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Share Name | Share Symbol | Market | Type |
---|---|---|---|
American Express Company | NYSE:AXP | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.27 | 0.12% | 234.60 | 236.00 | 233.41 | 235.50 | 1,219,746 | 19:38:37 |
Revenues Rise on Strong Net Interest Income Growth
3 Million New Cards Acquired on High Investment Spending
American Express Company (NYSE: AXP) today reported first-quarter net income of $1.4 billion, down 6 percent from $1.5 billion a year ago. Diluted earnings per share was $1.45, down from $1.48 a year ago.
(Millions, except percentages and per share amounts)
Quarters EndedMarch 31,
PercentageInc/(Dec)
2016
2015
Total Revenues Net of Interest Expense $ 8,088 $ 7,950 2 Net Income $ 1,426 $ 1,525 (6) Earnings Per Common Share – Diluted:Net Income Attributable to Common Shareholders1
$ 1.45 $ 1.48 (2) Average Diluted Common Shares Outstanding 963 1,023 (6) Return on Average Equity 23.6 % 29.0 %First-quarter consolidated total revenues net of interest expense were $8.1 billion, up 2 percent from $8.0 billion a year ago. FX-adjusted consolidated total revenues increased 4 percent, reflecting a rise in net interest income, Card Member spending and net card fees.2
Consolidated provisions for losses were $434 million, up 3 percent from $420 million a year ago. The current quarter reflected the accounting for certain cobrand loan portfolios as “held for sale,” where credit costs are now reported in other operating expenses. The increase from last year was also impacted by a smaller reserve release than a year ago.
Consolidated expenses were $5.5 billion, up 5 percent, from $5.2 billion a year ago. The current quarter’s expenses included:
The effective tax rate for the quarter was 35 percent, up from 34 percent a year ago.
The company's return on average equity (ROE) was 23.6 percent, down from 29.0 percent a year ago.
“First quarter results were in line with the financial outlook we provided last month at our Investor Day,” said Kenneth I. Chenault, chairman and chief executive officer. “Despite strong competition throughout the payments industry, we generated a 4 percent increase in FX-adjusted revenues.2 Those revenues reflected strong, underlying growth in our lending portfolio, along with higher Card Member spending and fee income. Our 6 percent rise in Card Member spending was partially offset by a lower merchant discount rate and the higher costs associated with cash back rewards.
“Investment spending was up significantly and reflected initiatives to grow the business by expanding our Card Member base and gaining a greater share of their overall spending and borrowing. We added 3 million new proprietary cards this quarter, with almost two thirds of the consumer acquisitions coming through digital channels. Our underlying loan portfolio grew 11 percent and credit metrics remained excellent.
“In addition, we continued to make very good progress on expanding our merchant network here in the United States and internationally. Operating expenses continued to be well managed and the restructuring charge this quarter reflected an initial phase of actions to take $1 billion out of our cost base by 2017. Our priorities for this year and next continue to be accelerating revenue growth, resetting our cost base and optimizing the investments we’re making in the business.
“Given the actions we are taking and the strength of our business model, I believe our outlook for 2016 of EPS between $5.40 to $5.70 and EPS of at least $5.60 in 2017 remains appropriate. And, as we said last month at Investor Day, this outlook excludes the impact of restructuring charges or other contingencies.”
Segment Results
As previously announced, effective for the first quarter of 2016, the company realigned its segment presentation to reflect the organizational changes announced during the fourth quarter of 2015. Prior periods have been restated to conform to the new reportable operating segments, which are as follows:
Corporate functions and certain other businesses and operations are included in Corporate and Other.
U.S. Consumer Services reported first-quarter net income of $694 million, up 5 percent from $659 million a year ago.
Total revenues net of interest expense increased 3 percent to $3.3 billion from $3.2 billion a year ago. The rise primarily reflected higher net interest income from growth in the loan portfolio.
Provisions for losses totaled $190 million, down 2 percent from $193 million a year ago. The decrease resulted from the previously mentioned accounting for certain cobrand loans as “held for sale.” That impact was partially offset by higher loan balances, excluding the “held for sale” loans in both periods.
Total expenses were $2 billion, up 2 percent from a year ago. The current quarter reflected higher marketing, rewards and Card Member services costs, partially offset by the previously mentioned gain on the sale of the JetBlue cobrand portfolio.
The effective tax rate was 36 percent, down from 37 percent a year ago.
International Consumer and Network Services reported first-quarter net income of $188 million, down 5 percent from $197 million a year ago. The decline reflected the impact of the stronger U.S. dollar.
Total revenues net of interest expense were $1.3 billion, down 1 percent compared to a year ago. FX-adjusted revenues increased 8 percent, primarily reflecting higher Card Member spending and an increase in net card fees.2
Total expenses were $987 million, up 1 percent from $977 million a year ago. FX-adjusted expenses increased 6 percent.2 The current quarter’s expenses reflected higher marketing and rewards costs.
The effective tax rate was 26 percent, down from 30 percent a year ago.
Global Commercial Services reported first-quarter net income of $485 million, down 6 percent from $517 million a year ago.
Total revenues net of interest expense were $2.4 billion, up 2 percent compared to a year ago. The increase reflected higher net interest income and Card Member spending.
Provisions for losses totaled $160 million, up 6 percent from $151 million a year ago, primarily driven by higher merchant financing loan balances and delinquencies, partially offset by lower write-offs in the Card Member receivables portfolio.
Total expenses were $1.5 billion, up 7 percent from $1.4 billion a year ago. The current quarter’s expenses reflected higher rewards and investment spending, primarily on technology development.
The effective tax rate was 36 percent, down from 37 percent a year ago.
Global Merchant Services reported first-quarter net income of $357 million, down 3 percent from $369 million a year ago. The decline reflected the impact of the stronger U.S. dollar.
Total revenues net of interest expense were $1.1 billion, down 3 percent compared to a year ago. FX-adjusted revenues were flat compared to a year ago.2 The current quarter’s revenues were impacted by a lower net merchant discount rate, which offset the benefit of higher Card Member spending.
Total expenses were $521 million, down 3 percent from $537 million a year ago. FX-adjusted expenses decreased 2 percent.2 The decrease reflected lower merchant acquirer payments related to OptBlue, the company’s initiative to expand merchant coverage in the United States.
The effective tax rate was 38 percent, up from 37 percent a year ago.
Corporate and Other reported first-quarter net loss of $298 million, compared to a net loss of $217 million a year ago.
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/company/american-express, twitter.com/americanexpress, and youtube.com/americanexpress.
Key links to products, services and corporate responsibility information: charge and credit cards, business credit cards, Plenti rewards program, travel services, gift cards, prepaid cards, merchant services, corporate card, business travel and corporate responsibility.
