep 30, 2014 vs. Sep 30, 2013 |
|||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||||||||||
Revenues |
||||||||||||||||||||||||||||||||||||
Discount revenue, fees and other |
$ | 1,368 | $ | 1,366 | $ | 1,293 | $ | 1,373 | $ | 1,309 | 5 | $ | 4,027 | $ | 3,856 | 4 | ||||||||||||||||||||
Interest income |
14 | 11 | 10 | 9 | 8 | 75 | 35 | 23 | 52 | |||||||||||||||||||||||||||
Interest expense |
(68 | ) | (78 | ) | (62 | ) | (65 | ) | (62 | ) | 10 | (208 | ) | (187 | ) | 11 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Net interest income |
82 | 89 | 72 | 74 | 70 | 17 | 243 | 210 | 16 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total revenues net of interest expense |
1,450 | 1,455 | 1,365 | 1,447 | 1,379 | 5 | 4,270 | 4,066 | 5 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Provisions for losses |
24 | 18 | 16 | 14 | 13 | 85 | 58 | 53 | 9 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total revenues net of interest expense after provisions for losses |
1,426 | 1,437 | 1,349 | 1,433 | 1,366 | 4 | 4,212 | 4,013 | 5 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Expenses |
||||||||||||||||||||||||||||||||||||
Marketing, promotion, rewards, Card Member services and other |
201 | 277 | 156 | 158 | 200 | 1 | 634 | 546 | 16 | |||||||||||||||||||||||||||
Salaries and employee benefits and other operating expenses |
555 | 582 | 491 | 643 | 558 | (1 | ) | 1,628 | 1,630 | | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total |
756 | 859 | 647 | 801 | 758 | | 2,262 | 2,176 | 4 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Pretax segment income |
670 | 578 | 702 | 632 | 608 | 10 | 1,950 | 1,837 | 6 | |||||||||||||||||||||||||||
Income tax provision |
243 | 205 | 259 | 233 | 217 | 12 | 707 | 661 | 7 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Segment income |
$ | 427 | $ | 373 | $ | 443 | $ | 399 | $ | 391 | 9 | $ | 1,243 | $ | 1,176 | 6 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Effective tax rate |
36.3 | % | 35.5 | % | 36.9 | % | 36.9 | % | 35.7 | % | 36.3 | % | 36.0 | % | ||||||||||||||||||||||
Selected Statistical Information |
||||||||||||||||||||||||||||||||||||
(Billions, except percentages and where indicated) |
||||||||||||||||||||||||||||||||||||
Global Card billed business (P) |
$ | 258.1 | $ | 258.1 | $ | 238.1 | $ | 254.0 | $ | 236.2 | 9 | $ | 754.3 | $ | 698.4 | 8 | ||||||||||||||||||||
Global Network & Merchant Services: |
||||||||||||||||||||||||||||||||||||
Total segment assets |
$ | 18.2 | $ | 18.7 | $ | 18.3 | $ | 17.1 | $ | 17.8 | 2 | $ | 18.2 | $ | 17.8 | 2 | ||||||||||||||||||||
Segment capital (M) |
$ | 2.0 | $ | 2.0 | $ | 1.9 | $ | 2.0 | $ | 2.0 | (3 | ) | $ | 2.0 | $ | 2.0 | (3 | ) | ||||||||||||||||||
Return on average segment capital (N) |
82.6 | % | 79.4 | % | 81.2 | % | 76.8 | % | 73.4 | % | 82.6 | % | 73.4 | % | ||||||||||||||||||||||
Return on average tangible segment capital (N) |
91.3 | % | 87.8 | % | 89.7 | % | 84.9 | % | 81.1 | % | 91.3 | % | 81.1 | % | ||||||||||||||||||||||
Global Network Services: |
||||||||||||||||||||||||||||||||||||
Card billed business |
$ | 41.6 | $ | 40.1 | $ | 36.6 | $ | 39.3 | $ | 35.9 | 16 | $ | 118.2 | $ | 104.9 | 13 | ||||||||||||||||||||
Total cards-in-force (millions) |
43.2 | 42.5 | 41.3 | 40.7 | 39.4 | 10 | 43.2 | 39.4 | 10 |
See Appendix VI for footnote references | ||||
-13- |
American Express Company | (Preliminary | ) | ||
Components of Return on Average Equity (ROE), Return on Average Common Equity (ROCE), and Return on Average Tangible Common Equity (ROTCE) | ||||
Appendix I | ||||
(Millions, except percentages) |
For the Twelve Months Ended | ||||||||||||||||||||
Sep 30, 2014 |
Jun 30, 2014 |
Mar 31, 2014 |
Dec 31, 2013 |
Sep 30, 2013 |
||||||||||||||||
ROE |
||||||||||||||||||||
Net income |
$ | 5,746 | $ | 5,635 | $ | 5,511 | $ | 5,359 | $ | 4,688 | ||||||||||
Average shareholders equity |
$ | 19,948 | $ | 19,591 | $ | 19,442 | $ | 19,254 | $ | 19,289 | ||||||||||
Return on average equity (Q) |
28.8 | % | 28.8 | % | 28.3 | % | 27.8 | % | 24.3 | % | ||||||||||
Reconciliation of ROCE and ROTCE |
||||||||||||||||||||
Net income |
$ | 5,746 | $ | 5,635 | $ | 5,511 | $ | 5,359 | $ | 4,688 | ||||||||||
Earnings allocated to participating share awards and other |
46 | 47 | 48 | 47 | 43 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income attributable to common shareholders |
$ | 5,700 | $ | 5,588 | $ | 5,463 | $ | 5,312 | $ | 4,645 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Average shareholders equity |
$ | 19,948 | $ | 19,591 | $ | 19,442 | $ | 19,254 | $ | 19,289 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Average common shareholders equity |
$ | 19,948 | $ | 19,591 | $ | 19,442 | $ | 19,254 | $ | 19,289 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Average goodwill and other intangibles |
3,941 | 3,994 | 4,012 | 4,055 | 4,091 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Average tangible common shareholders equity |
$ | 16,007 | $ | 15,597 | $ | 15,430 | $ | 15,199 | $ | 15,198 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Return on average common equity (Q) |
28.6 | % | 28.5 | % | 28.1 | % | 27.6 | % | 24.1 | % | ||||||||||
Return on average tangible common equity (R) |
35.6 | % | 35.8 | % | 35.4 | % | 34.9 | % | 30.6 | % |
See Appendix VI for footnote references | ||||
-14- |
American Express Company | (Preliminary | ) |
Components of Return on Average Segment Capital (ROSC) and Return on Average Tangible Segment Capital (ROTSC)
Appendix II
(Millions, except percentages)
For the Twelve Months Ended | ||||||||||||||||||||
Sep 30, 2014 |
Jun 30, 2014 |
Mar 31, 2014 |
Dec 31, 2013 |
Sep 30, 2013 |
||||||||||||||||
U.S. Card Services |
||||||||||||||||||||
Segment income |
$ | 3,399 | $ | 3,292 | $ | 3,265 | $ | 3,193 | $ | 2,752 | ||||||||||
Average segment capital |
$ | 9,580 | $ | 9,337 | $ | 9,180 | $ | 8,974 | $ | 8,940 | ||||||||||
Average goodwill and other intangibles |
299 | 311 | 323 | 334 | 345 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Average tangible segment capital |
$ | 9,281 | $ | 9,026 | $ | 8,857 | $ | 8,640 | $ | 8,595 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Return on average segment capital (S) |
35.5 | % | 35.3 | % | 35.6 | % | 35.6 | % | 30.8 | % | ||||||||||
Return on average tangible segment capital (S) |
36.6 | % | 36.5 | % | 36.9 | % | 37.0 | % | 32.0 | % | ||||||||||
International Card Services |
||||||||||||||||||||
Segment income |
$ | 481 | $ | 481 | $ | 612 | $ | 631 | $ | 623 | ||||||||||
Average segment capital |
$ | 3,043 | $ | 3,063 | $ | 3,053 | $ | 3,024 | $ | 2,990 | ||||||||||
Average goodwill and other intangibles |
1,376 | 1,394 | 1,389 | 1,396 | 1,398 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Average tangible segment capital |
$ | 1,667 | $ | 1,669 | $ | 1,664 | $ | 1,628 | $ | 1,592 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Return on average segment capital (S) |
15.8 | % | 15.7 | % | 20.0 | % | 20.9 | % | 20.8 | % | ||||||||||
Return on average tangible segment capital (S) |
28.9 | % | 28.8 | % | 36.8 | % | 38.8 | % | 39.1 | % | ||||||||||
Global Commercial Services |
||||||||||||||||||||
Segment income |
$ | 1,131 | $ | 1,188 | $ | 853 | $ | 860 | $ | 743 | ||||||||||
Average segment capital |
$ | 3,736 | $ | 3,707 | $ | 3,679 | $ | 3,647 | $ | 3,637 | ||||||||||
Average goodwill and other intangibles |
1,715 | 1,736 | 1,759 | 1,768 | 1,775 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Average tangible segment capital |
$ | 2,021 | $ | 1,971 | $ | 1,920 | $ | 1,879 | $ | 1,862 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Return on average segment capital (S) |
