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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 | |
---|---|---|---|---|---|---|---|---|
4.56 | 1.98% | 235.33 | 234.57 | 231.32 | 232.29 | 2,259,574 | 01:00:00 |
Performance Reflects Expense Controls, Higher Loans and Card Member Spending, Which Helped to Mitigate the Impact of Stronger U.S. Dollar and Year-Ago Business Travel Benefits
American Express Company (NYSE:AXP) today reported second-quarter net income of $1.47 billion, down from $1.53 billion a year ago. Diluted earnings per share decreased 1 percent to $1.42, from $1.43 a year ago.
(Millions, except percentages and per share amounts)
Quarters EndedJune 30,
PercentageInc/(Dec)
Six Months EndedJune 30,
PercentageInc/(Dec)
2015 2014 2015 2014 Total Revenues Net of Interest Expense $ 8,284 $ 8,631 (4)% $ 16,234 $ 16,804 (3)% Net Income $ 1,473 $ 1,529 (4)% $ 2,998 $ 2,961 1% Earnings Per Common Share – Diluted:Net Income Attributable to Common Shareholders1
$ 1.42 $ 1.43 (1)% $ 2.90 $ 2.77 5% Average Diluted Common Shares Outstanding 1,013 1,058 (4)% 1,018 1,062 (4)% Return on Average Equity 28.1% 28.8 % 28.1 % 28.8 %Results for the quarter were negatively affected by the significant impact of a stronger U.S. dollar on international operations. The year-ago quarter included business travel operations and a gain related to the business travel joint venture transaction.
Consolidated total revenues net of interest expense totaled $8.3 billion for the second quarter, down 4 percent from $8.6 billion a year ago. Excluding the impact of foreign exchange rates2 and business travel results in the year-ago period, adjusted revenues rose 5 percent.3 The increase primarily reflected higher Card Member spending and growth in the loan portfolio.
Consolidated provisions for losses totaled $467 million, down 4 percent from $489 million a year ago. The decrease reflected lower net write-offs in the current quarter, offset, in part, by the effect of a larger reserve release a year ago.
Consolidated expenses totaled $5.6 billion, down 4 percent (flat FX-adjusted2) from $5.8 billion a year ago. The year-ago quarter included business travel operations and the previously mentioned joint venture transaction gain (which was reported as an expense reduction). The gain was partially offset by several other year-ago items, including incremental investments, a restructuring charge and transaction-related costs.
The effective tax rate for the quarter remained unchanged from a year ago at 34 percent.
The company’s return on average equity (ROE) was 28.1 percent, down from 28.8 percent a year ago.
“We delivered solid underlying earnings performance this quarter,” said Kenneth I. Chenault, chairman and chief executive officer. “Disciplined expense control and a substantial return of capital to shareholders through share repurchases together with higher Card Member spending and loan volumes helped to mitigate the negative impact of a strong U.S. dollar and the year-ago benefits from Global Business Travel, which now operates as a joint venture.
“Against the backdrop of an uneven global economy, Card Member spending grew 6 percent, adjusted for FX, with strong performance in most international regions. Our credit metrics remained at, or near, historically low levels.
“Lower operating expenses this quarter largely offset the higher costs related to previously renewed co-brand partnerships.
“We continue to see opportunities across the company and this quarter marked the initial stage of a ramp up in investment spending on growth initiatives. As planned, we expect to increase our investments substantially in the second half of the year. Our focus will be on: acquiring new Card Members; gaining additional business from consumer, small business and middle market customers; expanding our presence internationally; growing our merchant network; building our loyalty coalition business; and introducing new digital capabilities.”
Segment Results
U.S. Card Services reported second-quarter net income of $886 million, up 15 percent from $770 million a year ago.
Total revenues net of interest expense increased 6 percent to $4.7 billion from $4.5 billion a year ago. The rise largely reflected an increase in Card Member spending and higher net interest income from the growth in the loan portfolio.
Provisions for losses totaled $327 million, down 4 percent from $339 million a year ago. The decrease reflected lower net write-offs in the current quarter, offset, in part, by a larger reserve release a year ago.
Total expenses increased 4 percent to $3.0 billion from $2.9 billion a year ago. The rise primarily reflected higher rewards and Card Member services expenses driven by increased Card Member spending volumes and increased costs related to certain previously renewed co-brand partnerships.
The effective tax rate was 35 percent compared to 36 percent a year ago.
International Card Services reported second-quarter net income of $125 million, up 62 percent from $77 million a year ago.
Total revenues net of interest expense were $1.3 billion, down 10 percent from $1.4 billion a year ago. Revenues rose 5 percent on an FX-adjusted basis,2 primarily reflecting higher FX-adjusted net interest income and net card fees.
Total expenses were $1.0 billion, down 16 percent (down 8 percent FX-adjusted2) from $1.2 billion a year ago. The year-ago period included a portion of the incremental investments and restructuring charge mentioned earlier.
The effective tax rate was 13 percent compared to (12) percent a year ago, reflecting the impact of recurring permanent tax benefits on varying levels of pretax income.
Global Commercial Services reported second-quarter net income of $203 million, down 64 percent from $561 million a year ago, which included the joint venture transaction gain.
Total revenues net of interest expense were $881 million, down 31 percent (down 27 percent FX-adjusted2) from $1.3 billion a year ago. Year-ago revenues included the company’s business travel operations.
Total expenses increased 45 percent (up 67 percent FX-adjusted2) to $525 million from $361 million a year ago. The increase primarily reflected the joint venture transaction gain in the prior year (which was reported as an expense reduction).
Global Network & Merchant Services reported second-quarter net income of $448 million, up 20 percent from $373 million a year ago.
Total revenues net of interest expense decreased 4 percent to $1.4 billion from $1.5 billion a year ago. Revenues increased 2 percent on an FX-adjusted basis,2 reflecting higher global Card Member spending.
Total expenses decreased 20 percent to $688 million from $859 million a year ago. The year-ago period included a portion of the incremental investments mentioned earlier.
Corporate and Other reported second-quarter net loss of $189 million compared with net loss of $252 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/company/american-express, twitter.com/americanexpress, and youtube.com/americanexpress.
Key links to products and services: charge and credit cards, business credit cards, Plenti rewards program, travel services, gift cards, prepaid cards, merchant services, corporate card and business travel.