An investor conference call will be held at 5:00 p.m. (ET) today to discuss first-quarter earnings results. Live audio and presentation slides for the investor conference call will be available to the general public on the American Express Investor Relations website at http://ir.americanexpress.com. A replay of the conference call will be available later today at the same website address.
Cautionary Note Regarding Forward-looking Statements
This release 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 Company’s expected business and financial performance and which include management’s outlook for 2016-2017, among other matters, contain words such as “believe,” “expect,” “estimate,” “anticipate,” “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:
A further description of these uncertainties and other risks can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, the Company's other filings with the Securities and Exchange Commission and the Company’s presentation slides for the investor conference call available on the American Express Investor Relations website at http://ir.americanexpress.com.
1 Represents net income less (i) earnings allocated to participating share awards of $11 million for the three months ended March 31, 2016 and 2015, and (ii) dividends on preferred shares of $21 million and nil for the three months ended March 31, 2016 and 2015, respectively.
2 As reported in this release, FX-adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translations into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the three months ended March 31, 2016 apply to the period(s) against which such results are being compared). Certain amounts included in the calculations of FX-adjusted revenues and expenses, which constitute non-GAAP measures, are subject to management allocations. The company believes the presentation of information on an FX-adjusted basis is helpful to investors by making it easier to compare the company’s performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates.
American Express Company
(Preliminary) Consolidated Statements of Income (Millions, except percentages and per share amounts) Q1'16 Q4'15 Q3'15 Q2'15 Q1'15YOY %change
Non-interest revenues Discount revenue $ 4,643 $ 4,913 $ 4,778 $ 4,946 $ 4,660 - Net card fees 699 687 679 667 667 5 Other fees and commissions (A) 680 704 727 727 708 (4 ) Other 486 540 504 521 468 4 Total non-interest revenues 6,508 6,844 6,688 6,861 6,503 - Interest income Interest on loans 1,938 1,891 1,847 1,776 1,795 8 Interest and dividends on investment securities 36 37 38 41 41 (12 ) Deposits with banks and other 31 19 19 20 21 48 Total interest income 2,005 1,947 1,904 1,837 1,857 8 Interest expense Deposits 150 138 125 109 103 46 Long-term debt and other 275 262 274 305 307 (10 ) Total interest expense 425 400 399 414 410 4 Net interest income 1,580 1,547 1,505 1,423 1,447 9 Total revenues net of interest expense 8,088 8,391 8,193 8,284 7,950 2 Provisions for losses Charge card 169 195 203 165 174 (3 ) Card Member loans 227 361 309 285 235 (3 ) Other 38 16 17 17 11 # Total provisions for losses 434 572 529 467 420 3 Total revenues net of interest expense after provisions for losses 7,654 7,819 7,664 7,817 7,530 2 Expenses Marketing and promotion 727 892 847 761 609 19 Card Member rewards 1,703 1,794 1,763 1,799 1,640 4 Card Member services and other 282 246 269 242 261 8 Salaries and employee benefits 1,338 1,209 1,212 1,250 1,305 3 Professional services 604 784 687 655 624 (3 ) Occupancy and equipment 465 482 523 415 434 7 Other, net 351 958 425 465 341 3 Total expenses 5,470 6,365 5,726 5,587 5,214 5 Pretax income 2,184 1,454 1,938 2,230 2,316 (6 ) Income tax provision 758 555 672 757 791 (4 ) Net income $ 1,426 $ 899 $ 1,266 $ 1,473 $ 1,525 (6 ) Net income attributable to common shareholders (B) $ 1,394 $ 873 $ 1,234 $ 1,442 $ 1,514 (8 ) Effective tax rate 34.7 % 38.2 % 34.7 % 33.9 % 34.2 %Earnings Per Common Share
Basic Net income attributable to common shareholders $ 1.45 $ 0.89 $ 1.24 $ 1.43 $ 1.49 (3 ) Average common shares outstanding 961 977 994 1,009 1,019 (6 ) Diluted Net income attributable to common shareholders $ 1.45 $ 0.89 $ 1.24 $ 1.42 $ 1.48 (2 ) Average common shares outstanding 963 981 997 1,013 1,023 (6 ) Cash dividends declared per common share $ 0.29 $ 0.29 $ 0.29 $ 0.29 $ 0.26 12 # - Denotes a variance of more than 100 percent. American Express Company Consolidated Balance Sheets and Related Statistical Information (Billions, except percentages, per share amounts and where indicated) Q1'16 Q4'15 Q3'15 Q2'15 Q1'15YOY %change