30.3 | % | 32.0 | % | 23.2 | % | 23.6 | % | 20.4 | % | ||||||||||
Return on average tangible segment capital (S) |
56.0 | % | 60.3 | % | 44.4 | % | 45.8 | % | 39.9 | % | ||||||||||
Global Network & Merchant Services |
||||||||||||||||||||
Segment income |
$ | 1,642 | $ | 1,606 | $ | 1,645 | $ | 1,575 | $ | 1,530 | ||||||||||
Average segment capital |
$ | 1,989 | $ | 2,022 | $ | 2,026 | $ | 2,050 | $ | 2,084 | ||||||||||
Average goodwill and other intangibles |
190 | 192 | 193 | 195 | 197 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Average tangible segment capital |
$ | 1,799 | $ | 1,830 | $ | 1,833 | $ | 1,855 | $ | 1,887 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Return on average segment capital (S) |
82.6 | % | 79.4 | % | 81.2 | % | 76.8 | % | 73.4 | % | ||||||||||
Return on average tangible segment capital (S) |
91.3 | % | 87.8 | % | 89.7 | % | 84.9 | % | 81.1 | % |
See Appendix VI for footnote references | ||||
-15- |
American Express Company | (Preliminary | ) |
Net Interest Yield on Card Member Loans
Appendix III
(Millions, except percentages and where indicated)
Quarters Ended | ||||||||||||||||||||
Sep 30, 2014 |
Jun 30, 2014 |
Mar 31, 2014 |
Dec 31, 2013 |
Sep 30, 2013 |
||||||||||||||||
Net interest income |
$ | 1,395 | $ | 1,316 | $ | 1,337 | $ | 1,319 | $ | 1,283 | ||||||||||
Exclude: |
||||||||||||||||||||
Interest expense not attributable to the Companys Card Member loan portfolio |
$ | 247 | $ | 259 | $ | 263 | $ | 279 | $ | 296 | ||||||||||
Interest income not attributable to the Companys Card Member loan portfolio |
$ | (90 | ) | $ | (89 | ) | $ | (88 | ) | $ | (91 | ) | $ | (87 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted net interest income (T) |
$ | 1,552 | $ | 1,486 | $ | 1,512 | $ | 1,507 | $ | 1,492 | ||||||||||
Average loans (billions) |
$ | 66.4 | $ | 65.2 | $ | 64.5 | $ | 64.4 | $ | 63.0 | ||||||||||
Exclude: |
||||||||||||||||||||
Unamortized deferred card fees, net of direct acquisition costs of Card Member loans, and other (billions) |
$ | (0.2 | ) | $ | (0.2 | ) | $ | (0.2 | ) | $ | (0.2 | ) | $ | (0.2 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted average loans (billions) (U) |
$ | 66.2 | $ | 65.0 | $ | 64.3 | $ | 64.2 | $ | 62.8 | ||||||||||
Net interest income divided by average loans (V) |
8.5 | % | 8.1 | % | 8.4 | % | 8.1 | % | 8.1 | % | ||||||||||
Net interest yield on Card Member loans (W) |
9.3 | % | 9.2 | % | 9.5 | % | 9.3 | % | 9.4 | % |
See Appendix VI for footnote references | ||||
-16- |
U.S. Card Services and International Card Services | (Preliminary | ) | ||
Net Interest Yield on Card Member Loans | ||||
Appendix IV | ||||
(Millions, except percentages and where indicated) |
Quarters Ended | ||||||||||||||||||||
Sep 30, 2014 |
Jun 30, 2014 |
Mar 31, 2014 |
Dec 31, 2013 |
Sep 30, 2013 |
||||||||||||||||
USCS: |
||||||||||||||||||||
Net interest income |
$ | 1,313 | $ | 1,255 | $ | 1,273 | $ | 1,256 | $ | 1,236 | ||||||||||
Exclude: |
||||||||||||||||||||
Interest expense not attributable to the Companys Card Member loan portfolio |
$ | 39 | $ | 40 | $ | 39 | $ | 43 | $ | 45 | ||||||||||
Interest income not attributable to the Companys Card Member loan portfolio |
$ | (3 | ) | $ | (3 | ) | $ | (3 | ) | $ | (2 | ) | $ | (3 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted net interest income (T) |
$ | 1,349 | $ | 1,292 | $ | 1,309 | $ | 1,297 | $ | 1,278 | ||||||||||
Average loans (billions) |
$ | 58.0 | $ | 56.8 | $ | 56.1 | $ | 55.8 | $ | 54.7 | ||||||||||
Exclude: |
||||||||||||||||||||
Unamortized deferred card fees, net of direct acquisition costs of Card Member loans (billions) |
$ | | $ | | $ | 0.1 | $ | | $ | | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted average loans (billions) (U) |
$ | 58.0 | $ | 56.8 | $ | 56.2 | $ | 55.8 | $ | 54.7 | ||||||||||
Net interest income divided by average loans (V) |
9.1 | % | 8.9 | % | 9.2 | % | 8.9 | % | 9.0 | % | ||||||||||
Net interest yield on Card Member loans (W) |
9.2 | % | 9.1 | % | 9.4 | % | 9.2 | % | 9.3 | % | ||||||||||
ICS: |
||||||||||||||||||||
Net interest income |
$ | 188 | $ | 183 | $ | 195 | $ | 200 | $ | 195 | ||||||||||
Exclude: |
||||||||||||||||||||
Interest expense not attributable to the Companys Card Member loan portfolio |
$ | 24 | $ | 21 | $ | 18 | $ | 21 | $ | 23 | ||||||||||
Interest income not attributable to the Companys Card Member loan portfolio |
$ | (10 | ) | $ | (10 | ) | $ | (10 | ) | $ | (11 | ) | $ | (6 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted net interest income (T) |
$ | 202 | $ | 194 | $ | 203 | $ | 210 | $ | 212 | ||||||||||
Average loans (billions) |
$ | 8.3 | $ | 8.3 | $ | 8.3 | $ | 8.5 | $ | 8.3 | ||||||||||
Exclude: |
||||||||||||||||||||
Unamortized deferred card fees, net of direct acquisition costs of Card Member loans, and other (billions) |
$ | (0.2 | ) | $ | (0.2 | ) | $ | (0.2 | ) | $ | (0.2 | ) | $ | (0.2 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted average loans (billions) (U) |
$ | 8.1 | $ | 8.1 | $ | 8.1 | $ | 8.3 | $ | 8.1 | ||||||||||
Net interest income divided by average loans (V) |
9.1 | % | 8.8 | % | 9.5 | % | 9.3 | % | 9.3 | % | ||||||||||
Net interest yield on Card Member loans (W) |
9.9 | % | 9.6 | % | 10.1 | % | 10.0 | % | 10.4 | % |
See Appendix VI for footnote references | ||||
-17- |
(Preliminary)
American Express Company
Revenue and Expense Reconciliation
Appendix V
(Millions) | Quarters Ended | % Change | Nine Months Ended | % Change | ||||||||||||||||||||
Sep 30, 2014 |
Sep 30, 2013 |
Sep 30, 2014 vs. Sep 30, 2013 |
Sep 30, 2014 |
Sep 30, 2013 |
Sep 30, 2014 vs. Sep 30, 2013 |
|||||||||||||||||||
Consolidated: |
||||||||||||||||||||||||
Reported total revenues net of interest expense |
$ | 8,329 | $ | 8,301 | | $ | 25,185 | $ | 24,427 | 3 | ||||||||||||||
Global Business Travel (GBT) revenues net of interest expense |
396 | 396 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Adjusted total revenues net of interest expense |
8,329 | 7,905 | 5 | 25,185 | 24,031 | 5 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
FX and GBT adjusted total revenues net of interest expense (X) |
7,857 | 6 | 23,871 | 6 | ||||||||||||||||||||
Reported total expenses |
5,595 | 5,878 | (5 | ) | 16,957 | 17,166 | (1 | ) | ||||||||||||||||
GBT expenses |
336 | 336 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Adjusted total expenses |
5,595 | 5,542 | 1 | 16,957 | 16,830 | 1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
FX and GBT adjusted total expenses (X) |
5,525 | 1 | 16,763 | 1 | ||||||||||||||||||||
Global Commercial Services: |
||||||||||||||||||||||||
Reported total revenues net of interest expense |
900 | 1,221 | (26 | ) | 3,363 | 3,615 | (7 | ) | ||||||||||||||||
GBT revenues net of interest expense |
396 | 396 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Adjusted total revenues net of interest expense |
900 | 825 | 9 | 3,363 | 3,219 | 4 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
FX and GBT adjusted total revenues net of interest expense (X) |
818 | 10 | 3,205 | 5 | ||||||||||||||||||||
Reported total expenses |
542 | 851 | (36 | ) | 1,774 | 2,565 | (31 | ) | ||||||||||||||||
GBT expenses |
336 | 336 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Adjusted total expenses |
$ | 542 | $ | 515 | 5 | $ | 1,774 | $ | 2,229 | (20 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
FX and GBT adjusted total expenses (X) |
514 | 5 | 2,225 | (20 | ) |
Note: Represents operating performance of Global Business Travel as reported in Q313. Does not include other Global Business Travel-related items, including equity earnings from the joint venture and impacts related to a transition services agreement that will phase out over time.