The 2015 Second Quarter Earnings Supplement will be available today on the American Express website at http://ir.americanexpress.com. An investor conference call will be held at 5:00 p.m. (ET) today to discuss second-quarter earnings results. Live audio and presentation slides for the investor conference call will be available to the general public at the same website. A replay of the conference call will be available later today at the same website 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 company’s 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 described in the 2015 Second Quarter Earnings Supplement of American Express Company furnished today as an exhibit to a Current Report on Form 8-K, the company's Annual Report on Form 10-K for the year ended December 31, 2014 and the company’s other reports on file 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.
1 Represents net income less earnings allocated to participating share awards of $11 million and $12 million for the three months ended June 30, 2015 and 2014, respectively, and $22 million and $24 million for the six months ended June 30, 2015 and 2014, respectively. In addition, net income is further reduced by dividends on preferred shares of $20 million for both the three and six months ended June 30, 2015. No preferred dividends were paid in 2014.
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 June 30, 2015 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.
3 Adjusted revenue growth is a non-GAAP measure and excludes the impact of changes in foreign exchange rates and the company’s business travel operations in Q2’14 from total revenues net of interest expense. Management believes this metric is useful in evaluating the ongoing operating performance of the company. See Appendix V in the selected statistical tables for a reconciliation to total revenues net of interest expense on a GAAP basis.
American Express Company (Preliminary)Consolidated Statements of Income
(Millions, except percentages and per share amounts) Quarters Ended % Change Six Months Ended % Change Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Jun 30, 2015 vs. Jun 30, Jun 30, 2015 vs. 2015 2015 2014 2014 2014 Jun 30, 2014 2015 2014 Jun 30, 2014 Revenues Non-interest revenues Discount revenue (A) $ 4,946 $ 4,660 $ 4,961 $ 4,889 $ 4,919 1 $ 9,606 $ 9,539 1 Net card fees 667 667 671 680 687 (3 ) 1,334 1,361 (2 ) Travel commissions and fees 95 89 91 104 500 (81 ) 184 923 (80 ) Other commissions and fees 632 619 624 642 624 1 1,251 1,242 1 Other 521 468 1,310 593 585 (11 ) 989 1,086 (9 ) Total non-interest revenues 6,861 6,503 7,657 6,908 7,315 (6 ) 13,364 14,151 (6 ) Interest income Interest on loans 1,776 1,795 1,769 1,753 1,696 5 3,571 3,407 5 Interest and dividends on investment securities 41 41 43 45 45 (9 ) 82 91 (10 ) Deposits with banks and other 20 21 17 17 18 11 41 37 11 Total interest income 1,837 1,857 1,829 1,815 1,759 4 3,694 3,535 4 Interest expense Deposits 109 103 97 91 91 20 212 185 15 Long-term debt and other 305 307 308 329 352 (13 ) 612 697 (12 ) Total interest expense 414 410 405 420 443 (7 ) 824 882 (7 ) Net interest income 1,423 1,447 1,424 1,395 1,316 8 2,870 2,653 8 Total revenues net of interest expense 8,284 7,950 9,081 8,303 8,631 (4 ) 16,234 16,804 (3 ) Provisions for losses Charge card 165 174 198 196 183 (10 ) 339 398 (15 ) Card Member loans 285 235 341 265 282 1 520 532 (2 ) Other 17 11 43 27 24 (29 ) 28 44 (36 ) Total provisions for losses 467 420 582 488 489 (4 ) 887 974 (9 ) Total revenues net of interest expense after provisions for losses 7,817 7,530 8,499 7,815 8,142 (4 ) 15,347 15,830 (3 ) Expenses Marketing and promotion (A) 761 609 887 783 959 (21 ) 1,370 1,546 (11 ) Card Member rewards 1,799 1,640 1,881 1,695 1,773 1 3,439 3,355 3 Card Member services and other 242 261 203 205 192 26 503 414 21 Salaries and employee benefits 1,250 1,305 1,607 1,290 1,658 (25 ) 2,555 3,198 (20 ) Professional services 655 624 768 731 817 (20 ) 1,279 1,509 (15 ) Occupancy and equipment 415 434 446 432 467 (11 ) 849 929 (9 ) Communications 85 88 98 91 101 (16 ) 173 194 (11 ) Other, net 380 253 384 342 (137 ) # 633 165 # Total 5,587 5,214 6,274 5,569 5,830 (4 ) 10,801 11,310 (5 ) Pretax income 2,230 2,316 2,225 2,246 2,312 (4 ) 4,546 4,520 1 Income tax provision 757 791 778 769 783 (3 ) 1,548 1,559 (1 ) Net income $ 1,473 $ 1,525 $ 1,447 $ 1,477 $ 1,529 (4 ) $ 2,998 $ 2,961 1 Net income attributable to common shareholders (B) $ 1,442 $ 1,514 $ 1,436 $ 1,466 $ 1,517 (5 ) $ 2,956 $ 2,937 1 Effective tax rate 33.9 % 34.2 % 35.0 % 34.2 % 33.9 % 34.0 % 34.5 %Earnings Per Common Share