Assets Cash & cash equivalents $ 25 $ 23 $ 20 $ 21 $ 24 4 Card Member loans and receivables held for sale 12 15 - - - - Card Member receivables, less reserves 44 44 44 44 43 2 Card Member Loans, less reserves 56 58 68 68 66 (15 ) Investment securities 4 4 4 5 4 - Other (C) 18 17 18 19 18 - Total assets $ 159 $ 161 $ 154 $ 157 $ 155 3 Liabilities and Shareholders' Equity Customer deposits $ 56 $ 55 $ 49 $ 47 $ 45 24 Short-term borrowings 3 5 3 4 2 50 Long-term debt 47 48 49 53 55 (15 ) Other (C) 32 32 32 31 31 3 Total liabilities 138 140 133 135 133 4 Shareholders' Equity 21 21 21 22 22 (5 ) Total liabilities and shareholders' equity $ 159 $ 161 $ 154 $ 157 $ 155 3 Return on average equity (D) 23.6 % 24.0 % 26.8 % 28.1 % 29.0 % Return on average common equity (D) 24.8 % 25.2 % 27.8 % 28.8 % 29.3 % Return on average tangible common equity (D) 30.6 % 31.0 % 34.2 % 35.4 % 36.2 % Book value per common share (dollars) (E) $ 20.13 $ 19.71 $ 20.06 $ 20.27 $ 19.93 1 # - Denotes a variance of more than 100 percent. American Express Company Consolidated Capital Q1'16 Q4'15 Q3'15 Q2'15 Q1'15Shares Outstanding (in millions)
Beginning of period 969 985 1,002 1,016 1,023 Repurchase of common shares (20 ) (16 ) (18 ) (16 ) (9 ) Net impact of employee benefit plans and others 2 - 1 2 2 End of period 951 969 985 1,002 1,016Risk-Based Capital Ratios - Transitional Basel III ($ in billions) (F)
Common Equity Tier 1/Risk Weighted Assets (RWA) 12.6 % 12.4 % 13.2 % 13.5 % 13.8 % Tier 1 13.8 % 13.5 % 14.3 % 14.7 % 14.9 % Total 15.3 % 15.2 % 16.2 % 16.5 % 16.8 % Common Equity Tier 1 $ 16.5 $ 16.7 $ 17.1 $ 17.7 $ 17.6 Tier 1 Capital $ 18.0 $ 18.3 $ 18.7 $ 19.2 $ 19.1 Tier 2 Capital $ 2.1 $ 2.3 $ 2.4 $ 2.3 $ 2.4 Total Capital $ 20.1 $ 20.6 $ 21.1 $ 21.5 $ 21.5 RWA $ 130.9 $ 135.2 $ 130.2 $ 130.7 $ 128.0 Tangible Common Equity (TCE)/RWA (G) 11.8 % 11.5 % 12.3 % 12.6 % 12.8 % Tier 1 Leverage 11.5 % 11.7 % 12.1 % 12.4 % 12.3 % Supplementary Leverage Ratio (SLR) (H) 9.6 % 9.8 % 10.2 % 10.4 % 10.4 % TCE $ 15.5 $ 15.5 $ 16.0 $ 16.5 $ 16.4 Average Total Assets to calculate the Tier 1 Leverage Ratio (I) $ 157.1 $ 156.4 $ 153.7 $ 155.1 $ 155.4 Total Leverage Exposure to calculate SLR $ 188.3 $ 186.6 $ 182.8 $ 184.1 $ 184.0Risk-Based Capital Ratios - Estimated fully phased-in Basel III ($ in billions) (F) (J)
RWA (J) $ 132.2 $ 135.0 $ 129.9 $ 130.4 $ 128.7 Risk-Based Capital (Common Equity Tier 1) (J) $ 15.9 $ 15.9 $ 16.3 $ 16.9 $ 16.8 Risk-Based Capital (Tier 1) (J) $ 17.5 $ 17.5 $ 17.9 $ 18.5 $ 18.4 Common Equity Tier 1 ratio (J)(K) 12.0 % 11.8 % 12.6 % 12.9 % 13.1 % Tier 1 Risk-Based Capital Ratio (J)(L) 13.2 % 13.0 % 13.8 % 14.1 % 14.3 % Supplementary Leverage Ratio (J)(M) 9.3 % 9.4 % 9.8 % 10.0 % 10.0 % # - Denotes a variance of more than 100 percent. American Express Company (Preliminary) Selected Card Related Statistical Information (Billions, except percentages and where indicated) Q1'16 Q4'15 Q3'15 Q2'15 Q1'15YOY % change
Card billed business (N): United States $ 176.3 $ 190.2 $ 180.4 $ 181.8 $ 169.4 4 Outside the United States 77.5 83.0 78.5 80.2 76.2 2 Worldwide $ 253.8 $ 273.2 $ 258.9 $ 262.0 $ 245.6 3 Total cards-in-force (O) (millions): United States 57.9 57.6 56.4 55.3 54.8 6 Outside the United States 60.7 60.2 59.4 58.5 57.4 6 Worldwide 118.6 117.8 115.8 113.8 112.2 6 Basic cards-in-force (O) (millions): United States 45.1 44.8 43.6 42.8 42.4 6 Outside the United States 50.0 49.5 49.0 48.2 47.3 6 Worldwide 95.1 94.3 92.6 91.0 89.7 6 Average basic Card Member spending (dollars) (P) United States $ 4,249 $ 4,633 $ 4,503 $ 4,616 $ 4,320 (2 ) Outside the United States $ 3,082 $ 3,352 $ 3,197 $ 3,297 $ 3,135 (2 ) Worldwide $ 3,952 $ 4,305 $ 4,165 $ 4,272 $ 4,008 (1 ) Card Member loans (Q) United States $ 50.7 $ 51.5 $ 62.1 $ 61.8 $ 59.9 (15 ) Outside the United States $ 6.7 $ 7.1 6.8 7.2 6.9 (3 ) Worldwide $ 57.4 $ 58.6 $ 68.9 $ 69.0 $ 66.8 (14 ) Average discount rate (R) 2.44 % 2.42 % 2.46 % 2.49 % 2.49 % Average fee per card (dollars) (P) $ 40 $ 39 $ 39 $ 39 $ 39 3 Average fee per card adjusted (dollars) (P) $ 43 $ 43 $ 44 $ 43 $ 44 (2 )# - Denotes a variance of more than 100 percent.
American Express Company Selected Credit Related Statistical Information (Billions, except percentages and where indicated) Q1'16 Q4'15 Q3'15 Q2'15 Q1'15YOY %change
Worldwide Card Member receivables (Q) Total receivables $ 44.5 $ 44.1 $ 44.3 $ 44.9 $ 43.7 2 Loss reserves (millions): Beginning balance $ 462 $ 441 $ 420 $ 429 $ 465 (1 ) Provisions (S) 169 195 203 165 174 (3 ) Net write-offs (T) (186 ) (169 ) (174 ) (171 ) (199 ) (7 ) Other (U) 1 (5 ) (8 ) (3 ) (11 ) # Ending balance $ 446 $ 462 $ 441 $ 420 $ 429 4 % of receivables 1.0 % 1.0 % 1.0 % 0.9 % 1.0 % Net write-off rate (principal only) (V) 1.9 % 1.7 % 1.8 % 1.7 % 2.1 % Net write-off rate (principal and fees) (V) 2.1 % 1.9 % 2.0 % 1.9 % 2.3 % 30 days past due as a % of total 1.5 % 1.5 % 1.6 % 1.5 % 1.6 % Net loss ratio (as a % of charge volume) - Global Corporate Payments (GCP) (W) 0.08 % 0.08 % 0.08 % 0.09 % 0.10 % 90 days past billing as a % of total - GCP 0.7 % 0.9 % 0.7 % 0.7 % 0.7 % Worldwide Card Member loans (Q) Total loans $ 57.4 $ 58.6 $ 68.9 $ 69.0 $ 66.8 (14 ) Loss reserves (millions): Beginning balance $ 1,028 $ 1,164 $ 1,132 $ 1,130 $ 1,201 (14 ) Provisions (S) 227 361 309 285 235 (3 ) Net write-offs - principal (T) (214 ) (234 ) (231 ) (243 ) (259 ) (17 ) Net write-offs - interest and fees (T) (40 ) (40 ) (37 ) (42 ) (43 ) (7 ) Reserves transferred to held for sale - (224 ) - - - Other (U) 11 1 (9 ) 2 (4 ) # Ending balance $ 1,012 $ 1,028 $ 1,164 $ 1,132 $ 1,130 (10 ) Ending reserves - principal $ 959 $ 975 $ 1,114 $ 1,076 $ 1,074 (11 ) Ending reserves - interest and fees $ 53 $ 53 $ 50 $ 56 $ 56 (5 ) % of loans 1.8 % 1.8 % 1.7 % 1.6 % 1.7 % % of past due 161 % 164 % 164 % 171 % 163 % Average loans $ 57.4 $ 67.1 $ 69.0 $ 68.0 $ 67.6 (15 ) Net write-off rate (principal only) (V) 1.5 % 1.4 % 1.3 % 1.4 % 1.5 % Net write-off rate (principal, interest and fees) (V) 1.8 % 1.6 % 1.6 % 1.7 % 1.8 % 30 days past due loans as a % of total 1.1 % 1.1 % 1.0 % 1.0 % 1.0 % Net interest income divided by average loans (X) 8.9 % 8.7 % 8.7 % 8.4 % 8.6 % Net interest yield on Card Member loans (X) 9.7 % 9.4 % 9.5 % 9.3 % 9.6 % # - Denotes a variance of more than 100 percent. American Express Company (Preliminary) Selected Income Statement information by Segment (Millions)U.S. ConsumerServices
InternationalConsumer andNetworkServices
GlobalCommercialServices
GlobalMerchantServices
Corporate andOther
Consolidated (USCS) (ICNS) (GCS) (GMS) Q1'16 Non-interest revenues $ 2,029 $ 1,140 $ 2,190 $ 1,041 $ 108 $ 6,508 Interest income 1,391 227 321 - 66 2,005 Interest expense 140 54 95 (59 ) 195 425 Total revenues net of interest expense 3,280 1,313 2,416 1,100 (21 ) 8,088 Total provision 190 71 160 8 5 434 Pretax income (loss) 1,087 255 761 571 (490 ) 2,184 Income tax provision (benefit) 393 67 276 214 (192 ) 758 Net income (loss) 694 188 485 357 (298 ) 1,426 Q1'15 Non-interest revenues $ 2,031 $ 1,145 $ 2,175 $ 1,070 $ 82 $ 6,503 Interest income 1,273 245 278 - 61 1,857 Interest expense 114 63 89 (59 ) 203 410 Total revenues net of interest expense 3,190 1,327 2,364 1,129 (60 ) 7,950 Total provision 193 70 151 6 - 420 Pretax income (loss) 1,041 280 817 586 (408 ) 2,316 Income tax provision (benefit) 382 83 300 217 (191 ) 791 Net income (loss) 659 197 517 369 (217 ) 1,525 YOY % change Non-interest revenues - - 1 (3 ) 32 - Interest income 9 (7 ) 15 - 8 8 Interest expense 23 (14 ) 7 - (4 ) 4 Total revenues net of interest expense 3 (1 ) 2 (3 ) (65 ) 2 Total provision (2 ) 1 6 33 - 3 Pretax income (loss) 4 (9 ) (7 ) (3 ) 20 (6 ) Income tax provision (benefit) 3 (19 ) (8 ) (1 ) 1 (4 ) Net income (loss) 5 (5 ) (6 ) (3 ) 37 (6 ) American Express Company(Preliminary)
Billed Business Growth Trend YOY % change Reported FX-Adjusted (Y) Q1'16 Q4'15 Q3'15 Q2'15 Q1'15 Q1'16 Q4'15 Q3'15 Q2'15 Q1'15 Worldwide (Z) Total Billed Business 3 % 2 % 0 % 2 % 3 % 6 % 5 % 5 % 6 % 7 % Proprietary billed business 3 1 0 0 2 4 3 3 4 5 GNS billed business (AA) 5 3 (1 ) 5 7 13 14 13 16 16 Airline-related volume (9% of Q1'16 worldwide billed business) (4 ) (5 ) (6 ) (5 ) (3 ) (2 ) (1 ) 0 1 2 United States (Z) Billed Business 4 4 4 5 6 n/a n/a n/a n/a n/a Proprietary consumer card billed business (AB) 4 4 4 5 6 n/a n/a n/a n/a n/a Proprietary small business and corporate services billed business (AC) 5 3 4 4 6 n/a n/a n/a n/a n/aT&E-related volume (27% of Q1'16 U.S. billed business)
1 2 3 4 5 n/a n/a n/a n/a n/a Non-T&E-related volume (73% of Q1'16 U.S. billed business) 5 4 4 5 6 n/a n/a n/a n/a n/a Airline-related volume (8% of Q1'16 U.S. billed business) (5 ) (3 ) (3 ) (2 ) 0 n/a n/a n/a n/a n/a Outside the United States (Z) Billed Business 2 (3 ) (8 ) (5 ) (3 ) 9 8 7 8 8 Japan, Asia Pacific & Australia ("JAPA") billed business 8 5 (2 ) 4 6 13 14 13 16 15 Latin America & Canada ("LACC") billed business (14 ) (19 ) (24 ) (18 ) (14 ) 5 0 (5 ) (5 ) (4 ) Europe, Middle East & Africa ("EMEA") billed business 3 (4 ) (5 ) (9 ) (9 ) 8 5 7 7 6 Proprietary consumer card billed business (AA) 1 (8 ) (15 ) (14 ) (12 ) 8 3 (1 ) (1 ) 0 Proprietary small business and corporate services billed business (AC) (3 ) (10 ) (11 ) (11 ) (10 ) 4 2 5 4 3 U.S. Consumer Services (Preliminary) Selected Income Statement and Statistical Information (Millions, except percentages) Q1'16 Q4'15 Q3'15 Q2'15 Q1'15YOY %change