See Appendix VI for footnote references | ||||
-18- |
Appendix VI |
(Preliminary | ) |
All information in the preceding tables is presented in accordance with U.S. generally accepted accounting principles (GAAP), unless otherwise indicated. Certain reclassifications of prior period amounts have been made to conform to the current period presentation.
(A) | Represents net income, less earnings allocated to participating share awards of $11 million for the quarter ended September 30, 2014, $12 million for the quarter ended June 30, 2014, $12 million for the quarter ended March 31, 2014, $11 million for the quarter ended December 31, 2013, and $12 million for the quarter ended September 30, 2013. |
(B) | Refer to Appendix I for components of return on average equity, return on average common equity and return on average tangible common equity, a non-GAAP measure. |
(C) | Card billed business includes activities (including cash advances) related to proprietary cards, cards issued under network partnership agreements (non-proprietary billed business), and certain insurance fees charged on proprietary cards. In-store spend activity within retail co-brand portfolios in Global Network Services, from which the Company earns no revenue, is not included in non-proprietary billed business. Card billed business is reflected in the United States or outside the United States based on where the issuer is located. |
(D) | Total cards-in-force represents the number of cards that are issued and outstanding. Proprietary basic consumer cards-in-force includes basic cards issued to the primary account owner and does not include additional supplemental cards issued on that account. Proprietary basic small business and corporate cards-in-force include basic and supplemental cards issued to employee Card Members. Non-proprietary cards-in-force includes all cards that are issued and outstanding under network partnership agreements, except for retail co-brand Card Member accounts that have no out-of-store spend activity during the prior 12 month period. |
(E) | This calculation is designed to reflect pricing at merchants accepting general purpose American Express cards. It represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires, prior to payments to third parties unrelated to merchant acceptance. |
(F) | Average basic Card Member spending and average fee per card are computed from proprietary card activities only. Average fee per card is computed based on net card fees, including the amortization of deferred direct acquisition costs divided by average worldwide proprietary cards-in-force. The adjusted average fee per card, which is a non-GAAP measure, is computed in the same manner, but excludes amortization of deferred direct acquisition costs. The amount of amortization excluded for these periods was $77 million for the quarter ended September 30, 2014, $77 million for the quarter ended June 30, 2014, $73 million for the quarter ended March 31, 2014, $64 million for the quarter ended December 31, 2013, and $67 million for the quarter ended September 30, 2013. The Company presents adjusted average fee per card because the Company believes this metric presents a useful indicator of card fee pricing across a range of its proprietary card products. |
(G) | Provisions for principal (resulting from authorized transactions) and fee reserve components. |
(H) | Consists of principal (resulting from authorized transactions), interest and/or fees, less recoveries. |
(I) | Beginning in first quarter 2014, reserves related for card-related fraud losses are reflected in Other liabilities. All periods include foreign currency translation adjustments and other items. |
(J) | The Company presents a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, because the Companys practice is to include uncollectible interest and/or fees as part of its total provision for losses, a net write-off rate including principal, interest and/or fees is also presented. |
(K) | See Appendix III for calculations of net interest yield on Card Member loans, a non-GAAP measure, and net interest income divided by average loans, a GAAP measure, and the Companys rationale for presenting net interest yield on Card Member loans. |
(L) | Historically, net loss ratio as a % of charge volume and 90 days past billings as a % of receivables were presented for ICS and GCS. As a result of system enhancements, beginning in first quarter 2014, 30 days past due as a % of total, net write-off rate (principal only) and net write-off rate (principal and fees) will be presented for ICS. |
(M) | Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements. |
(N) | Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital, a non-GAAP measure. |
(O) | See Appendix IV for calculations of net interest yield on Card Member loans, a non-GAAP measure, and net interest income divided by average loans, a GAAP measure, and the Companys rationale for presenting net interest yield on Card Member loans. |
(P) | Global Card billed business includes activities (including cash advances) related to proprietary cards, cards issued under network partnership agreements (non-proprietary billed business), and certain insurance fees charged on proprietary cards. In-store spend activity within retail co-brand portfolios in Global Network Services, from which the Company earns no revenue, is not included in non-proprietary billed business. |
(Q) | Return on average equity and return on average common equity are calculated by dividing one year period net income/net income attributable to common shareholders by one year average total shareholders equity/average common shareholders equity, respectively. |
(R) | Return on average tangible common equity, a non-GAAP measure, is computed in the same manner as return on average common equity except the computation of average tangible common shareholders equity, a non-GAAP measure, excludes from average total shareholders equity, average goodwill and other intangibles. The Company believes that return on average tangible common equity is a useful measure of the profitability of its business. |
(S) | Return on average segment capital is calculated by dividing one year period segment income by one year average segment capital. Return on average tangible segment capital, a non-GAAP measure, is computed in the same manner as return on average segment capital except the computation of average tangible segment capital, a non-GAAP measure, excludes average goodwill and other intangibles. The Company believes that return on average tangible segment capital is a useful measure of the profitability of its business. |
(T) | Adjusted net interest income, a non-GAAP measure, represents net interest income allocated to the Companys Card Member loan portfolio excluding the impact of interest expense and interest income not attributable to the Companys Card Member loan portfolio. The Company believes adjusted net interest income is useful to investors because it is a component of net interest yield on Card Member loans. |
(U) | Adjusted average loans, a non-GAAP measure, represents average Card Member loans excluding the impact of deferred card fees, net of deferred direct acquisition costs of Card Member loans, and other. The Company believes adjusted average loans is useful to investors because it is a component of net interest yield on Card Member loans. |
(V) | This calculation includes elements of total interest income and total interest expense that are not attributable to the Card Member loan portfolio, and thus is not representative of net interest yield on Card Member loans. The calculation includes interest income and interest expense attributable to investment securities and other interest-bearing deposits as well as to Card Member loans, and interest expense attributable to other activities, including Card Member receivables. |
(W) | Net interest yield on Card Member loans, a non-GAAP measure, is computed by dividing adjusted net interest income by adjusted average loans, computed on an annualized basis. The calculation of net interest yield on Card Member loans includes interest that is deemed uncollectible. For all presentations of net interest yield on Card Member loans, reserves and net write-offs related to uncollectible interest are recorded through provisions for losses - Card Member loans; therefore, such reserves and net write-offs are not included in the net interest yield calculation. The Company believes net interest yield on Card Member loans is useful to investors because it provides a measure of profitability of the Companys Card Member loan portfolio. |
(X) | Revenue net of interest expense and total expenses on an FX adjusted basis are a non-GAAP measures. FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars (i.e., assumes Q314 foreign exchange rates apply to Q313 results). The Companys calculations of non-GAAP measures may differ from the calculations of similarly titled measures of other companies. |
-19-
EXHIBIT 99.2
2014
Third Quarter
Earnings Supplement
The enclosed summary should be read in conjunction with the text and statistical tables included in American Express Companys (the Company or AXP) Third Quarter 2014 Earnings Release.
