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March 31, 2017
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New York | 13-4922250 | |||
(I.R.S. Employer Identification No.) | ||||
200 Vesey Street, New York, New York | 10285 | |||
(Address of principal executive offices) | (Zip Code) |
None |
Large accelerated filer | Accelerated filer | |
Non-accelerated filer | Smaller reporting company Emerging growth company |
Class | Outstanding at | ||
Common Shares (par value $0.20 per share) | 893,779,186 Shares |
Part I. | Page No. | ||||||||||
Item 1. | |||||||||||
1 | |||||||||||
2 | |||||||||||
3 | |||||||||||
4 | |||||||||||
5 | |||||||||||
Item 2. | 26 | ||||||||||
Item 3. | 54 | ||||||||||
Item 4. | |||||||||||
54 | |||||||||||
Part II. | |||||||||||
Item 1. | 57 | ||||||||||
Item 1A. | 57 | ||||||||||
Item 2. | 58 | ||||||||||
Item 5. | 59 | ||||||||||
Item 6. | 59 | ||||||||||
60 | |||||||||||
E-1 |
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Three Months Ended September 30 (Millions, except per share amounts) | 2016 | 2015 | ||||||
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Revenues | ||||||||
Non-interest revenues | ||||||||
Discount revenue | $ | 4,516 | $ | 4,778 | ||||
Net card fees | 747 | 679 | ||||||
Other fees and commissions | 694 | 727 | ||||||
Other | 483 | 504 | ||||||
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Total non-interest revenues | 6,440 | 6,688 | ||||||
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Interest income | ||||||||
Interest on loans | 1,690 | 1,847 | ||||||
Interest and dividends on investment securities | 34 | 38 | ||||||
Deposits with banks and other | 40 | 19 | ||||||
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Total interest income | 1,764 | 1,904 | ||||||
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Interest expense | ||||||||
Deposits | 150 | 125 | ||||||
Long-term debt and other | 280 | 274 | ||||||
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Total interest expense | 430 | 399 | ||||||
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Net interest income | 1,334 | 1,505 | ||||||
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Total revenues net of interest expense | 7,774 | 8,193 | ||||||
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Provisions for losses | ||||||||
Charge card | 174 | 203 | ||||||
Card Member loans | 319 | 309 | ||||||
Other | 11 | 17 | ||||||
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Total provisions for losses | 504 | 529 | ||||||
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Total revenues net of interest expense after provisions for losses | 7,270 | 7,664 | ||||||
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Expenses | ||||||||
Marketing and promotion | 930 | 847 | ||||||
Card Member rewards | 1,566 | 1,763 | ||||||
Card Member services and other | 278 | 269 | ||||||
Salaries and employee benefits | 1,263 | 1,212 | ||||||
Other, net | 1,498 | 1,635 | ||||||
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Total expenses | 5,535 | 5,726 | ||||||
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Pretax income | 1,735 | 1,938 | ||||||
Income tax provision | 593 | 672 | ||||||
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Net income | $ | 1,142 | $ | 1,266 | ||||
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Earnings per Common Share (Note 15):(a) | ||||||||
Basic | $ | 1.21 | $ | 1.24 | ||||
Diluted | $ | 1.20 | $ | 1.24 | ||||
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Average common shares outstanding for earnings per common share: | ||||||||
Basic | 920 | 994 | ||||||
Diluted | 923 | 997 | ||||||
Cash dividends declared per common share | $ | 0.32 | $ | 0.29 | ||||
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Three Months Ended March 31 (Millions, except per share amounts) | 2017 | 2016 | ||||||
Revenues | ||||||||
Non-interest revenues | ||||||||
Discount revenue | $ | 4,519 | $ | 4,643 | ||||
Net card fees | 748 | 699 | ||||||
Other fees and commissions | 713 | 680 | ||||||
Other | 409 | 486 | ||||||
Total non-interest revenues | 6,389 | 6,508 | ||||||
Interest income | ||||||||
Interest on loans | 1,860 | 1,938 | ||||||
Interest and dividends on investment securities | 23 | 36 | ||||||
Deposits with banks and other | 60 | 31 | ||||||