Non-interest revenues $ 2,029 $ 2,155 $ 2,117 $ 2,176 $ 2,031 - Interest income 1,391 1,349 1,324 1,252 1,273 9 Interest expense 140 130 123 121 114 23 Net interest income 1,251 1,219 1,201 1,131 1,159 8 Total revenues net of interest expense 3,280 3,374 3,318 3,307 3,190 3 Provisions for losses 190 334 294 243 193 (2 ) Total revenues net of interest expense after provisions for losses 3,090 3,040 3,024 3,064 2,997 3 Expenses Marketing, promotion, rewards, Card Member services and other 1,348 1,410 1,396 1,366 1,210 11 Salaries and employee benefits and other operating expenses 655 793 768 759 746 (12 ) Total expenses 2,003 2,203 2,164 2,125 1,956 2 Pretax segment income 1,087 837 860 939 1,041 4 Income tax provision 393 296 318 326 382 3 Segment income $ 694 $ 541 $ 542 $ 613 $ 659 5 Effective tax rate 36.2 % 35.4 % 37.0 % 34.7 % 36.7 % (Billions, except percentages and where indicated) Card billed business $ 89.0 $ 98.4 $ 92.3 $ 93.6 $ 85.7 4 Total cards-in-force (millions) 40.9 40.7 40.0 39.1 38.6 6 Basic cards-in-force (millions) 28.8 28.6 28.0 27.3 26.9 7 Average basic Card Member spending (dollars) (P) $ 3,092 $ 3,471 $ 3,337 $ 3,472 $ 3,184 (3 ) Total segment assets (AD) $ 86.3 $ 92.7 $ 84.0 $ 84.4 $ 84.0 Segment capital (AE) $ 7.4 $ 7.2 $ 7.3 $ 7.9 $ 7.8 Return on average segment capital (AF) 31.8 % 31.1 % 30.1 % 31.2 % 30.5 % Return on average tangible segment capital (AF) 33.3 % 32.5 % 31.3 % 32.4 % 31.6 % Card Member receivables: (Q) Total receivables $ 10.3 $ 11.8 $ 10.5 $ 10.8 $ 10.5 (1 ) 30 days past due as a % of total 1.4 % 1.4 % 1.6 % 1.4 % 1.5 % Net write-off rate (principal only) (V) 1.8 % 1.6 % 1.5 % 1.2 % 2.1 % Net write-off rate (principal and fees) (V) 2.0 % 1.8 % 1.7 % 1.4 % 2.3 % Card Member loans: (Q) Total loans $ 42.4 $ 43.5 $ 52.2 $ 51.8 $ 50.3 (16 ) 30 days past due loans as a % of total 1.0 % 1.0 % 1.0 % 0.9 % 0.9 % Average loans $ 42.5 $ 50.5 $ 52.1 $ 51.1 $ 50.9 (16 ) Net write-off rate (principal only) (V) 1.5 % 1.4 % 1.3 % 1.4 % 1.5 % Net write-off rate (principal, interest and fees) (V) 1.7 % 1.6 % 1.5 % 1.6 % 1.7 % Net interest income divided by average loans (X) 9.3 % 9.1 % 9.2 % 8.9 % 9.1 % Net interest yield on Card Member loans (X) 9.5 % 9.1 % 9.2 % 9.0 % 9.4 % # - Denotes a variance of more than 100 percent. International Consumer and Network Services (Preliminary) Selected Income Statement and Statistical Information (Millions, except percentages) Q1'16 Q4'15 Q3'15 Q2'15 Q1'15YOY %change
Non-interest revenues $ 1,140 $ 1,178 $ 1,141 $ 1,163 $ 1,145 - Interest income 227 235 228 237 245 (7 ) Interest expense 54 59 55 58 63 (14 ) Net interest income 173 176 173 179 182 (5 ) Total revenues net of interest expense 1,313 1,354 1,314 1,342 1,327 (1 ) Provisions for losses 71 77 77 76 70 1 Total revenues net of interest expense after provisions for losses 1,242 1,277 1,237 1,266 1,257 (1 ) Expenses Marketing, promotion, rewards, Card Member services and other 481 547 504 482 447 8 Salaries and employee benefits and other operating expenses 506 545 532 546 530 (5 ) Total expenses 987 1,092 1,036 1,028 977 1 Pretax segment income 255 185 201 238 280 (9 ) Income tax provision/(benefit) 67 45 47 45 83 (19 ) Segment income $ 188 $ 140 $ 154 $ 193 $ 197 (5 ) Effective tax rate 26.3 % 24.3 % 23.4 % 18.9 % 29.6 % (Billions, except percentages and where indicated) Card billed business Proprietary $ 24.7 $ 27.0 $ 25.1 $ 25.5 $ 24.5 1 Global Network Services (GNS) 40.5 43.5 $ 40.8 $ 41.5 $ 38.6 5 Total $ 65.2 $ 70.5 $ 65.9 $ 67.0 $ 63.1 3 Total cards-in-force (millions) Proprietary 14.8 14.6 14.5 14.5 14.3 3 GNS 47.7 47.4 46.3 45.5 44.5 7 Total 62.5 62.0 60.8 60.0 58.8 6 Proprietary basic cards-in-force (millions) 10.1 9.9 9.9 9.9 9.9 2 Average basic Card Member spending (dollars) (P) $ 2,455 $ 2,718 $ 2,547 $ 2,600 $ 2,454 - Total segment assets (AD) $ 34.3 $ 35.1 $ 34.5 $ 28.9 $ 28.6 Segment capital (AE) $ 2.5 $ 2.6 $ 3.1 $ 3.1 $ 3.0 Return on average segment capital (AF) 23.6 % 23.8 % 21.9 % 24.8 % 24.3 % Return on average tangible segment capital (AF) 31.7 % 32.0 % 29.6 % 34.1 % 34.2 % Card Member receivables: (Q) Total receivables $ 5.6 $ 5.6 $ 5.2 $ 5.5 $ 5.1 8 30 days past due as a % of total 1.5 % 1.5 % 1.6 % 1.5 % 1.6 % Net write-off rate (principal only) (V) 2.2 % 2.1 % 2.3 % 2.1 % 1.9 % Net write-off rate (principal and fees) (V) 2.4 % 2.3 % 2.5 % 2.3 % 2.1 % Card Member loans: (Q) Total loans $ 6.6 $ 7.1 $ 6.7 $ 7.2 $ 6.8 (3 ) 30 days past due loans as a % of total 1.8 % 1.6 % 1.6 % 1.6 % 1.8 % Average loans $ 6.8 $ 7.0 $ 6.9 $ 7.0 $ 7.2 (6 ) Net write-off rate (principal only) (V) 1.9 % 1.8 % 1.8 % 2.0 % 2.0 % Net write-off rate (principal, interest and fees) (V) 2.4 % 2.2 % 2.3 % 2.5 % 2.5 % Net interest income divided by average loans (X) 10.3 % 10.1 % 10.1 % 10.2 % 10.2 % Net interest yield on Card Member loans (X) 10.8 % 10.6 % 10.4 % 10.7 % 10.9 % # - Denotes a variance of more than 100 percent. Global Commercial Services (Preliminary) Selected Income Statement and Statistical Information (Millions, except percentages) Q1'16 Q4'15 Q3'15 Q2'15 Q1'15YOY %change