This presentation contains certain forward-looking statements that are subject to risks and uncertainties and speak only as of the date on which they are made. Important factors that could cause actual results to differ materially from these forward-looking statements, including the Companys financial and other goals, are set forth on pages 13-14 of this Supplement, in the Companys 2013 Annual Report to Shareholders, in its 2013 Annual Report on Form 10-K, in its Quarterly Report on Form 10-Q for the quarters ended March 31, 2014 and June 30, 2104 and in other reports on file with the Securities and Exchange Commission. In addition, certain calculations included within this supplement constitute non-GAAP financial measures and may differ from the calculations of similarly titled measures by other companies.
|
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2014 OVERVIEW
FINANCIAL RESULTS
| The Company reported $1.5B of net income in Q314, compared to $1.4B in Q313. This resulted in diluted EPS attributable to common shareholders of $1.40 per share, an increase of 12% from $1.25 a year ago. |
| Total revenues net of interest expense were flat compared to Q313. The prior-year period included the revenue from the Companys business travel operations, which were deconsolidated as a result of the previously announced business travel joint venture that closed June 30, 2014. Excluding these revenues from Q313, adjusted revenue growth was 5% in Q314,1 and would round to 6% on an FX adjusted basis.2 |
| Q314 return on average equity (ROE) was 28.8%. |
BUSINESS METRICS
| Worldwide billed business of $258B increased 9% on a reported basis and 10% on an FX adjusted basis, compared to Q313. |
| Worldwide Card Member loan balances of $66.1B increased 5% from $63.0B a year ago, reflecting higher Card Member spending levels, partially offset by an increase in paydown rates. |
| Worldwide lending write-off rates improved versus the prior year and last quarter to reach new all-time lows. The Companys third quarter worldwide net lending write-off rate3 was 1.5%, as compared to 1.6% in Q214 and 1.7% in Q313. |
Percentage | ||||||||||||||||
Quarters Ended | Percentage | Inc/(Dec) | ||||||||||||||
September 30, | Inc/(Dec) | FX Adjusted2 | ||||||||||||||
2014 | 2013 | |||||||||||||||
Card billed business4 (billions): |
||||||||||||||||
United States |
$ | 173.0 | $ | 158.2 | 9 | % | ||||||||||
Outside the United States |
85.1 | 78.0 | 9 | 11 | % | |||||||||||
|
|
|
|
|||||||||||||
Total |
$ | 258.1 | $ | 236.2 | 9 | 10 | ||||||||||
|
|
|
|
|||||||||||||
Total cards-in-force (millions): |
||||||||||||||||
United States |
54.5 | 52.8 | 3 | |||||||||||||
Outside the United States |
56.6 | 52.6 | 8 | |||||||||||||
|
|
|
|
|||||||||||||
Total |
111.1 | 105.4 | 5 | |||||||||||||
|
|
|
|
|||||||||||||
Basic cards-in-force (millions): |
||||||||||||||||
United States |
42.2 | 40.9 | 3 | |||||||||||||
Outside the United States |
46.3 | 42.6 | 9 | |||||||||||||
|
|
|
|
|||||||||||||
Total |
88.5 | 83.5 | 6 | |||||||||||||
|
|
|
|
|||||||||||||
Average basic Card Member spending5 (dollars): |
||||||||||||||||
United States |
$ | 4,486 | $ | 4,255 | 5 | |||||||||||
Outside the United States |
$ | 3,523 | $ | 3,467 | 2 | 4 | ||||||||||
Total |
$ | 4,223 | $ | 4,037 | 5 | 5 |
1 | Adjusted revenue growth is a non-GAAP measure and excludes revenue from the Companys business travel operations in Q313 from total revenues net of interest expense. Adjusted revenue growth does not exclude other business travel-related items, including transaction-related costs, the equity earnings from the joint venture in Q314, and impacts related to a transition services agreement that will phase out over time. Management believes adjusted revenue growth is useful in evaluating the ongoing operating performance of the Company. See Annex 1 for a reconciliation to total revenues net of interest expense on a GAAP basis. |
2 | As reported in this Earnings Supplement, FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars (e.g., assumes the foreign exchange rates used to determine results for the three months ended September 30, 2014 apply to the period(s) against which such results are being compared). The Company believes the presentation of information on an FX adjusted basis is helpful to investors by making it easier to compare the Companys performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates. |
3 | Rate reflects principal losses only. Net write-off rates including interest and/or fees are included in the Companys Third Quarter 2014 Earnings Release, selected statistical tables. |
4 | For additional information about discount rate calculations and billed business, please refer to the Companys Third Quarter 2014 Earnings Release, selected statistical tables. |
5 | Proprietary card activity only. |
-1-
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2014 OVERVIEW
Additional Billed Business Statistics:
(Growth vs. Q313)
Percentage | ||||||||
Percentage | Inc/(Dec) | |||||||
Inc/(Dec) | FX Adjusted6 | |||||||
Worldwide7 |
||||||||
Total Billed Business |
9 | % | 10 | % | ||||
Proprietary billed business |
8 | 9 | ||||||
GNS billed business8 |
16 | 17 | ||||||
Airline-related volume (9% of worldwide billed business) |
7 | 7 | ||||||
U.S.7 |
||||||||
Billed Business |
9 | |||||||
Proprietary consumer card billed business9 |
8 | |||||||
Proprietary small business billed business9 |
12 | |||||||
Proprietary corporate services billed business10 |
10 | |||||||
T&E-related volume (26% of U.S. billed business) |
7 | |||||||
Non-T&E-related volume (74% of U.S. billed business) |
10 | |||||||
Airline-related volume (8% of U.S. billed business) |
5 | |||||||
Outside the U.S.7 |
||||||||
Billed Business |
9 | 11 | ||||||
Japan, Asia Pacific & Australia (JAPA) billed business |
16 | 16 | ||||||
Latin America & Canada (LACC) billed business |
1 | 8 | ||||||
Europe, Middle East, & Africa (EMEA) billed business |
7 | 7 | ||||||
Proprietary consumer and small business billed business11 |
4 | 6 | ||||||
JAPA billed business |
4 | 6 | ||||||
LACC billed business |
(1 | ) | 5 | |||||
EMEA billed business |
9 | 8 | ||||||
Proprietary corporate services billed business10 |
3 | 5 |
6 | See Note 2, page 1. |
7 | Captions not designated as proprietary or GNS include both proprietary and Global Network Services (GNS) data. |
8 | Included in Global Network and Merchant Services (GNMS). |
9 | Included in U.S. Card Services (USCS). |
10 | Included in Global Commercial Services (GCS). |
11 | Included in International Card Services (ICS). |
-2-
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2014 OVERVIEW
Consolidated Statement of Income
(Preliminary) | Quarters Ended | |||||||||||
(Millions, except percentages and per share amounts) | September 30, | Percentage | ||||||||||