BASIC Net income attributable to common shareholders $ 1.43 $ 1.49 $ 1.40 $ 1.41 $ 1.44 (1 ) $ 2.92 $ 2.78 5 Average common shares outstanding 1,009 1,019 1,028 1,041 1,052 (4 ) 1,013 1,056 (4 ) DILUTED Net income attributable to common shareholders $ 1.42 $ 1.48 $ 1.39 $ 1.40 $ 1.43 (1 ) $ 2.90 $ 2.77 5 Average common shares outstanding 1,013 1,023 1,033 1,047 1,058 (4 ) 1,018 1,062 (4 ) Cash dividends declared per common share $ 0.29 $ 0.26 $ 0.26 $ 0.26 $ 0.26 12 $ 0.55 $ 0.49 12 # - Denotes a variance of more than 100 percent. American Express CompanyCondensed Consolidated Balance Sheets
(Billions, except percentages, per share amounts and where indicated) Quarters Ended % Change Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Jun 30, 2015 vs. 2015 2015 2014 2014 2014 Jun 30, 2014 Assets Cash & cash equivalents $ 21 $ 24 $ 22 $ 21 $ 18 17 Accounts receivable 47 46 47 47 49 (4 ) Investment securities 5 4 4 5 5 - Loans 69 67 70 66 66 5 Other assets 15 14 16 15 14 7 Total assets $ 157 $ 155 $ 159 $ 154 $ 152 3 Liabilities and Shareholders' Equity Customer deposits $ 47 $ 45 $ 44 $ 43 $ 42 12 Short-term borrowings 4 2 3 3 3 33 Long-term debt 53 55 58 56 55 (4 ) Other liabilities 31 31 33 32 32 (3 ) Total liabilities 135 133 138 134 132 2 Shareholders' Equity 22 22 21 20 20 10 Total liabilities and shareholders' equity $ 157 $ 155 $ 159 $ 154 $ 152 3Selected Statistical Information
Return on average equity (C) 28.1 % 29.0 % 29.1 % 28.8 % 28.8 % Return on average common equity (C) 28.8 % 29.3 % 29.0 % 28.6 % 28.5 % Return on average tangible common equity (C) 35.4 % 36.2 % 35.9 % 35.6 % 35.8 % Common shares outstanding (millions) 1,002 1,016 1,023 1,035 1,046 (4 ) Book value per common share (dollars) $ 21.85 $ 21.49 $ 20.21 $ 19.54 $ 19.32 13 Shareholders' equity $ 21.9 $ 21.8 $ 20.7 $ 20.2 $ 20.2 8 # - Denotes a variance of more than 100 percent. American Express CompanyFinancial Summary
(Millions) Quarters Ended % Change Six Months Ended % Change Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Jun 30, 2015 vs. Jun 30, Jun 30, 2015 vs. 2015 2015 2014 2014 2014 Jun 30, 2014 2015 2014 Jun 30, 2014Total revenues net of interest expense
U.S. Card Services $ 4,726 $ 4,525 $ 4,594 $ 4,501 $ 4,451 6 $ 9,251 $ 8,715 6 International Card Services 1,258 1,241 1,355 1,394 1,391 (10 ) 2,499 2,743 (9 ) Global Commercial Services 881 827 1,585 900 1,269 (31 ) 1,708 2,463 (31 ) Global Network & Merchant Services 1,396 1,344 1,477 1,450 1,455 (4 ) 2,740 2,820 (3 ) 8,261 7,937 9,011 8,245 8,566 (4 ) 16,198 16,741 (3 ) Corporate & Other 23 13 70 58 65 (65 ) 36 63 (43 ) CONSOLIDATED TOTAL REVENUES NET OF INTEREST EXPENSE $ 8,284 $ 7,950 $ 9,081 $ 8,303 $ 8,631 (4 ) $ 16,234 $ 16,804 (3 )Pretax income (loss)
U.S. Card Services $ 1,366 $ 1,480 $ 1,083 $ 1,411 $ 1,200 14 $ 2,846 $ 2,606 9 International Card Services 144 184 1 176 69 # 328 272 21 Global Commercial Services 314 284 949 309 865 (64 ) 598 1,150 (48 ) Global Network & Merchant Services 695 698 670 670 578 20 1,393 1,280 9 2,519 2,646 2,703 2,566 2,712 (7 ) 5,165 5,308 (3 ) Corporate & Other (289 ) (330 ) (478 ) (320 ) (400 ) (28 ) (619 ) (788 ) (21 ) PRETAX INCOME $ 2,230 $ 2,316 $ 2,225 $ 2,246 $ 2,312 (4 ) $ 4,546 $ 4,520 1Net income (loss)
U.S. Card Services $ 886 $ 934 $ 665 $ 889 $ 770 15 $ 1,820 $ 1,646 11 International Card Services 125 134 33 142 77 62 259 236 10 Global Commercial Services 203 180 594 204 561 (64 ) 383 745 (49 ) Global Network & Merchant Services 448 444 417 427 373 20 892 816 9 1,662 1,692 1,709 1,662 1,781 (7 ) 3,354 3,443 (3 ) Corporate & Other (189 ) (167 ) (262 ) (185 ) (252 ) (25 ) (356 ) (482 ) (26 ) NET INCOME $ 1,473 $ 1,525 $ 1,447 $ 1,477 $ 1,529 (4 ) $ 2,998 $ 2,961 1 # - Denotes a variance of more than 100 percent. American Express Company (Preliminary)Selected Statistical Information (continued)
(Billions, except percentages and where indicated) Quarters Ended % Change Six Months Ended % Change Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Jun 30, 2015 vs. Jun 30, Jun 30, 2015 vs. 2015 2015 2014 2014 2014 Jun 30, 2014 2015 2014 Jun 30, 2014 Card billed business (D): United States $ 181.6 $ 169.2 $ 182.5 $ 173.0 $ 173.4 5 $ 350.8 $ 332.6 5 Outside the United States 80.4 76.4 86.0 85.1 84.7 (5 ) 156.8 163.6 (4 ) Total $ 262.0 $ 245.6 $ 268.5 $ 258.1 $ 258.1 2 $ 507.6 $ 496.2 2 Total cards-in-force (E) (millions): United States 55.3 54.8 54.9 54.5 54.1 2 55.3 54.1 2 Outside the United States 58.5 57.4 57.3 56.6 55.8 5 58.5 55.8 5 Total 113.8 112.2 112.2 111.1 109.9 4 113.8 109.9 4 Basic cards-in-force (E) (millions): United States 42.8 42.4 42.6 42.2 42.0 2 42.8 42.0 2 Outside the United States 48.2 47.3 47.0 46.3 45.6 6 48.2 45.6 6 Total 91.0 89.7 89.6 88.5 87.6 4 91.0 87.6 4 Average discount rate (A) (F) 2.49 % 2.49 % 2.44 % 2.48 % 2.48 % 2.49 % 2.49 % Average basic Card Member spending (dollars) (G) $ 4,272 $ 4,008 $ 4,377 $ 4,223 $ 4,288 (0 ) $ 8,277 $ 8,281 (0 ) Average fee per card (dollars) (G) $ 39 $ 39 $ 39 $ 40 $ 41 (5 ) $ 39 $ 41 (5 ) Average fee per card adjusted (dollars) (G) $ 43 $ 44 $ 44 $ 45 $ 45 (4 ) $ 44 $ 45 (2 ) Worldwide Card Member receivables: Total receivables $ 44.9 $ 43.7 $ 44.9 $ 45.1 $ 45.3 (1 ) $ 44.9 $ 45.3 (1 ) Loss reserves (millions): Beginning balance $ 429 $ 465 $ 432 $ 413 $ 414 4 $ 465 $ 386 20 Provisions (H) 165 174 198 196 183 (10 ) 339 398 (15 ) Net write-offs (I) (171 ) (199 ) (156 ) (168 ) (182 ) (6 ) (370 ) (359 ) 3 Other (J) (3 ) (11 ) (9 ) (9 ) (2 ) 50 (14 ) (12 ) 17 Ending balance $ 420 $ 429 $ 465 $ 432 $ 413 2 $ 420 $ 413 2 % of receivables 0.9 % 1.0 % 1.0 % 1.0 % 0.9 % 0.9 % 0.9 % Net write-off rate (principal only) - USCS/ICS (K) 1.7 % 2.1 % 1.5 % 1.6 % 1.8 % 1.9 % 1.9 % Net write-off rate (principal and fees) - USCS/ICS (K) 1.9 % 2.3 % 1.7 % 1.8 % 2.0 % 2.1 % 2.0 % 30 days past due as a % of total - USCS/ICS 1.5 % 1.6 % 1.6 % 1.6 % 1.5 % 1.5 % 1.5 % Net loss ratio (as a % of charge volume) - GCS 0.09 % 0.10 % 0.08 % 0.09 % 0.09 % 0.10 % 0.09 % 90 days past billing as a % of total - GCS 0.7 % 0.7 % 0.8 % 0.8 % 0.7 % 0.7 % 0.7 % Worldwide Card Member loans: Total loans $ 69.0 $ 66.8 $ 70.4 $ 66.1 $ 66.3 4 $ 69.0 $ 66.3 4 Loss reserves (millions): Beginning balance $ 1,130 $ 1,201 $ 1,146 $ 1,170 $ 1,191 (5 ) $ 1,201 $ 1,261 (5 ) Provisions (H) 285 235 341 265 282 1 520 532 (2 ) Net write-offs - principal (I) (243 ) (259 ) (237 ) (245 ) (267 ) (9 ) (502 ) (541 ) (7 ) Net write-offs - interest and fees (I) (42 ) (43 ) (40 ) (40 ) (42 ) - (85 ) (84 ) 1 Other (J) 2 (4 ) (9 ) (4 ) 6 (67 ) (2 ) 2 # Ending balance $ 1,132 $ 1,130 $ 1,201 $ 1,146 $ 1,170 (3 ) $ 1,132 $ 1,170 (3 ) Ending reserves - principal $ 1,076 $ 1,074 $ 1,149 $ 1,093 $ 1,114 (3 ) $ 1,076 $ 1,114 (3 ) Ending reserves - interest and fees $ 56 $ 56 $ 52 $ 53 $ 56 - $ 56 $ 56 - % of loans 1.6 % 1.7 % 1.7 % 1.7 % 1.8 % 1.6 % 1.8 % % of past due 171 % 163 % 167 % 165 % 171 % 171 % 171 % Average loans $ 68.0 $ 67.6 $ 67.7 $ 66.4 $ 65.2 4 $ 68.0 $ 65.0 5 Net write-off rate (principal only) (K) 1.4 % 1.5 % 1.4 % 1.5 % 1.6 % 1.5 % 1.7 % Net write-off rate (principal, interest and fees) (K) 1.7 % 1.8 % 1.6 % 1.7 % 1.9 % 1.7 % 1.9 % 30 days past due loans as a % of total 1.0 % 1.0 % 1.0 % 1.1 % 1.0 % 1.0 % 1.0 % Net interest income divided by average loans (L) 8.4 % 8.6 % 8.4 % 8.5 % 8.1 % 8.4 % 8.2 % Net interest yield on Card Member loans (L) 9.3 % 9.6 % 9.3 % 9.3 % 9.2 % 9.4 % 9.3 % # - Denotes a variance of more than 100 percent. U.S. Card Services (Preliminary)Selected Income Statement Data
(Millions, except percentages) Quarters Ended % Change Six Months Ended % Change Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Jun 30, 2015 vs. Jun 30, Jun 30, 2015 vs. 2015 2015 2014 2014 2014 Jun 30, 2014 2015 2014 Jun 30, 2014 Revenues Non-interest revenues (A) $ 3,372 $ 3,148 $ 3,253 $ 3,188 $ 3,196 6 $ 6,520 $ 6,187 5 Interest income 1,517 1,529 1,490 1,465 1,408 8 3,046 2,831 8 Interest expense 163 152 149 152 153 7 315 303 4 Net interest income 1,354 1,377 1,341 1,313 1,255 8 2,731 2,528 8 Total revenues net of interest expense 4,726 4,525 4,594 4,501 4,451 6 9,251 8,715 6 Provisions for losses 327 296 399 316 339 (4 ) 623 681 (9 ) Total revenues net of interest expense after provisions for losses 4,399 4,229 4,195 4,185 4,112 7 8,628 8,034 7 Expenses Marketing, promotion, rewards, (A) Card Member services and other 1,996 1,733 2,038 1,764 1,839 9 3,729 3,395 10 Salaries and employee benefits and other operating expenses 1,037 1,016 1,074 1,010 1,073 (3 ) 2,053 2,033 1 Total 3,033 2,749 3,112 2,774 2,912 4 5,782 5,428 7 Pretax segment income 1,366 1,480 1,083 1,411 1,200 14 2,846 2,606 9 Income tax provision 480 546 418 522 430 12 1,026 960 7 Segment income $ 886 $ 934 $ 665 $ 889 $ 770 15 $ 1,820 $ 1,646 11 Effective tax rate 35.1 % 36.9 % 38.6 % 37.0 % 35.8 % 36.1 % 36.8 %Selected Statistical Information
(Billions, except percentages and where indicated) Card billed business $ 144.1 $ 132.5 $ 145.0 $ 136.2 $ 136.5 6 $ 276.7 $ 260.8 6 Total cards-in-force (millions) 46.3 45.9 45.6 45.2 44.7 4 46.3 44.7 4 Basic cards-in-force (millions) 34.6 34.2 34.0 33.7 33.3 4 34.6 33.3 4 Average basic Card Member spending (dollars) $ 4,210 $ 3,875 $ 4,281 $ 4,069 $ 4,133 2 $ 8,073 $ 7,938 2 U.S. Consumer Travel: Travel sales (millions) $ 1,020 $ 988 $ 817 $ 956 $ 1,027 (1 ) $ 2,008 $ 2,001 0 Travel commissions and fees/sales 7.1 % 6.6 % 7.5 % 7.4 % 7.4 % 6.8 % 6.9 % Total segment assets $ 108.2 $ 107.7 $ 113.2 $ 103.3 $ 101.1 7 $ 108.2 $ 101.1 7 Segment capital (M) $ 10.8 $ 10.8 $ 10.4 $ 9.9 $ 9.9 9 $ 10.8 $ 9.9 9 Return on average segment capital (N) 32.6 % 32.1 % 32.5 % 35.5 % 35.3 % 32.6 % 35.3 % Return on average tangible segment capital (N) 33.8 % 33.2 % 33.6 % 36.6 % 36.5 % 33.8 % 36.5 % Card Member receivables: Total receivables $ 22.1 $ 21.5 $ 22.5 $ 21.3 $ 21.2 4 $ 22.1 $ 21.2 4 30 days past due as a % of total 1.5 % 1.7 % 1.7 % 1.6 % 1.5 % 1.5 % 1.5 % Average receivables $ 22.0 $ 21.3 $ 21.8 $ 21.4 $ 21.3 3 $ 21.7 $ 21.0 3 Net write-off rate (principal only) (K) 1.6 % 2.2 % 1.4 % 1.5 % 1.8 % 1.9 % 1.8 % Net write-off rate (principal and fees) (K) 1.8 % 2.4 % 1.6 % 1.7 % 2.0 % 2.1 % 2.0 % Card Member loans: Total loans $ 61.7 $ 59.9 $ 62.6 $ 58.0 $ 57.7 7 $ 61.7 $ 57.7 7 30 days past due loans as a % of total 0.9 % 1.0 % 1.0 % 1.0 % 0.9 % 0.9 % 0.9 % Average loans $ 60.9 $ 60.4 $ 59.7 $ 58.0 $ 56.8 7 $ 60.8 $ 56.6 7 Net write-off rate (principal only) (K) 1.4 % 1.5 % 1.3 % 1.4 % 1.6 % 1.4 % 1.6 % Net write-off rate (principal, interest and fees) (K) 1.6 % 1.7 % 1.5 % 1.6 % 1.8 % 1.6 % 1.9 % Net interest income divided by average loans (L) 8.9 % 9.1 % 9.0 % 9.1 % 8.9 % 9.0 % 8.9 % Net interest yield on Card Member loans (L) 9.2 % 9.5 % 9.1 % 9.2 % 9.1 % 9.3 % 9.3 % # - Denotes a variance of more than 100 percent. International Card Services (Preliminary)Selected Income Statement Data
(Millions, except percentages) Quarters Ended % Change Six Months Ended % Change Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Jun 30, 2015 vs. Jun 30, Jun 30, 2015 vs. 2015 2015 2014 2014 2014 Jun 30, 2014 2015 2014 Jun 30, 2014 Revenues Non-interest revenues $ 1,082 $ 1,061 $ 1,166 $ 1,206 $ 1,208 (10 ) $ 2,143 $ 2,365 (9 ) Interest income 236 244 260 273 275 (14 ) 480 552 (13 ) Interest expense 60 64 71 85 92 (35 ) 124 174 (29 ) Net interest income 176 180 189 188 183 (4 ) 356 378 (6 ) Total revenues net of interest expense 1,258 1,241 1,355 1,394 1,391 (10 ) 2,499 2,743 (9 ) Provisions for losses 83 76 95 98 90 (8 ) 159 177 (10 ) Total revenues net of interest expense after provisions for losses 1,175 1,165 1,260 1,296 1,301 (10 ) 2,340 2,566 (9 ) Expenses Marketing, promotion, rewards, Card Member services and other 472 437 555 532 577 (18 ) 909 1,073 (15 ) Salaries and employee benefits and other operating expenses 559 544 704 588 655 (15 ) 1,103 1,221 (10 ) Total 1,031 981 1,259 1,120 1,232 (16 ) 2,012 2,294 (12 ) Pretax segment income 144 184 1 176 69 # 328 272 21 Income tax provision/(benefit) 19 50 (32 ) 34 (8 ) # 69 36 92 Segment income $ 125 $ 134 $ 33 $ 142 $ 77 62 $ 259 $ 236 10 Effective tax rate 13.2 % 27.2 % # 19.3 % -11.6 % 21.0 % 13.2 %Selected Statistical Information
(Billions, except percentages and where indicated) Card billed business $ 30.0 $ 28.7 $ 34.0 $ 33.9 $ 34.1 (12 ) $ 58.7 $ 66.0 (11 ) Total cards-in-force (millions) 15.0 14.9 15.7 15.8 15.7 (4 ) 15.0 15.7 (4 ) Basic cards-in-force (millions) 10.4 10.4 11.0 10.9 10.9 (5 ) 10.4 10.9 (5 ) Average basic Card Member spending (dollars) $ 2,888 $ 2,729 $ 3,109 $ 3,100 $ 3,137 (8 ) $ 5,609 $ 6,084 (8 ) International Consumer Travel: Travel sales (millions) $ 333 $ 334 $ 353 $ 362 $ 354 (6 ) $ 667 $ 707 (6 ) Travel commissions and fees/sales 6.9 % 7.2 % 7.4 % 6.9 % 6.8 % 7.0 % 6.5 % Total segment assets $ 29.2 $ 29.0 $ 30.7 $ 31.1 $ 31.6 (8 ) $ 29.2 $ 31.6 (8 ) Segment capital (M) $ 3.5 $ 3.2 $ 3.0 $ 3.0 $ 3.0 15 $ 3.5 $ 3.0 15 Return on average segment capital (N) 13.9 % 12.7 % 13.6 % 15.8 % 15.7 % 13.9 % 15.7 % Return on average tangible segment capital (N) 23.3 % 22.3 % 24.6 % 28.9 % 28.8 % 23.3 % 28.8 % Card Member receivables: Total receivables $ 6.8 $ 6.4 $ 7.7 $ 7.3 $ 7.5 (9 ) $ 6.8 $ 7.5 (9 ) 30 days past billing as a % of total 1.4 % 1.6 % 1.3 % 1.4 % 1.3 % 1.4 % 1.3 % Net write-off rate (principal only) (K) 2.1 % 1.9 % 1.8 % 1.9 % 1.9 % 2.0 % 2.0 % Net write-off rate (principal and fees) (K) 2.3 % 2.0 % 1.9 % 2.1 % 2.0 % 2.1 % 2.2 % Card Member loans: Total loans $ 7.2 $ 6.8 $ 7.7 $ 8.0 $ 8.6 (16 ) $ 7.2 $ 8.6 (16 ) 30 days past due loans as a % of total 1.6 % 1.8 % 1.6 % 1.6 % 1.6 % 1.6 % 1.6 % Average loans $ 7.0 $ 7.2 $ 7.9 $ 8.3 $ 8.3 (16 ) $ 7.1 $ 8.3 (14 ) Net write-off rate (principal only) (K) 2.0 % 2.0 % 1.9 % 1.9 % 2.0 % 2.0 % 2.0 % Net write-off rate (principal, interest and fees) (K) 2.5 % 2.5 % 2.4 % 2.4 % 2.4 % 2.5 % 2.4 % Net interest income divided by average loans (O) 10.1 % 10.0 % 9.6 % 9.1 % 8.8 % 10.0 % 9.1 % Net interest yield on Card Member loans (O) 10.7 % 10.9 % 10.5 % 9.9 % 9.6 % 10.7 % 9.8 % # - Denotes a variance of more than 100 percent. Global Commercial Services (Preliminary)Selected Income Statement Data