Non-interest revenues $ 2,190 $ 2,253 $ 2,217 $ 2,285 $ 2,175 1 Interest income 321 311 297 289 278 15 Interest expense 95 94 91 91 89 7 Net interest income 226 217 206 198 189 20 Total revenues net of interest expense 2,416 2,470 2,423 2,483 2,364 2 Provisions for losses 160 153 148 136 151 6 Total revenues net of interest expense after provisions for losses 2,256 2,317 2,275 2,347 2,213 2 Expenses Marketing, promotion, rewards, Card Member services and other 766 784 826 809 723 6 Salaries and employee benefits and other operating expenses 729 772 712 689 673 8 Total expenses 1,495 1,556 1,538 1,498 1,396 7 Pretax segment income 761 761 737 849 817 (7 ) Income tax provision 276 274 269 299 300 (8 ) Segment income $ 485 $ 487 $ 468 $ 550 $ 517 (6 ) Effective tax rate 36.3 % 36.0 % 36.5 % 35.2 % 36.7 % (Billions, except percentages and where indicated) Card billed business $ 98.5 $ 103.2 $ 99.5 $ 100.4 $ 95.5 3 Total cards-in-force (millions) 15.2 15.1 15.0 14.7 14.8 3 Basic cards-in-force (millions) 15.2 15.1 15.0 14.7 14.8 3 Average basic Card Member spending (dollars) (P) $ 6,509 $ 6,859 $ 6,711 $ 6,811 $ 6,461 1 Total segment assets (AD) $ 46.7 $ 45.1 $ 45.9 $ 45.9 $ 45.5 Segment capital (AE) $ 7.2 $ 7.0 $ 6.8 $ 7.1 $ 7.3 Return on average segment capital (AF) 28.0 % 28.7 % 34.1 % 35.2 % 34.4 % Return on average tangible segment capital (AF) 38.8 % 40.0 % 47.5 % 49.2 % 48.4 % Card Member receivables (Q) $ 28.6 $ 26.7 $ 28.6 $ 28.6 $ 28.1 2 Card Member loans (Q) $ 8.3 $ 8.0 $ 10.0 $ 10.0 $ 9.7 (14 ) Card Member receivables: (Q) Total receivables - GCP (W) $ 15.4 $ 13.8 $ 15.7 $ 15.9 $ 15.7 90 days past billing as a % of total - GCP (W) 0.7 % 0.9 % 0.7 % 0.7 % 0.7 % Net loss ratio (as a % of charge volume) - GCP (W) 0.08 % 0.08 % 0.08 % 0.09 % 0.10 % Total receivables - Global Small Business Services (GSBS) (AG) $ 13.2 $ 12.9 $ 12.9 $ 12.8 $ 12.4 7 30 days past due as a % of total - GSBS 1.6 % 1.7 % 1.6 % 1.6 % 1.8 % Net write-off rate (principal only) - GSBS (V) 1.8 % 1.6 % 1.8 % 1.9 % 2.2 % Net write-off rate (principal and fees) - GSBS (V) 2.1 % 1.8 % 2.0 % 2.1 % 2.4 % Card Member loans: (Q) (AH) Total loans - GSBS $ 8.3 $ 8.0 $ 10.0 $ 9.9 $ 9.7 (14 ) 30 days past due as a % of total - GSBS 1.0 % 1.1 % 1.0 % 0.9 % 1.0 % Average loans - GSBS $ 8.1 $ 9.6 $ 9.9 $ 9.8 $ 9.5 (15 ) Net write-off rate (principal only) - GSBS (U) 1.4 % 1.2 % 1.3 % 1.3 % 1.3 % Net write-off rate (principal, interest and fees) - GSBS (U) 1.6 % 1.5 % 1.5 % 1.5 % 1.6 % Net interest income divided by average loans (X) 8.8 % 8.5 % 8.3 % 8.0 % 7.9 % Net interest yield on Card Member loans (X) 10.5 % 10.2 % 10.0 % 10.0 % 10.2 % # - Denotes a variance of more than 100 percent. Global Merchant Services (Preliminary) Selected Income Statement and Statistical Information (Millions, except percentages) Q1'16 Q4'15 Q3'15 Q2'15 Q1'15YOY % change
Non-interest revenues $ 1,041 $ 1,148 $ 1,123 $ 1,130 $ 1,070 (3 ) Interest income - - - 1 - - Interest expense (59 ) (57 ) (46 ) (49 ) (59 ) - Net interest income 59 57 46 50 59 - Total revenues net of interest expense 1,100 1,205 1,169 1,180 1,129 (3 ) Provisions for losses 8 9 8 8 6 33 Total revenues net of interest expense after provisions for losses 1,092 1,196 1,161 1,172 1,123 (3 ) Expenses Marketing, promotion, rewards, Card Member services and other 58 84 78 76 56 4 Salaries and employee benefits and other operating expenses 463 537 449 510 481 (4 ) Total expenses 521 621 527 586 537 (3 ) Pretax segment income 571 575 634 586 586 (3 ) Income tax provision 214 211 237 217 217 (1 ) Segment income $ 357 $ 364 $ 397 $ 369 $ 369 (3 ) Effective tax rate 37.5 % 36.7 % 37.4 % 37.0 % 37.0 % Loyalty Coalition revenue $ 94 $ 99 $ 100 $ 88 $ 91 3 (Billions, except percentages and where indicated) Average discount rate (R) 2.44 % 2.42 % 2.46 % 2.49 % 2.49 % Total segment assets (AD) $ 23.7 $ 23.5 $ 23.3 $ 17.4 $ 17.2 Segment capital (AE) $ 2.4 $ 2.4 $ 2.6 $ 2.3 $ 2.2 Return on average segment capital (AF) 62.7 % 64.8 % 66.9 % 68.0 % 68.9 % Return on average tangible segment capital (AF) 79.3 % 82.7 % 86.5 % 89.5 % 92.0 % # - Denotes a variance of more than 100 percent. American Express Company (Preliminary) Appendix I Components of Return on Average Equity (ROE), Return on Average Common Equity (ROCE), and Return on Average Tangible Common Equity (ROTCE) (Millions, except percentages) For the Twelve Months Ended Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, 2016 2015 2015 2015 2015ROE
Net income $ 5,064 $ 5,163 $ 5,711 $ 5,922 $ 5,978 Average shareholders' equity $ 21,499 $ 21,494 $ 21,349 $ 21,050 $ 20,606 Return on average equity (AI) 23.6 % 24.0 % 26.8 % 28.1 % 29.0 %
Reconciliation of ROCE and ROTCE
Net income $ 5,064 $ 5,163 $ 5,711 $ 5,922 $ 5,978 Preferred shares dividends and related accretion 83 62 42 20 - Earnings allocated to participating share awards and other 38 38 43 44 45 Net income attributable to common shareholders $ 4,943 $ 5,063 $ 5,626 $ 5,858 $ 5,933 Average shareholders' equity $ 21,499 $ 21,494 $ 21,349 $ 21,050 $ 20,606 Average preferred shares 1,584 1,390 1,081 716 350 Average common shareholders' equity $ 19,915 $ 20,104 $ 20,268 $ 20,334 $ 20,256 Average goodwill and other intangibles 3,742 3,782 3,796 3,802 3,845 Average tangible common shareholders' equity $ 16,173 $ 16,322 $ 16,472 $ 16,532 $ 16,411 Return on average common equity (AI) 24.8 % 25.2 % 27.8 % 28.8 % 29.3 % Return on average tangible common equity (AJ) 30.6 % 31.0 % 34.2 % 35.4 % 36.2 % American Express Company (Preliminary) Appendix II Components of Return on Average Segment Capital (ROSC) and Return on Average Tangible Segment Capital (ROTSC) (Millions, except percentages) For the Twelve Months Ended Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, 2016 2015 2015 2015 2015U.S. Consumer Services