2014 | 2013 | Inc/(Dec) | ||||||||||
Revenues |
||||||||||||
Non-interest revenues |
||||||||||||
Discount revenue |
$ | 4,915 | $ | 4,659 | 5 | % | ||||||
Net card fees |
680 | 658 | 3 | |||||||||
Travel commissions and fees |
104 | 490 | (79 | ) | ||||||||
Other commissions and fees |
642 | 610 | 5 | |||||||||
Other |
593 | 601 | (1 | ) | ||||||||
|
|
|
|
|||||||||
Total non-interest revenues |
6,934 | 7,018 | (1 | ) | ||||||||
Net interest income |
1,395 | 1,283 | 9 | |||||||||
|
|
|
|
|||||||||
Total revenues net of interest expense |
8,329 | 8,301 | 0 | |||||||||
|
|
|
|
|||||||||
Provisions for losses |
||||||||||||
Charge card |
196 | 159 | 23 | |||||||||
Card Member loans |
265 | 248 | 7 | |||||||||
Other |
27 | 12 | # | |||||||||
|
|
|
|
|||||||||
Total provisions for losses |
488 | 419 | 16 | |||||||||
|
|
|
|
|||||||||
Total revenues net of interest expense after provisions for losses |
7,841 | 7,882 | (1 | ) | ||||||||
|
|
|
|
|||||||||
Expenses |
||||||||||||
Marketing and promotion |
809 | 827 | (2 | ) | ||||||||
Card Member rewards |
1,695 | 1,619 | 5 | |||||||||
Card Member services and other |
205 | 197 | 4 | |||||||||
Salaries and employee benefits |
1,290 | 1,544 | (16 | ) | ||||||||
Professional services |
731 | 793 | (8 | ) | ||||||||
Occupancy and equipment |
432 | 462 | (6 | ) | ||||||||
Communications |
91 | 94 | (3 | ) | ||||||||
Other, net |
342 | 342 | 0 | |||||||||
|
|
|
|
|||||||||
Total |
5,595 | 5,878 | (5 | ) | ||||||||
|
|
|
|
|||||||||
Pretax income |
2,246 | 2,004 | 12 | |||||||||
Income tax provision |
769 | 638 | 21 | |||||||||
|
|
|
|
|||||||||
Net Income |
$ | 1,477 | $ | 1,366 | 8 | |||||||
|
|
|
|
|||||||||
Net income attributable to common shareholders12 |
$ | 1,466 | $ | 1,354 | 8 | |||||||
|
|
|
|
|||||||||
Earnings Per Common Share-Basic |
||||||||||||
Net Income attributable to common shareholders |
$ | 1.41 | $ | 1.26 | 12 | |||||||
|
|
|
|
|||||||||
Earnings Per Common Share-Diluted |
||||||||||||
Net Income attributable to common shareholders |
$ | 1.40 | $ | 1.25 | 12 | |||||||
|
|
|
|
|||||||||
Average Shares Outstanding |
||||||||||||
Basic |
1,041 | 1,074 | (3 | ) | ||||||||
Diluted |
1,047 | 1,081 | (3 | ) |
# denotes a variance of more than 100%.
12 | Represents net income less earnings allocated to participating share awards of $11MM and $12MM for the three months ended September 30, 2014 and 2013, respectively. |
-3-
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2014 OVERVIEW
| Discount Revenue: Increased 5%, reflecting 9% growth in billed business volumes, partially offset by a decrease in the average discount rate, faster growth in GNS billings than in overall Company billings, as well as increased cash rebate rewards and corporate client incentives in the current period. |
| The average discount rate13 of 2.49% in Q314 decreased by 3 bps compared to 2.52% in Q313. In the current quarter, the discount rate was impacted in part by changes in the mix of Card Member spending by industry, with a modest impact from the OptBlue program. As indicated in prior quarters, changes in the mix of spending by location and industry, volume-related pricing discounts, strategic investments, certain pricing initiatives, competition in the market and other factors will likely result in continued erosion of the average discount rate over time. |
| Net Card Fees: Increased 3%, reflecting growth in basic cards-in-force in USCS and ICS. |
| Travel Commissions and Fees: Decreased 79% to $104MM, as the revenues from business travel are no longer consolidated in the income statement. Please see Other Items of Note for further detail. |
| Other Commissions and Fees: Increased 5% versus Q313, primarily benefitting from higher Loyalty Partner revenue. |
| Other Revenues: Decreased 1%, driven primarily by lost revenue from the sale of the Publishing business on October 1, 2013. This was partially offset by revenues received for transitional services provided to the business travel joint venture, and a $9MM net increase in gain related to the sales of investment securities in Concur and ICBC (combined $45MM in Q314 vs. $36MM from ICBC in Q313). |
| Net Interest Income: Increased 9% versus Q313, reflecting a 5% increase in average Card Member loans and lower funding costs compared to Q313. Net interest income divided by average loans was 8.5% and worldwide net interest yield, a non-GAAP measure, was 9.3% versus 9.4% in Q313.14 |
| Charge Card Provision for Losses: Increased 23% due to higher write-offs and a larger reserve build versus the prior year. |
| Worldwide Charge Card: |
Q314 | Q214 | Q313 | ||||||||||
USCS Net write-off rate15 |
1.5 | % | 1.8 | % | 1.4 | % | ||||||
ICS Net write-off rate16 |
1.9 | % | 1.9 | % | | |||||||
GCS Net loss ratio as a % of charge volume |
0.1 | % | 0.1 | % | 0.1 | % | ||||||
USCS 30 days past due as a % of total |
1.6 | % | 1.5 | % | 1.7 | % | ||||||
ICS 30 days past due as a % of total16 |
1.4 | % | 1.3 | % | | |||||||
GCS 90 days past billings as a % of total |
0.8 | % | 0.7 | % | 0.8 | % | ||||||
Worldwide Receivables (billions) |
$ | 45.1 | $ | 45.3 | $ | 43.5 | ||||||
Reserves (millions) |
$ | 432 | $ | 413 | $ | 396 | ||||||
% of receivables |
1.0 | % | 0.9 | % | 0.9 | % |
13 | See Note 4, page 1. |
14 | See Annex 3 for the calculation of net interest yield on Card Member loans, a non-GAAP measure, and net interest income divided by average loans, a GAAP measure. The Company believes net interest yield on Card Member loans is useful to investors because it provides a measure of profitability of the Companys Card Member loan portfolio. |
15 | See Note 3, page 1. |
16 | Beginning in the first quarter of 2014, as a result of system enhancements, 30 days past due as a % of total, and Net write-off rate (principal only) have been presented for ICS. For historical Net loss ratio as a % of charge volume for ICS, please refer to the Companys Third Quarter 2014 Earnings Release, Selected Statistical tables. |
-4-
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2014 OVERVIEW
| Card Member Loan Provision for Losses: Increased 7%, in part due to a smaller reserve release versus the prior year. This impact was partially offset by lower net write-offs in Q314 due to improved credit performance. |
| Worldwide Loans: |
Q314 | Q214 | Q313 | ||||||||||
Net write-off rate17 |
1.5 | % | 1.6 | % | 1.7 | % | ||||||
30 days past due loans as a % of total |
1.1 | % | 1.0 | % | 1.1 | % | ||||||
Total Loans (billions) |
$ | 66.1 | $ | 66.3 | $ | 63.0 | ||||||
Reserves (millions) |
$ | 1,146 | $ | 1,170 | $ | 1,281 | ||||||
% of total loans |
1.7 | % | 1.8 | % | 2.0 | % | ||||||
% of past due |
165 | % | 171 | % | 179 | % |
| Other Provision for Losses: Was $27MM, compared to $12MM in Q313. |
| Marketing and Promotion Expense: Decreased 2% versus a year ago. Marketing and promotion dropped significantly from the elevated levels seen in Q214, when the Company reinvested a significant portion of the gain from the business travel joint venture transaction in growth initiatives across all segments. |
| Card Member Rewards Expense: Increased 5%, driven by higher spend volumes within Membership Rewards and Co-brand products, partially offset by a true-up of certain rewards-related reserves. |
| The Companys Membership Rewards ultimate redemption rate for program participants remained 95% in Q314, in line with Q214. |
| Card Member Services and Other Expense: Increased $8MM from Q313 to $205MM. |
| Salaries and Employee Benefits Expense: Decreased 16%, predominantly because the expenses from business travel are no longer consolidated in the income statement. |
| Professional Services Expense: Decreased 8%, driven in part by lower technology expenses in the current quarter, including in the Enterprise Growth business. |
| Occupancy and Equipment Expense: Decreased 6%, predominantly because the expenses from business travel are no longer consolidated in the income statement. |
| Communications Expense: Was $91MM, compared to $94MM in Q313. |
| Other, Net Expense: Remained flat compared to Q313. |
| Pretax Margin: Was 27.0% of total revenues net of interest expense in Q314 compared with 24.1% in Q313. |
| Effective Tax Rate: Was 34.2% in Q314 compared with 31.8% in Q313. The effective tax rate for 2013 reflected the reversal of a valuation allowance related to deferred tax assets associated with certain of the Companys non-U.S. business travel operations, as well as the resolution of certain prior years items. |
17 | See Note 3, page 1. |
-5-
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2014 OVERVIEW
CAPITAL
| Capital Distribution to Shareholders: During Q314, approximately 89% of capital generated was distributed to shareholders through the Companys quarterly common share dividend and share repurchases. |
The Company repurchased 13MM common shares at an average price of $88.49 in Q314 versus 13MM common shares at an average price of $74.73 in Q313.