Total interest income | 1,943 | 2,005 | ||||||
Interest expense | ||||||||
Deposits | 149 | 150 | ||||||
Long-term debt and other | 294 | 275 | ||||||
Total interest expense | 443 | 425 | ||||||
Net interest income | 1,500 | 1,580 | ||||||
Total revenues net of interest expense | 7,889 | 8,088 | ||||||
Provisions for losses | ||||||||
Charge card | 213 | 169 | ||||||
Card Member loans | 337 | 227 | ||||||
Other | 23 | 38 | ||||||
Total provisions for losses | 573 | 434 | ||||||
Total revenues net of interest expense after provisions for losses | 7,316 | 7,654 | ||||||
Expenses | ||||||||
Marketing and promotion | 700 | 727 | ||||||
Card Member rewards | 1,807 | 1,703 | ||||||
Card Member services and other | 321 | 282 | ||||||
Salaries and employee benefits | 1,264 | 1,338 | ||||||
Other, net | 1,407 | 1,420 | ||||||
Total expenses | 5,499 | 5,470 | ||||||
Pretax income | 1,817 | 2,184 | ||||||
Income tax provision | 580 | 758 | ||||||
Net income | $ | 1,237 | $ | 1,426 | ||||
Earnings per Common Share (Note 15): (a) | ||||||||
Basic | $ | 1.34 | $ | 1.45 | ||||
Diluted | $ | 1.34 | $ | 1.45 | ||||
Average common shares outstanding for earnings per common share: | ||||||||
Basic | 899 | 961 | ||||||
Diluted | 903 | 963 | ||||||
Cash dividends declared per common share | $ | 0.32 | $ | 0.29 |
(a) | Represents net income less (i) earnings allocated to participating share awards of |
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Nine Months Ended September 30(Millions, except per share amounts) | 2016 | 2015 | ||||||
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Revenues | ||||||||
Non-interest revenues | ||||||||
Discount revenue | $ | 13,983 | $ | 14,384 | ||||
Net card fees | 2,161 | 2,013 | ||||||
Other fees and commissions | 2,076 | 2,162 | ||||||
Other | 1,514 | 1,493 | ||||||
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Total non-interest revenues | 19,734 | 20,052 | ||||||
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Interest income | ||||||||
Interest on loans | 5,446 | 5,418 | ||||||
Interest and dividends on investment securities | 104 | 120 | ||||||
Deposits with banks and other | 104 | 60 | ||||||
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Total interest income | 5,654 | 5,598 | ||||||
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Interest expense | ||||||||
Deposits | 450 | 337 | ||||||
Long-term debt and other | 841 | 886 | ||||||
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Total interest expense | 1,291 | 1,223 | ||||||
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Net interest income | 4,363 | 4,375 | ||||||
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Total revenues net of interest expense | 24,097 | 24,427 | ||||||
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Provisions for losses | ||||||||
Charge card | 496 | 542 | ||||||
Card Member loans | 831 | 829 | ||||||
Other | 74 | 45 | ||||||
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Total provisions for losses | 1,401 | 1,416 | ||||||
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Total revenues net of interest expense after provisions for losses | 22,696 | 23,011 | ||||||
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Expenses | ||||||||
Marketing and promotion | 2,445 | 2,217 | ||||||
Card Member rewards | 5,035 | 5,202 | ||||||
Card Member services and other | 841 | 772 | ||||||
Salaries and employee benefits | 4,052 | 3,767 | ||||||
Other, net | 3,388 | 4,569 | ||||||
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Total expenses | 15,761 | 16,527 | ||||||
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Pretax income | 6,935 | 6,484 | ||||||
Income tax provision | 2,352 | 2,220 | ||||||
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Net income | $ | 4,583 | $ | 4,264 | ||||
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Earnings per Common Share (Note 15): (a) | ||||||||
Basic | $ | 4.77 | $ | 4.16 | ||||
Diluted | $ | 4.76 | $ | 4.15 | ||||
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Average common shares outstanding for earnings per common share: | ||||||||
Basic | 940 | 1,007 | ||||||
Diluted | 943 | 1,011 | ||||||
Cash dividends declared per common share | $ | 0.90 | $ | 0.84 | ||||
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Three Months Ended March 31 (Millions) | 2017 | 2016 | ||||||