Segment income $ 2,390 $ 2,355 $ 2,274 $ 2,355 $ 2,271 Average segment capital $ 7,514 $ 7,560 $ 7,556 $ 7,551 $ 7,440 Average goodwill and other intangibles 330 317 299 280 261 Average tangible segment capital $ 7,184 $ 7,243 $ 7,257 $ 7,271 $ 7,179 Return on average segment capital (AK) 31.8 % 31.1 % 30.1 % 31.2 % 30.5 % Return on average tangible segment capital (AK) 33.3 % 32.5 % 31.3 % 32.4 % 31.6 %International Consumer and Network Services
Segment income $ 676 $ 684 $ 627 $ 688 $ 651 Average segment capital $ 2,861 $ 2,873 $ 2,861 $ 2,780 $ 2,675 Average goodwill and other intangibles 727 735 743 759 774 Average tangible segment capital $ 2,134 $ 2,138 $ 2,118 $ 2,021 $ 1,901 Return on average segment capital (AK) 23.6 % 23.8 % 21.9 % 24.8 % 24.3 % Return on average tangible segment capital (AK) 31.7 % 32.0 % 29.6 % 34.1 % 34.2 %Global Commercial Services
Segment income $ 1,990 $ 2,022 $ 2,384 $ 2,446 $ 2,352 Average segment capital $ 7,107 $ 7,036 $ 6,988 $ 6,942 $ 6,829 Average goodwill and other intangibles 1,979 1,976 1,973 1,973 1,972 Average tangible segment capital $ 5,128 $ 5,060 $ 5,015 $ 4,969 $ 4,857 Return on average segment capital (AK) 28.0 % 28.7 % 34.1 % 35.2 % 34.4 % Return on average tangible segment capital (AK) 38.8 % 40.0 % 47.5 % 49.2 % 48.4 %Global Merchant Services
Segment income $ 1,487 $ 1,499 $ 1,504 $ 1,472 $ 1,462 Average segment capital $ 2,371 $ 2,311 $ 2,248 $ 2,165 $ 2,123 Average goodwill and other intangibles 496 499 508 521 534 Average tangible segment capital $ 1,875 $ 1,812 $ 1,740 $ 1,644 $ 1,589 Return on average segment capital (AK) 62.7 % 64.8 % 66.9 % 68.0 % 68.9 % Return on average tangible segment capital (AK) 79.3 % 82.7 % 86.5 % 89.5 % 92.0 % American Express Company(Preliminary)
Appendix III Net Interest Yield on Card Member Loans (Millions, except percentages and where indicated) Q1'16 Q4'15 Q3'15 Q2'15 Q1'15Consolidated
Net interest income $ 1,580 $ 1,547 $ 1,505 $ 1,423 $ 1,447 Exclude: Interest expense not attributable to the Company's Card Member loan portfolio $ 238 $ 225 $ 232 $ 248 $ 246 Interest income not attributable to the Company's Card Member loan portfolio $ (103 ) $ (90 ) $ (89 ) $ (91 ) $(87
) Adjusted net interest income (AL) $ 1,715 $ 1,682 $ 1,648 $ 1,580 $ 1,606 Average loans including Held for Sale (billions) $ 70.8 $ 70.9 $ 69.0 $ 68.0 $ 67.6 Net interest income divided by average loans (AM) 8.9 % 8.7 % 8.7 % 8.4 % 8.6 % Net interest yield on Card Member loans (AN) 9.7 % 9.4 % 9.5 % 9.3 % 9.6 %U.S. Consumer Services
Net interest income $ 1,251 $1,219
$1,201
$ 1,131 $ 1,159 Exclude: Interest expense not attributable to the Company's Card Member loan portfolio $ 19 $ 19 $ 18 $ 18 $ 17 Interest income not attributable to the Company's Card Member loan portfolio $ (5 ) $(4
) $(5
) $(3
) $(4
) Adjusted net interest income (AL) $ 1,265 $ 1,234 $ 1,214 $ 1,146 $ 1,172 Average loans including Held for Sale (billions) $ 53.8 $ 53.7 $ 52.1 $ 51.1 $ 50.9 Net interest income divided by average loans (AM) 9.3 % 9.1 % 9.2 % 8.9 % 9.1 % Net interest yield on Card Member loans (AN) 9.5 % 9.1 % 9.2 % 9.0 % 9.4 %International Consumer and Network Services
Net interest income $ 173 $ 176 $ 173 $ 179 $ 182 Exclude: Interest expense not attributable to the Company's Card Member loan portfolio $ 11 $ 14 $ 14 $ 14 $ 15 Interest income not attributable to the Company's Card Member loan portfolio $(3
) $ (4 ) $(6
) $ (6 ) $ (4 ) Adjusted net interest income (AL) $ 181 $ 186 $ 181 $ 187 $ 193 Average loans (billions) $ 6.7 $ 7.0 $ 6.9 $ 7.0 $ 7.2 Net interest income divided by average loans (AM) 10.3 % 10.1 % 10.1 % 10.2 % 10.2 % Net interest yield on Card Member loans (AN) 10.8 % 10.6 % 10.5 % 10.7 % 10.9 %Global Commercial Services
Net interest income $ 226 $ 217 $ 206 $ 198 $ 189 Exclude: Interest expense not attributable to the Company's Card Member loan portfolio $ 72 $ 72 $ 71 $ 72 $ 71 Interest income not attributable to the Company's Card Member loan portfolio $(28
) $ (28 ) $ (24 ) $ (22 ) $ (19 ) Adjusted net interest income (AL) $ 270 $ 261 $ 253 $ 248 $ 241 Average loans including Held for Sale (billions) $ 10.3 $ 10.2 $ 10.0 $ 9.9 $ 9.6 Net interest income divided by average loans (AM) 8.8 % 8.5 % 8.3 % 8.0 % 7.9 % Net interest yield on Card Member loans (AN) 10.5 % 10.2 % 10.0 % 10.0 % 10.2 % Appendix IV (Preliminary)All Information in the preceding tables is presented on a basis prepared 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. None of the prior period financial information was materially misstated.