Shares Outstanding:
Millions of Shares | ||||||||||||
Q314 | Q214 | Q313 | ||||||||||
Beginning of period |
1,046 | 1,059 | 1,084 | |||||||||
Repurchase of common shares |
(13 | ) | (13 | ) | (13 | ) | ||||||
Employee benefit plans, compensation and other |
2 | | | |||||||||
|
|
|
|
|
|
|||||||
End of period |
1,035 | 1,046 | 1,071 | |||||||||
|
|
|
|
|
|
Capital Ratios: As of September 30, 2014, the Companys key consolidated capital ratios,18 as calculated under the new U.S. regulatory capital standards, known as Basel III, inclusive of transition provisions, were as follows:
($ in billions) | September 30, 2014 | |||
Risk-Based Capital |
||||
Tier 1 |
13.6 | % | ||
Total |
15.1 | % | ||
Tier 1 Leverage |
11.6 | % | ||
Common Equity Tier 1/Risk Weighted Assets (RWA) |
13.6 | % | ||
Total Shareholders Equity |
$ | 20.2 | ||
Tangible Common Equity (TCE)19/RWA |
12.8 | % | ||
Tier 1 Capital |
$ | 17.6 | ||
Common Equity Tier 1 |
$ | 17.6 | ||
Tier 2 Capital |
$ | 1.9 | ||
Total Average Assets20 |
$ | 151.6 | ||
RWA |
$ | 128.9 | ||
TCE |
$ | 16.5 |
The transition provisions for 2014 under Basel III cause the Companys reported capital ratios to be higher than they would have been under the prior regulatory standards, known as Basel I. Specifically, the Common Equity Tier 1 and Tier 1 capital ratios would have been approximately 35 bps lower under Basel I (approximately 13.3%21). The largest contributor to the difference is the way intangible assets are being treated and ultimately transitioned in over a 5-year period under Basel III.
Had the Basel III rules been fully phased in during Q314, the Company estimates that the reported Common Equity Tier 1 and Tier 1 capital ratios would be approximately 70 bps lower than the reported transitional Basel III ratios and approximately 40 bps lower versus Basel I. The Supplementary Leverage Ratio would have been approximately 9.3%.21 These ratios are calculated using the standardized approach. The Company is currently taking steps toward implementing the Basel III advanced approaches in the United States.
18 | These ratios represent preliminary estimates as of the date of this Earnings Supplement and may be revised in the Companys September 30, 2014 Form 10-Q. |
19 | Tangible common equity, a non-GAAP measure, excludes goodwill and other intangibles of $3.8B from total shareholders equity of $20.2B. The Company believes presenting the ratio of tangible common equity to risk-weighted assets is a useful measure of evaluating the strength of the Companys capital position. |
20 | Presented for the purpose of calculating the Tier 1 Leverage Ratio. |
21 | The Common Equity Tier 1 and Tier 1 capital ratios under Basel I and Fully Phased-in Basel III, and the Supplementary Leverage Ratio are non-GAAP measures. The Company believes the presentation of the capital ratios is helpful to investors by showing the impact of Basel III. The impact of the Basel III rule will change over time based upon changes in the size and composition of the Companys balance sheet; and the impact for the third quarter of 2014 is not necessarily indicative of the impact in future periods. Refer to Annex 2 for a reconciliation of the capital ratios. |
-6-
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2014 OVERVIEW
FUNDING AND LIQUIDITY
| Funding Activities: During Q314, the Company primarily funded its business through deposit-taking and the issuance of unsecured debt. |
| Deposits: The Company held the following deposits: |
($ in billions) | Sept. 30, 2014 | June 30, 2014 | Change | |||||||||
U.S. Direct Deposits22 |
$ | 26.6 | $ | 26.5 | $ | 0.1 | ||||||
U.S. 3rd Party CDs |
6.4 | 5.9 | 0.5 | |||||||||
U.S. 3rd Party Sweep Accounts |
8.9 | 8.9 | | |||||||||
Other Deposits |
0.1 | 0.1 | | |||||||||
Card Member Credit Balances |
0.7 | 0.7 | | |||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 42.7 | $ | 42.1 | $ | 0.6 | ||||||
|
|
|
|
|
|
The total portfolio of U.S. retail Certificates of Deposit (CDs) issued through the direct deposit and third-party programs had a weighted average remaining maturity of 25.9 months and a weighted average rate at issuance of 1.65%.
| Unsecured Debt: On August 15, 2014, American Express Credit Corporation (Credco) issued $1.9B of dual-tranche senior unsecured notes consisting of (i) $1.5B of fixed-rate senior notes with a maturity of five years and a coupon of 2.250% and (ii) $400MM of floating-rate senior notes with a maturity of five years at a rate of 3-month LIBOR plus 49 bps. On September 23, 2014, Credco issued $1.0B of dual-tranche senior unsecured notes consisting of (i) $700MM of fixed-rate senior notes with a maturity of three years and a coupon of 1.550% and (ii) $300MM of floating-rate senior notes with a maturity of three years at a rate of 3-month LIBOR plus 30 bps. |
| Asset-Backed Securitization: On July 1, 2014, the Company issued $1.0B of Class A asset-backed securities from the American Express Credit Account Master Trust (Lending Trust) with a maturity of three years and a coupon of 1.260%. On September 22, 2014, the Company issued $1.5B of Class A asset-backed securities from the Lending Trust with a maturity of three years and a coupon of 1.490%. |
| As of September 30, 2014, the Company held $15.6B of excess cash23 and $0.1B of securities held as collateral24 versus $13.7B of long-term debt and CDs25 maturing over the next 12 months. |
22 | Direct Deposits primarily includes the Personal Savings® direct deposit program, which consisted of $26.2B from high-yield savings accounts and $0.4B from retail CDs as of September 30, 2014. |
23 | Includes $21.3B classified as Cash and Cash Equivalents less $5.7B of cash available to fund day-to-day operations. The $15.6B represents cash residing in the United States. |
24 | Represents off balance sheet securities held as collateral from a counterparty that had not been sold or re-pledged. |
25 | Reflects the face amount of unsecured term debt; the long-term debt balance on the Companys consolidated balance sheet includes capitalized leases of $0.1B and certain adjustments which are not included in this balance. |
-7-
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2014 OVERVIEW
OTHER ITEMS OF NOTE
| Corporate & Other: Net expense reported in Corporate & Other was $185MM in Q314 compared with $252MM in Q214 and $210MM in Q313. |
| The lower net expense compared to Q214 was primarily driven by the contribution to the American Express Foundation in the prior quarter and lower expenses in the Enterprise Growth business in the current quarter. |
| The lower net expense compared to Q313 was primarily driven by lower interest expense in the current quarter. |
| Business Travel Joint Venture Transaction: On June 30, 2014, the Company completed its previously announced plans to establish a joint venture for its business travel operations. As a result of the transaction, business travel was deconsolidated, which impacts the Companys year-over-year growth rates in Travel Commissions and Fees, where a majority of business travel revenue was recorded, and in Operating Expenses,26 where a majority of business travel expense was recorded. The impact to revenues, expenses and pre-tax income also affects year-over-year growth rates in the GCS segment. The following schedule contains business travel revenues, expenses and pre-tax income for 2013, as well as the first two quarters of 2014. |
$MM | Q214 | Q114 | FY 2013 | Q413 | Q313 | |||||||||||||||||
Total revenues, net of interest |
402 | 339 | 1,548 | 405 | 396 | |||||||||||||||||
Provision for losses |
(4 | ) | (2 | ) | (5 | ) | (2 | ) | (2 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total revenues, net of interest and provision |
398 | 337 | 1,543 | 403 | 394 | |||||||||||||||||
Total operating expenses |
(335 | ) | (335 | ) | (1,412 | ) | (361 | ) | (335 | ) | ||||||||||||
Other expenses |
(2 | ) | (1 | ) | (4 | ) | (1 | ) | (1 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Pre-tax income |
61 | 1 | 127 | 41 | 58 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| Potential SAP Acquisition of Concur Technologies: In 2008, American Express entered into an operating agreement and made a strategic investment in Concur Technologies, resulting in a 13.5% ownership stake. During September, SAP announced that it would be acquiring Concur in a deal that valued Concur at $129 per share. If this proposed transaction is completed, it would result in a sizable gain. During the third quarter, the Company sold a small percentage of its interest in Concur, which was reflected in Other Revenue within the GCS segment. |
Currently, SAP and Concurs public expectation is for the transaction to close during the fourth quarter of 2014, though it could be delayed until the first quarter of 2015. Our operating agreements with Concur will continue after the transaction is complete, and the Company does not anticipate any immediate changes to this strategic relationship.