Net income | $ | 1,237 | $ | 1,426 | ||||
Other comprehensive income (loss): | ||||||||
Net unrealized securities gains, net of tax | 6 | 2 | ||||||
Foreign currency translation adjustments, net of tax | 316 | 4 | ||||||
Net unrealized pension and other postretirement benefit (losses) gains, net of tax | (8 | ) | 26 | |||||
Other comprehensive income | 314 | 32 | ||||||
Comprehensive income | $ | 1,551 | $ | 1,458 |
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Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
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(Millions) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
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Net income | $ | 1,142 | $ | 1,266 | $ | 4,583 | $ | 4,264 | ||||||||
Other comprehensive income (loss): | ||||||||||||||||
Net unrealized securities losses, net of tax of: 2016, $(9) and $(7); 2015, $(2) and $(13) | (15 | ) | (7 | ) | (8 | ) | (27 | ) | ||||||||
Foreign currency translation adjustments, net of tax of: 2016, $(24) and $37; 2015, $181 and $221 | 11 | (220 | ) | (115 | ) | (464 | ) | |||||||||
Net unrealized pension and other postretirement benefit gains, net of tax of: 2016, $7 and $36; 2015, $8 and $24 | 7 | 7 | 39 | 36 | ||||||||||||
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Other comprehensive income (loss) | 3 | (220 | ) | (84 | ) | (455 | ) | |||||||||
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Comprehensive income | $ | 1,145 | $ | 1,046 | $ | 4,499 | $ | 3,809 | ||||||||
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March 31, | December 31, | |||||||
(Millions, except share data) | 2017 | 2016 | ||||||
Assets | ||||||||
Cash and cash equivalents | ||||||||
Cash and due from banks | $ | 2,459 | $ | 3,278 | ||||
Interest-bearing deposits in other banks (includes securities purchased under resale agreements: 2017, $74; 2016, $115) | 25,497 | 20,779 | ||||||
Short-term investment securities | 1,410 | 1,151 | ||||||
Total cash and cash equivalents | 29,366 | 25,208 | ||||||
Accounts receivable | ||||||||
Card Member receivables (includes gross receivables available to settle obligations of a consolidated variable interest entity: 2017, $7,810; 2016, $8,874), less reserves: 2017, $491; 2016, $467 | 47,154 | 46,841 | ||||||
Other receivables, less reserves: 2017, $40; 2016, $45 | 2,812 | 3,232 | ||||||
Loans | ||||||||
Card Member loans (includes gross loans available to settle obligations of a consolidated variable interest entity: 2017, $24,438; 2016, $26,129), less reserves: 2017, $1,248; 2016, $1,223 | 62,320 | 64,042 | ||||||
Other loans, less reserves: 2017, $51; 2016, $42 | 1,635 | 1,419 | ||||||
Investment securities | 3,561 | 3,157 | ||||||
Premises and equipment, less accumulated depreciation and amortization: 2017, $5,405; 2016, $5,145 | 4,433 | 4,433 | ||||||
Other assets (includes restricted cash of consolidated variable interest entities: 2017, $55; 2016, $38) | 10,104 | 10,561 | ||||||
Total assets | $ | 161,385 | $ | 158,893 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Liabilities | ||||||||
Customer deposits | $ | 53,790 | $ | 53,042 | ||||
Travelers Cheques and other prepaid products | 2,706 | 2,812 | ||||||
Accounts payable | 11,700 | 11,190 | ||||||
Short-term borrowings | 3,600 | 5,581 | ||||||
Long-term debt (includes debt issued by consolidated variable interest entities: 2017, $16,757; 2016, $15,113) | 51,647 | 46,990 | ||||||
Other liabilities | 17,007 | 18,777 | ||||||
Total liabilities | 140,450 | 138,392 | ||||||
Contingencies (Note 8) | ||||||||
Shareholders’ Equity | ||||||||
Preferred shares, $1.662/3 par value, authorized 20 million shares; issued and outstanding 1,600 shares as of March 31, 2017 and December 31, 2016 | ― | ― | ||||||
Common shares, $0.20 par value, authorized 3.6 billion shares; issued and outstanding 895 million shares as of March 31, 2017 and 904 million shares as of December 31, 2016 | 179 | 181 | ||||||
Additional paid-in capital | 12,593 | 12,733 | ||||||
Retained earnings | 10,633 | 10,371 | ||||||
Accumulated other comprehensive loss | ||||||||
Net unrealized securities gains, net of tax of: 2017, $8; 2016, $5 | 13 | 7 | ||||||
Foreign currency translation adjustments, net of tax of: 2017, $(307); 2016, $24 | (1,946 | ) | (2,262 | ) | ||||