(Millions, except percentages) Quarters Ended % Change Six Months Ended % Change Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Jun 30, 2015 vs. Jun 30, Jun 30, 2015 vs. 2015 2015 2014 2014 2014 Jun 30, 2014 2015 2014 Jun 30, 2014 Revenues Non-interest revenues $ 924 $ 871 $ 1,635 $ 957 $ 1,332 (31 ) $ 1,795 $ 2,581 (30 ) Interest income 3 4 4 4 3 - 7 7 - Interest expense 46 48 54 61 66 (30 ) 94 125 (25 ) Net interest expense (43 ) (44 ) (50 ) (57 ) (63 ) (32 ) (87 ) (118 ) (26 ) Total revenues net of interest expense 881 827 1,585 900 1,269 (31 ) 1,708 2,463 (31 ) Provisions for losses 42 35 50 49 43 (2 ) 77 81 (5 ) Total revenues net of interest expense after provisions for losses 839 792 1,535 851 1,226 (32 ) 1,631 2,382 (32 ) Expenses Marketing, promotion, rewards, Card Member services and other 156 164 178 161 177 (12 ) 320 343 (7 ) Salaries and employee benefits and other operating expenses 369 344 408 381 184 # 713 889 (20 ) Total 525 508 586 542 361 45 1,033 1,232 (16 ) Pretax segment income 314 284 949 309 865 (64 ) 598 1,150 (48 ) Income tax provision 111 104 355 105 304 (63 ) 215 405 (47 ) Segment income $ 203 $ 180 $ 594 $ 204 $ 561 (64 ) $ 383 $ 745 (49 ) Effective tax rate 35.4 % 36.6 % 37.4 % 34.0 % 35.1 % 36.0 % 35.2 %Selected Statistical Information
(Billions, except percentages and where indicated) Card billed business $ 46.4 $ 45.3 $ 47.1 $ 46.5 $ 47.6 (3 ) $ 91.6 $ 93.1 (2 ) Total cards-in-force (millions) 6.9 6.9 6.9 6.9 7.0 (1 ) 6.9 7.0 (1 ) Basic cards-in-force (millions) 6.9 6.9 6.9 6.9 7.0 (1 ) 6.9 7.0 (1 ) Average basic Card Member spending (dollars) $ 6,739 $ 6,567 $ 6,817 $ 6,691 $ 6,781 (1 ) $ 13,313 $ 13,216 1 Total segment assets $ 19.7 $ 19.6 $ 18.5 $ 20.6 $ 20.8 (5 ) $ 19.7 $ 20.8 (5 ) Segment capital (M) $ 4.0 $ 4.1 $ 3.8 $ 3.8 $ 3.8 5 $ 4.0 $ 3.8 5 Return on average segment capital (N) 30.3 % 39.9 % 40.9 % 30.3 % 32.0 % 30.3 % 32.0 % Return on average tangible segment capital (N) 52.8 % 70.6 % 74.4 % 56.0 % 60.3 % 52.8 % 60.3 % Card Member receivables: Total receivables $ 15.9 $ 15.7 $ 14.6 $ 16.4 $ 16.5 (4 ) $ 15.9 $ 16.5 (4 ) 90 days past billing as a % of total 0.7 % 0.7 % 0.8 % 0.8 % 0.7 % 0.7 % 0.7 % Net loss ratio (as a % of charge volume) 0.09 % 0.10 % 0.08 % 0.09 % 0.09 % 0.10 % 0.09 % # - Denotes a variance of more than 100 percent. Global Network & Merchant Services (Preliminary)Selected Income Statement Data
(Millions, except percentages) Quarters Ended % Change Six Months Ended % Change Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Jun 30, 2015 vs. Jun 30, Jun 30, 2015 vs. 2015 2015 2014 2014 2014 Jun 30, 2014 2015 2014 Jun 30, 2014 Revenues Non-interest revenues $ 1,326 $ 1,270 $ 1,399 $ 1,368 $ 1,366 (3 ) $ 2,596 $ 2,659 (2 ) Interest income 23 20 17 14 11 # 43 21 # Interest expense (47 ) (54 ) (61 ) (68 ) (78 ) (40 ) (101 ) (140 ) (28 ) Net interest income 70 74 78 82 89 (21 ) 144 161 (11 ) Total revenues net of interest expense 1,396 1,344 1,477 1,450 1,455 (4 ) 2,740 2,820 (3 ) Provisions for losses 13 11 35 24 18 (28 ) 24 34 (29 ) Total revenues net of interest expense after provisions for losses 1,383 1,333 1,442 1,426 1,437 (4 ) 2,716 2,786 (3 ) Expenses Marketing, promotion, rewards, Card Member services and other 164 147 185 201 277 (41 ) 311 433 (28 ) Salaries and employee benefits and other operating expenses 524 488 587 555 582 (10 ) 1,012 1,073 (6 ) Total 688 635 772 756 859 (20 ) 1,323 1,506 (12 ) Pretax segment income 695 698 670 670 578 20 1,393 1,280 9 Income tax provision 247 254 253 243 205 20 501 464 8 Segment income $ 448 $ 444 $ 417 $ 427 $ 373 20 $ 892 $ 816 9 Effective tax rate 35.5 % 36.4 % 37.8 % 36.3 % 35.5 % 36.0 % 36.3 %Selected Statistical Information
(Billions, except percentages and where indicated) Global Card billed business (P) $ 262.0 $ 245.6 $ 268.5 $ 258.1 $ 258.1 2 $ 507.6 $ 496.2 2 Global Network & Merchant Services: Total segment assets $ 17.6 $ 17.8 $ 18.1 $ 18.2 $ 18.7 (6 ) $ 17.6 $ 18.7 (6 ) Segment capital (M) $ 2.2 $ 2.2 $ 2.0 $ 2.0 $ 2.0 8 $ 2.2 $ 2.0 8 Return on average segment capital (N) 83.5 % 82.1 % 84.0 % 82.6 % 79.4 % 83.5 % 79.4 % Return on average tangible segment capital (N) 92.0 % 90.6 % 92.9 % 91.3 % 87.8 % 92.0 % 87.8 % Global Network Services: Card billed business $ 41.9 $ 39.1 $ 42.5 $ 41.6 $ 40.1 4 $ 81.0 $ 76.7 6 Total cards-in-force (millions) 45.6 44.5 44.0 43.2 42.5 7 45.6 42.5 7 # - Denotes a variance of more than 100 percent. 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 Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, 2015 2015 2014 2014 2014ROE
Net income $ 5,922 $ 5,978 $ 5,885 $ 5,746 $ 5,635 Average shareholders' equity $ 21,050 $ 20,606 $ 20,254 $ 19,948 $ 19,591 Return on average equity (Q) 28.1 % 29.0 % 29.1 % 28.8 % 28.8 %Reconciliation of ROCE and ROTCE