26 | Operating Expenses represent salaries and employee benefits, professional services, occupancy and equipment, communications and other, net. |
-8-
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2014 OVERVIEW
EXPANDED PRODUCTS AND SERVICES
During the quarter, American Express continued to invest in growth opportunities through expanded products and services.
In our proprietary issuing and merchant businesses, the Company:
| Partnered with Apple to allow Card Members to make purchases through the Apple Pay digital wallet. Card Members will be able to use Apple Pay to transact in-store at merchants who accept contactless payments, or through mobile apps. Apples public expectation is for Apple Pay to launch in mid-October with acceptance at over 220,000 locations across a variety of major merchants. |
| Added Wells Fargo, Elavon and TSYS to the OptBlue merchant acquiring program to further expand American Express coverage amongst small merchants in the U.S. These signings bring the number of participating acquirers in OptBlue to fourteen, eight of which are among the top ten largest acquirers in the U.S. |
| Continued to sign new merchants around the world to the American Express network. In the U.S., Dollar General, the nations largest small-box discount retailer with more than 11,500 stores, and MetroPC, a wholesale distributor of computer equipment, now accept the American Express Card. In the UK, we signed Co-Op Pharmacy, the third largest pharmacy chain in the U.K., and Wilko, a family-owned high street, variety retailer. In Mexico, we signed CEMEX, a global building materials company. In addition, H&R Block in Australia now accepts American Express. |
| Expanded CenturionSM Lounge access to New York LaGuardia Airport. The Centurion Lounge at LGA is the third in a network of lounges across the U.S., with locations currently open in McCarran International Airport (LAS) in Las Vegas and Dallas/Fort Worth International Airport (DFW). The Centurion Lounge in San Francisco Airport (SFO) and Miami International Airport (MIA) are also under construction. |
| Launched the SimplyCash card in Canada, which offers a valuable cash-back rewards product with no annual fee. In conjunction, the Company launched SimplyCash Preferred, which offers a premium level of cash-back rewards for an annual fee. |
| Partnered with McDonalds to allow eligible U.S. Card Members enrolled in the Membership Rewards® program to use points in real-time for food and beverages in McDonalds restaurants nationwide. As part of the launch, each time a Card Member uses points for their McDonalds order, American Express will make a $1 donation to the Ronald McDonald House Charities (RHMC)®. |
In our Global Network Services (GNS) business, the Company:
| Announced a new card-issuing partnership with Santander in Mexico, and launched the Santander American Express® Credit Card with a new rewards program called Santander Rewards (Recompensas Santander). |
| Signed an agreement with Banesco in which Banesco becomes a merchant acquirer for American Express and continue to issue American Express-branded cards in Venezuela. |
| Supported GNS partners in launching a wide range of new products, including: the El Al Flycard Premium American Express® Card with Poalim Express in Israel, the HanaSK Global Pay American Express® Card with Hana Bank in Korea, the Nations Trust American Express® Travel Card with Nations Trust Bank in Sri Lanka and the SPDB Platinum Credit Card with Shanghai Pudong Bank in China. |
In our Enterprise Growth Group, the Company:
| Expanded the retail availability of American Express Serve to over 32,000 retail locations throughout the United States with the addition of OfficeMax and Hy-Vee retail locations in July 2014. |
| In partnership with China Mobile launched a partnership featuring the Global Travel Card (GTC), allowing individuals and corporate users of China Mobiles mobile wallet to participate in cross-border and international online commerce transactions. |
| In partnership with Walmart, Bluebird by American Express launched an integrated promotion with the Walmart Savings Catcher program to double customer savings when a Savings Catcher refund is redeemed onto a Bluebird account. |
| Partnered with Intuit to allow eligible clients of professional tax preparers to receive IRS tax refunds on the American Express Serve Card for the 2015 tax filing season. |
-9-
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2014 OVERVIEW
ANNEX 1
Revenue Net of Interest Adjusted for Global Business Travel
$MM |
Q314 | Q313 | Q314 YTD |
Q313 YTD |
||||||||||||
GAAP Revenue Net of Interest |
$ | 8,329 | $ | 8,301 | $ | 25,185 | $ | 24,427 | ||||||||
Global Business Travel Revenue Net of Interest |
(396 | ) | (396 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted Revenue Net of Interest |
8,329 | 7,905 | 25,185 | 24,031 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
FX27- and GBT-Adjusted Revenue Net of Interest |
7,857 | 23,871 | ||||||||||||||
YoY% Inc/(Dec) in GAAP Revenue Net of Interest |
0 | % | 3 | % | ||||||||||||
YoY% Inc/(Dec) in Adjusted Revenue Net of Interest |
5 | % | 5 | % | ||||||||||||
YoY% Inc/(Dec) in FX27- and GBT-Adjusted Revenue Net of Interest |
6 | % | 6 | % |
Note: This schedule adjusts for operating performance of Global Business Travel as reported in Q313. It does not include other Global Business Travel-related items, including equity earnings from the joint venture and impacts related to a transition services agreement that will phase out over time.
27 | See Note 2, page 1. |
-10-
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2014 OVERVIEW
ANNEX 2
The following table presents a comparison of the Companys Tier 1 and Tier 1 common risk-based capital under Basel I rules, Tier 1 and common equity Tier 1 risk-based capital under Transitional Basel III rules, and estimated Tier 1 and common equity Tier 1 risk-based capital under Fully Phased-in Basel III rules, for purposes of calculating the estimated Tier 1 and common equity Tier 1 capital ratios and the supplementary leverage ratio under Fully Phased-in Basel III rules.
(Billions, except ratios) |
Tier 1/ Tier 1 Common/ Common Equity Tier 1 |
|||
Risk-Based Capital under Basel I |
$ | 17.0 | ||
Adjustments related to: |
||||
AOCI |
(0.1 | ) | ||
Transition provisions for intangible assets |
0.5 | |||
Deferred tax assets |
0.1 | |||
Other |
0.0 | |||
|
|
|||
Risk-Based Capital under Transitional Basel III |
17.6 | |||
|
|
|||
Adjustments related to: |
||||
AOCI |
(0.2 | ) | ||
Transition provisions for intangible assets |
(0.6 | ) | ||
Deferred tax assets |
(0.1 | ) | ||
Other |
0.1 | |||
|
|
|||
Estimated Risk-Based Capital under Fully Phased-In Basel III(a) |
16.8 | |||
|
|
|||
Risk-Weighted Assets under Basel I / Transitional Basel III |
128.9 | |||
Estimated Risk-Weighted Assets under Fully Phased-In Basel III(a)(b) |
130.1 | |||
Tier 1 Common ratio under Basel I Rule |
13.2 | % | ||
Common Equity Tier 1 ratio under Transitional Basel III Rule |
13.6 | % | ||
Estimated Common Equity Tier 1 ratio under Fully Phased-In Basel III Rule(a)(b)(c) |
12.9 | % | ||
Tier 1 Risk-based Capital Ratio under Basel I Rule |
13.3 | % | ||
Tier 1 Risk-based Capital Ratio under Basel III Transitional Rule |
13.6 | % | ||
Estimated Tier 1 Risk-based Capital Ratio under Fully Phased-In Basel III Rule(a)(b)(d) |
12.9 | % | ||
Total Assets |
153.9 | |||
Estimated Total Assets for Supplementary Leverage Capital Purposes(a)(e) |
179.9 | |||
Estimated Supplementary Leverage Ratio under Fully Phased-In Basel III Rule(a)(f) |
9.3 | % |
(a) | Estimated common equity Tier 1 capital, Tier 1 capital, risk-weighted assets and total assets for supplementary leverage capital purposes under the fully phased-in Basel III Rule reflect the Companys current interpretation of the fully phased-in Basel III rules using the standardized approach. The estimated fully phased-in Basel III amounts could change in the future if the Companys business changes. |
(b) | Differences in the calculation of risk-weighted assets between Basel I/Basel III Transitional and fully phased-in Basel III include adjustments relating to the impact of the incremental risk weighting applied to deferred tax assets and significant investments in unconsolidated financial institutions, as well as exposures to past due accounts, equities and sovereigns. |
(c) | The common equity Tier 1 capital ratio under the fully phased-in Basel III rule is calculated as common equity Tier 1 capital under fully phased-in Basel III rules divided by estimated risk-weighted assets under fully phased-in Basel III rules. |
(d) | The Tier 1 risk-based capital ratio under the fully phased-in Basel III rule is calculated as Tier 1 risk-based capital under the fully phased-in Basel III rule divided by estimated risk-weighted assets under the fully-phased in Basel III rule. |
(e) | Estimated total assets for supplementary leverage capital purposes under fully phased-in Basel III rules includes adjustments for Tier 1 capital deductions, off-balance sheet derivatives, undrawn unconditionally cancellable commitments and other off-balance sheet liabilities. |
(f) | The fully phased-in Basel III supplementary leverage ratio is calculated by dividing fully phased-in Basel III Tier 1 capital by the Companys estimated total assets for supplementary leverage capital purposes under the fully phased-in Basel III rule. |
-11-
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2014 OVERVIEW
ANNEX 3
Calculation of Net Interest Yield on Card Member Loans
Three Months Ended | ||||||||
September 30, | ||||||||
(Millions, except percentages and where indicated) |
2014 | 2013 | ||||||
Net interest income |
$ | 1,395 | $ | 1,283 | ||||
Exclude: |
||||||||
Interest expense not attributable to the Companys Card Member loan portfolio |
247 | 296 | ||||||
Interest income not attributable to the Companys Card Member loan portfolio |
(90 | ) | (87 | ) | ||||
|
|
|
|
|||||