(A) Includes Travel Commissions and Fees which were shown separately until Q3'15. (B) Represents net income, less (i) earnings allocated to participating share awards of $11 million in Q1'16, and $6 million, $10 million, $11 million and $11 million in Q4'15, Q3'15, Q2'15 and Q1'15, respectively, and (ii) dividends on preferred shares of $21 million in Q1'16, and $20 million, $22 million and $20 million, in Q4'15, Q3'15 and Q2'15, respectively, and nil in Q1'15. (C) Within assets, "other" includes the following items as presented in the Company’s Consolidated Balance Sheets in its Form 10-Q: Other receivables, Other loans (including merchant financing loans), Premises and equipment and Other assets; and within liabilities, "other" includes the following items: Travelers Cheques and other prepaid products, Accounts payable and Other liabilities. (D) 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. (E) Beginning Q3’15, the calculation of book value per common share was revised to exclude shareholders’ equity from preferred share issuances. Applicable prior periods have been revised to conform to the current period presentation. (F) These ratios represent preliminary estimates for the current period as of the date of this Earnings Release and may be revised in the Company’s Q1'16 Form 10-Q. (G) Tangible Common Equity, a non-GAAP measure, excludes goodwill and other intangibles of $3.7B and preferred shares of $1.6B from total shareholders’ equity of $20.7B. The Company believes presenting the ratio of Tangible Common Equity to Risk-Weighted Assets is a useful measure of evaluating the strength of the Company’s capital position. (H) The Company is required to calculate a Supplementary Leverage Ratio, which is defined as Tier 1 Capital divided by Total Leverage Exposure. The Total Leverage Exposure reflects average total consolidated assets with adjustments for Tier 1 Capital deductions and includes off-balance sheet derivatives exposures, repo-style transactions and credit equivalents of undrawn commitments that are both conditionally and unconditionally cancellable. (I) Presented for the purpose of calculating the Tier 1 Leverage Ratio. (J) Estimated Common Equity Tier 1 Capital, Tier 1 Capital, Risk-Weighted Assets and Average Total Assets for Supplementary Leverage Capital purposes under the fully phased-in Basel III rules reflect the Company’s 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 Company’s business changes. (K) The Common Equity Tier 1 Capital ratio under the fully phased-in Basel III rules 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. (L) The Tier 1 Risk-Based Capital ratio under the fully phased-in Basel III rules is calculated as Tier 1 Risk-Based Capital under the fully phased-in Basel III rules divided by estimated Risk-Weighted Assets under the fully phased-in Basel III rules. (M) The fully phased-in Basel III Supplementary Leverage Ratio is calculated by dividing fully phased-in Basel III Tier 1 Capital by Total Leverage Exposure (refer to Footnote H for a definition of Total Leverage Exposure). (N) 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 cobrand portfolios in GNS, 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. Effective Q1'16, as a result of system enhancements, certain balances have been reclassified between United States and outside the United States. (O) 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 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 cobrand Card Member accounts that have no out-of-store spend activity during the prior 12 month period. (P) 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 average fee per card adjusted, 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 $68 million for Q1'16, and $70 million, $72 million, $61 million and $84 million for Q4'15, Q3'15, Q2'15 and Q1'15, respectively. 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. (Q) Effective December 1, 2015, the Company reclassified the Card Member loans and receivables related to its cobrand partnerships with Costco in the U.S. and Jetblue, to reflect them as Held for Sale (HFS) on the Consolidated Balance Sheets. The loans were reclassified at their net carrying amount, inclusive of the related reserves for losses. Accordingly, Card Member loans and receivables and the related credit metrics are presented excluding the HFS loans and receivables. Card Member loans HFS in USCS were $9.6 billion and $12.6 billion as of Q1'16 and Q4'15, respectively, and in GCS were $2.0 billion and $2.3 billion as of Q1'16 and Q4'15, respectively. Card Member receivables HFS in USCS were nil as of Q1'16 and Q4'15, and in GCS were $0.1 billion as of Q1'16 and Q4'15. Card Member loans in the GCS segment include an insignificant amount of loans related to the GCP business. (R) This calculation is generally designed to reflect pricing at merchants accepting general-purpose American Express cards. It represents the percentage of billed business (generated from both proprietary and GNS Card Member spending) retained by the Company from merchants it acquires, or for merchants acquired by a third party on its behalf, net of amounts retained by such third party. (S) Provisions for principal, interest and/or fee reserve components. (T) Consists of principal, interest and/or fees, less recoveries. (U) Q4'15 Card Member receivables include $1 million for the Reserves transferred to HFS. All periods include foreign currency translation adjustments and other items. (V) 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 Company's 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. The AXP net write-off rates and 30 days past due as a percentage of total relate to USCS, ICNS and GSBS Card Member receivables and loans. (W) GCP includes global and large corporate accounts as well as corporate middle markets/accounts. (X) 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 Company's rationale for presenting net interest yield on Card Member loans. (Y) 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 the foreign exchange rates used to determine results for Q1'16 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 Company's performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates. (Z) Captions not designated as “proprietary” or “GNS” include both proprietary and GNS data. (AA) Included in ICNS. (AB) Included in USCS. (AC) Included in GCS. (AD) Revised prospectively beginning in Q3'15, as a result of systems enhancements, to reclassify certain intercompany accounts. (AE) Segment capital represents capital allocated to a segment based upon specific business operational needs, risk measures, and regulatory capital requirements. (AF) Refer to Appendix II for components of return on average segment capital and return on average tangible segment capital, a non-GAAP measure. (AG) GSBS includes small business in the U.S. and international small business services. (AH) International GSBS Card Member loans and associated credit metrics continue to be reported within the international consumer business, in the ICNS segment, due to certain system limitations. These loans are insignificant to both ICNS and GCS. (AI) 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. (AJ) 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 common 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. (AK) 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. (AL) Adjusted net interest income, a non-GAAP measure, represents net interest income allocated to the Company's Card Member loan portfolio excluding the impact of interest expense and interest income not attributable to the Company's 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. (AM) 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. (AN) 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. Effective January 1, 2016, net interest yield also includes an insignificant amount of net interest income and loans related to certain non-traditional Card Member loans. The prior periods have been revised to conform with this presentation. The Company believes net interest yield on Card Member loans is useful to investors because it provides a measure of profitability of the Company's Card Member loan portfolio.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160420006512/en/
American Express CompanyMedia Contact:Marina H. Norville, +1-212-640-2832marina.h.norville@aexp.comInvestors/Analysts Contacts:Ken F. Paukowits, +1-212-640-6348ken.f.paukowits@aexp.comToby Willard, +1-212-640-5574sherwood.s.willardjr@aexp.com
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