Net income $ 5,922 $ 5,978 $ 5,885 $ 5,746 $ 5,635 Preferred shares dividends and related accretion 20 - - - - Earnings allocated to participating share awards and other 44 45 46 46 47 Net income attributable to common shareholders $ 5,858 $ 5,933 $ 5,839 $ 5,700 $ 5,588 Average shareholders' equity $ 21,050 $ 20,606 $ 20,254 $ 19,948 $ 19,591 Average preferred shares 716 350 114 - - Average common shareholders' equity $ 20,334 $ 20,256 $ 20,140 $ 19,948 $ 19,591 Average goodwill and other intangibles 3,802 3,845 3,888 3,941 3,994 Average tangible common shareholders' equity $ 16,532 $ 16,411 $ 16,252 $ 16,007 $ 15,597 Return on average common equity (Q) 28.8 % 29.3 % 29.0 % 28.6 % 28.5 % Return on average tangible common equity (R) 35.4 % 36.2 % 35.9 % 35.6 % 35.8 % 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 Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, 2015 2015 2014 2014 2014U.S. Card Services
Segment income $ 3,374 $ 3,258 $ 3,200 $ 3,399 $ 3,292 Average segment capital $ 10,352 $ 10,148 $ 9,843 $ 9,580 $ 9,337 Average goodwill and other intangibles 358 339 319 299 311 Average tangible segment capital $ 9,994 $ 9,809 $ 9,524 $ 9,281 $ 9,026 Return on average segment capital (S) 32.6 % 32.1 % 32.5 % 35.5 % 35.3 % Return on average tangible segment capital (S) 33.8 % 33.2 % 33.6 % 36.6 % 36.5 %International Card Services
Segment income $ 434 $ 386 $ 411 $ 481 $ 481 Average segment capital $ 3,133 $ 3,043 $ 3,020 $ 3,043 $ 3,063 Average goodwill and other intangibles 1,273 1,311 1,350 1,376 1,394 Average tangible segment capital $ 1,860 $ 1,732 $ 1,670 $ 1,667 $ 1,669 Return on average segment capital (S) 13.9 % 12.7 % 13.6 % 15.8 % 15.7 % Return on average tangible segment capital (S) 23.3 % 22.3 % 24.6 % 28.9 % 28.8 %Global Commercial Services
Segment income $ 1,181 $ 1,539 $ 1,543 $ 1,131 $ 1,188 Average segment capital $ 3,897 $ 3,859 $ 3,771 $ 3,736 $ 3,707 Average goodwill and other intangibles 1,661 1,678 1,696 1,715 1,736 Average tangible segment capital $ 2,236 $ 2,181 $ 2,075 $ 2,021 $ 1,971 Return on average segment capital (S) 30.3 % 39.9 % 40.9 % 30.3 % 32.0 % Return on average tangible segment capital (S) 52.8 % 70.6 % 74.4 % 56.0 % 60.3 %Global Network & Merchant Services
Segment income $ 1,736 $ 1,661 $ 1,660 $ 1,642 $ 1,606 Average segment capital $ 2,080 $ 2,024 $ 1,976 $ 1,989 $ 2,022 Average goodwill and other intangibles 194 190 189 190 192 Average tangible segment capital $ 1,886 $ 1,834 $ 1,787 $ 1,799 $ 1,830 Return on average segment capital (S) 83.5 % 82.1 % 84.0 % 82.6 % 79.4 % Return on average tangible segment capital (S) 92.0 % 90.6 % 92.9 % 91.3 % 87.8 % American Express Company (Preliminary)Net Interest Yield on Card Member Loans
Appendix III
(Millions, except percentages and where indicated) Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, 2015 2015 2014 2014 2014 Net interest income $ 1,423 $ 1,447 $ 1,424 $ 1,395 $ 1,316 Exclude: Interest expense not attributable to the Company's Card Member loan portfolio $ 249 $ 249 $ 250 $ 247 $ 259 Interest income not attributable to the Company's Card Member loan portfolio $ (97 ) $ (95 ) $ (92 ) $ (90 ) $ (89 ) Adjusted net interest income (T) $ 1,575 $ 1,601 $ 1,582 $ 1,552 $ 1,486 Average loans (billions) $ 68.0 $ 67.6 $ 67.7 $ 66.4 $ 65.2 Exclude: Certain non-traditional Card Member loans and other fees (billions) $ (0.2 ) $ (0.2 ) $ (0.2 ) $ (0.2 ) $ (0.2 ) Adjusted average loans (billions) (U) $ 67.8 $ 67.4 $ 67.5 $ 66.2 $ 65.0 Net interest income divided by average loans (V) 8.4 % 8.6 % 8.4 % 8.5 % 8.1 % Net interest yield on Card Member loans (W) 9.3 % 9.6 % 9.3 % 9.3 % 9.2 % 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 Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, 2015 2015 2014 2014 2014USCS:
Net interest income $ 1,354 $ 1,377 $ 1,341 $ 1,313 $ 1,255 Exclude: Interest expense not attributable to the Company's Card Member loan portfolio $ 41 $ 38 $ 39 $ 39 $ 40 Interest income not attributable to the Company's Card Member loan portfolio $ (4 ) $ (3 ) $ (3 ) $ (3 ) $ (3 ) Adjusted net interest income (T) $ 1,391 $ 1,412 $ 1,377 $ 1,349 $ 1,292 Average loans (billions) $ 60.9 $ 60.4 $ 59.7 $ 58.0 $ 56.8 Exclude:Certain non-traditional Card Member loans
and other fees (billions)
$ - $ - $ - $ - $ - Adjusted average loans (billions) (U) $ 60.9 $ 60.4 $ 59.7 $ 58.0 $ 56.8 Net interest income divided by average loans (V) 8.9 % 9.1 % 9.0 % 9.1 % 8.9 % Net interest yield on Card Member loans (W) 9.2 % 9.5 % 9.1 % 9.2 % 9.1 %ICS:
Net interest income $ 176 $ 180 $ 189 $ 188 $ 183 Exclude: Interest expense not attributable to the Company's Card Member loan portfolio $ 16 $ 18 $ 26 $ 24 $ 21 Interest income not attributable to the Company's Card Member loan portfolio $ (8 ) $ (8 ) $ (9 ) $ (10 ) $ (10 ) Adjusted net interest income (T) $ 184 $ 190 $ 206 $ 202 $ 194 Average loans (billions) $ 7.0 $ 7.2 $ 7.9 $ 8.3 $ 8.3 Exclude:Certain non-traditional Card Member loans