Adjusted net interest income(a) |
$ | 1,552 | $ | 1,492 | ||||
Average loans (billions) |
$ | 66.4 | $ | 63.0 | ||||
Exclude: |
||||||||
Unamortized deferred card fees, net of direct acquisition costs of Card Member loans, and other (billions) |
(0.2 | ) | (0.2 | ) | ||||
|
|
|
|
|||||
Adjusted average loans (billions)(b) |
$ | 66.2 | $ | 62.8 | ||||
Net interest income divided by average loans(c) |
8.5 | % | 8.1 | % | ||||
Net interest yield on Card Member loans(d) |
9.3 | % | 9.4 | % |
(a) | Adjusted net interest income, a non-GAAP measure, represents net interest income allocated to the Companys Card Member loan portfolio excluding the impact of interest expense and interest income not attributable to the Companys Card Member loan portfolio. The Company believes adjusted net interest income is useful to investors because it is a component of net interest yield on Card Member loans. |
(b) | Adjusted average loans, a non-GAAP measure, represents average Card Member loans excluding the impact of deferred card fees, net of deferred direct acquisition costs of Card Member loans, and other. The Company believes adjusted average loans is useful to investors because it is a component of net interest yield on Card Member loans. |
(c) | This calculation includes elements of total interest income and total interest expense that are not attributable to the Card Member loan portfolio, and thus is not representative of net interest yield on Card Member loans. The calculation includes interest income and interest expense attributable to investment securities and other interest-bearing deposits as well as to Card Member loans, and interest expense attributable to other activities, including Card Member receivables. |
(d) | Net interest yield on Card Member loans, a non-GAAP measure, is computed by dividing adjusted net interest income by adjusted average loans, computed on an annualized basis. The calculation of net interest yield on Card Member loans includes interest that is deemed uncollectible. For all presentations of net interest yield on Card Member loans, reserves and net write-offs related to uncollectible interest are recorded through provisions for lossesCard Member loans; therefore, such reserves and net write-offs are not included in the net interest yield calculation. The Company believes net interest yield on Card Member loans is useful to investors because it provides a measure of profitability of the Companys Card Member loan portfolio. |
-12-
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2014 OVERVIEW
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This supplement includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. The forward-looking statements, which address the Companys expected business and financial performance, among other matters, contain words such as believe, expect, estimate, anticipate, optimistic, intend, plan, aim, will, may, should, could, would, likely, and similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update or revise any forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements, include, but are not limited to, the following:
| the ability to hold annual operating expense growth to less than 3 percent during 2014, which will depend in part on unanticipated increases in significant categories of operating expenses, such as consulting or professional fees, compliance or regulatory-related costs and technology costs, the payment of monetary damages and penalties, disgorgement and restitution, the Companys decision to increase or decrease discretionary operating expenses depending on overall business performance, the Companys ability to achieve the expected benefits of the Companys reengineering plans, the Companys ability to balance expense control and investments in the business, the impact of changes in foreign currency exchange rates on costs and results, the impact of accounting changes and reclassifications, and the level of acquisition activity and related expenses; |
| the ability of the Company to meet its on-average and over-time growth targets for revenues net of interest expense, earnings per share and return on average equity, which will depend on factors such as the Companys success in implementing its strategies and business initiatives including growing the Companys share of overall spending, retaining and growing our partner relationships, increasing merchant coverage, enhancing its prepaid offerings, expanding the Global Network Services business and controlling expenses, and on factors outside managements control including the willingness of Card Members to sustain spending, the effectiveness of marketing and loyalty programs, regulatory and market pressures on pricing, credit trends, currency and interest rate fluctuations, and changes in general economic conditions, such as GDP growth, consumer confidence, unemployment and the housing market; |
| the ability of the Company to meet its on-average and over-time objective to return 50 percent of capital generated to shareholders through dividends and share repurchases, which will depend on factors such as approval of the Companys capital plans by its regulators, the amount the Company spends on acquisitions, the Companys results of operations and capital needs in any given period, and the amount of shares issued by the Company to employees upon the exercise of options; |
| the actual amount to be spent by the Company on investments in the business during the fourth quarter 2014 and the actual amount of any potential gain arising from the proposed acquisition of Concur Technologies the Company decides to invest in business building activities and initiatives designed to improve operating efficiencies, which will be based in part on the likelihood and timing of the closing of the proposed Concur acquisition, the magnitude of any gain recognized by the Company as a result of the Concur acquisition, which will depend on the ultimate purchase price paid by SAP, managements ability to identify attractive investment opportunities and make such investments, which could be impacted by business, regulatory or legal complexities, the Companys ability to develop and implement technology and other resources to realize efficiencies and the ability to control operating, infrastructure and rewards expenses as the business expands or changes, including the changing behavior of Card Members; |
| changes in the substantial and increasing worldwide competition in the payments industry, including competitive pressure that may impact the prices we charge merchants that accept our cards, competition for co-brand relationships and the success of marketing, promotion or rewards programs; |
| the impact of final laws and regulations, if any, arising from the European Commissions legislative proposals covering a range of issues affecting the payments industry, which will depend on various factors, including, but not limited to, the issues presented and decisions made in the European legislative and regulatory processes addressing the proposed regulation of interchange fees and other practices related to card-based payment transactions, the amount of time these processes take to reach completion, and the actual pricing and other requirements ultimately adopted in the final laws and regulations in the European Union and its Member States; |
-13-
AMERICAN EXPRESS COMPANY
THIRD QUARTER 2014 OVERVIEW
| the possibility that the Company will not fully execute on its plans for OptBlue, including offsetting decreases in the average discount rate with higher spend volume, which will depend in part on the success of OptBlue merchant acquirers in signing merchants to accept American Express, which could be impacted by the pricing set by the merchant acquirers and the value proposition offered to small merchants; |
| changes affecting the Companys ability or desire to issue preferred shares during the fourth quarter of 2014 or the first quarter of 2015, such as actions by bank regulatory agencies, capital needs, any reduction in the Companys credit ratings, which could materially increase the cost and other terms of preferred shares, and market conditions, among other factors; |
| litigation, such as class actions or proceedings brought by governmental and regulatory agencies (including the lawsuit filed against us by the U.S. Department of Justice and certain state attorneys general), that could result in (i) the imposition of behavioral remedies against us or us voluntarily making certain changes to our business practices, the effects of which in either case could have a material adverse impact on our financial performance; (ii) the imposition of substantial monetary damages and penalties, disgorgement and restitution; and/or (iii) damage to our global reputation and brand; |
| the potential failure of the U.S. Congress to renew legislation regarding the active financing exception to Subpart F of the Internal Revenue Code, which could increase the Companys effective tax rate and have an adverse impact on net income; and |
| factors beyond the Companys control such as changes in global economic and business conditions, including consumer and business spending, the availability and cost of capital, unemployment and political conditions, fire, power loss, disruptions in telecommunications, severe weather conditions, natural disasters, terrorism, cyber attacks or fraud, which could significantly affect spending on American Express cards, delinquency rates, loan balances and travel-related spending or disrupt the Companys global network systems and ability to process transactions. |
A further description of these uncertainties and other risks can be found in the Companys Annual Report on Form 10-K for the year ended December 31, 2013, the Companys Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014 and June 30, 2014 and the Companys other reports filed with the Securities and Exchange Commission.
-14-
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