and other fees (billions)
$ (0.1 ) $ (0.1 ) $ (0.2 ) $ (0.2 ) $ (0.2 ) Adjusted average loans (billions) (U) $ 6.9 $ 7.1 $ 7.7 $ 8.1 $ 8.1 Net interest income divided by average loans (V) 10.1 % 10.0 % 9.6 % 9.1 % 8.8 % Net interest yield on Card Member loans (W) 10.7 % 10.9 % 10.5 % 9.9 % 9.6 % American Express Company (Preliminary)Revenues Reconciliation for GBT Operations.
Appendix V
(Millions, except percentages) Quarters Ended Jun 30, Jun 30, % Change 2015 2014Consolidated:
Reported total revenues net of interest expense $ 8,284 $ 8,631 (4 )Global Business Travel ("GBT") revenues net of interest expense
- 402 Adjusted total revenues net of interest expense 8,284 8,229 1 FX and GBT adjusted total revenues net of interest expense (X) 7,909 5 Note: GBT revenues represent operating performance as reported in Q2'14. Appendix VI (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. (A) In Q1’15, the Company changed the classification related to certain payments to co-brand partners reducing both marketing and promotion and discount revenue. The misclassification in prior periods has been conformed to the current period presentation. The discount rate for prior periods has also been revised accordingly, resulting in a reduction of between zero and one basis point in any period from what was originally reported. (B) Represents net income, less (i) earnings allocated to participating share awards of $11 million for the quarter ended June 30, 2015, $11 million for the quarter ended March 31, 2015, $11 million for the quarter ended December 31, 2014, $11 million for the quarter ended September 30, 2014 and $12 million for the quarter ended June 30, 2014; and (ii) dividends on preferred shares of $20 million for the quarter ended June 30, 2015, and nil for all other comparative periods. (C) 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. (D) 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. (E) 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. (F) 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. (G) 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 $62 million for the quarter ended June 30, 2015, $83 million for the quarter ended March 31, 2015, $79 million for the quarter ended December 31, 2014, $77 million for the quarter ended September 30, 2014 and $77 million for the quarter ended June 30, 2014. 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. (H) Provisions for principal (resulting from authorized transactions) and fee reserve components. (I) Consists of principal (resulting from authorized transactions), interest and/or fees, less recoveries. (J) 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. (K) 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. Beginning in January 2015, timing of charge-offs for loans in certain modification programs changed from 180 days past due to 120 days past due. Excluding the impact of the change, which was fully recognized in the first quarter, the Q1'15 USCS/ICS Charge net write-off rate – principal only was 1.9% and the USCS Lending net write-off rate - principal only was 1.4%. (L) See Appendix III for quarterly 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. For calculations for the twelve months ended December 31, 2014 and 2013, please refer to Annex 3 of the Company’s 2014 Fourth Quarter/ Full Year Earnings Supplement on file with the Securities and Exchange Commission. (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 Company's 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 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. (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 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. (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 Company's Card Member loan portfolio. (X) Revenue net of interest expense on an FX adjusted basis and excluding the Company's business travel operations in Q2'14 is a non-GAAP measure. 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 Q2’15 foreign exchange rates apply to Q2'14 results). Country results used to calculate FX adjusted revenues, are subject to management allocations. Management believes this metric is useful in evaluating the ongoing operating performance of the Company. The Company’s calculations of non-GAAP measures may differ from the calculations of similarly titled measures of other companies.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150722006381/en/
Media:Marina H. Norville, +1-212-640-2832marina.h.norville@aexp.comorInvestors/Analysts:Ken Paukowits, +1-212-640-6348ken.f.paukowits@aexp.comorToby Willard, +1-212-640-5574sherwood.s.willardjr@aexp.com
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