Net unrealized pension and other postretirement benefit losses, net of tax of: 2017, $(195); 2016, $(186) | (537 | ) | (529 | ) | ||||
Total accumulated other comprehensive loss | (2,470 | ) | (2,784 | ) | ||||
Total shareholders’ equity | 20,935 | 20,501 | ||||||
Total liabilities and shareholders’ equity | $ | 161,385 | $ | 158,893 |
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(Millions, except share data) | | September 30, 2016 | | | December 31, 2015 | | ||
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Assets | ||||||||
Cash and cash equivalents | ||||||||
Cash and due from banks | $ | 2,524 | $ | 2,935 | ||||
Interest-bearing deposits in banks (includes securities purchased under resale agreements: 2016, $243; 2015, $41) | 22,988 | 19,569 | ||||||
Short-term investment securities | 1,008 | 258 | ||||||
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Total cash and cash equivalents | 26,520 | 22,762 | ||||||
Card Member loans and receivables held for sale (includes gross loans and receivables available to settle obligations of consolidated variable interest entities: 2016, nil; 2015, $4,966) | — | 14,992 | ||||||
Accounts receivable | ||||||||
Card Member receivables (includes gross receivables available to settle obligations of a consolidated variable interest entity: 2016, $5,485; 2015, $6,649), less reserves: 2016, $437; 2015, $462 | 44,821 | 43,671 | ||||||
Other receivables, less reserves: 2016, $48; 2015, $43 | 2,510 | 3,024 | ||||||
Loans | ||||||||
Card Member loans (includes gross loans available to settle obligations of a consolidated variable interest entity: 2016, $24,752; 2015, $23,559), less reserves: 2016, $1,114; 2015, $1,028 | 59,504 | 57,545 | ||||||
Other loans, less reserves: 2016, $30; 2015, $20 | 1,157 | 1,254 | ||||||
Investment securities | 3,728 | 3,759 | ||||||
Premises and equipment, less accumulated depreciation and amortization: 2016, $4,995; 2015, $6,801 | 4,301 | 4,108 | ||||||
Other assets (includes restricted cash of consolidated variable interest entities: 2016, $612; 2015, $155) | 10,836 | 10,069 | ||||||
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Total assets | $ | 153,377 | $ | 161,184 | ||||
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Liabilities and Shareholders’ Equity | ||||||||
Liabilities | ||||||||
Customer deposits | $ | 53,500 | $ | 54,997 | ||||
Travelers Cheques and other prepaid products | 2,656 | 3,247 | ||||||
Accounts payable | 11,372 | 11,822 | ||||||
Short-term borrowings (includes debt issued by a consolidated variable interest entity: 2016, nil; 2015, $100) | 2,861 | 4,812 | ||||||
Long-term debt (includes debt issued by consolidated variable interest entities: 2016, $14,759; 2015, $13,602) | 44,894 | 48,061 | ||||||
Other liabilities | 17,077 | 17,572 | ||||||
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Total liabilities | 132,360 | 140,511 | ||||||
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Commitments and Contingencies (Note 8) | ||||||||
Shareholders’ Equity | ||||||||
Preferred shares, $1.662/3 par value, authorized 20 million shares; issued and outstanding 1,600 shares as of September 30, 2016 and December 31, 2015 | — | — | ||||||
Common shares, $0.20 par value, authorized 3.6 billion shares; issued and outstanding 917 million shares as of September 30, 2016 and 969 million shares as of December 31, 2015 | 184 | 194 | ||||||
Additional paid-in capital | 12,790 | 13,348 | ||||||
Retained earnings | 10,661 | 9,665 | ||||||
Accumulated other comprehensive loss | ||||||||
Net unrealized securities gains, net of tax: 2016, $25; 2015, $32 | 50 | 58 | ||||||
Foreign currency translation adjustments, net of tax: 2016, $(63); 2015, $(100) | (2,159 | ) | (2,044 | ) | ||||
Net unrealized pension and other postretirement benefit losses, net of tax: 2016, $(188); 2015, $(223) | (509 | ) | (548 | ) | ||||
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Total accumulated other comprehensive loss | (2,618 | ) | (2,534 | ) | ||||
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Total shareholders’ equity | 21,017 | 20,673 | ||||||
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Total liabilities and shareholders’ equity | $ | 153,377 | $ | 161,184 | ||||
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Three Months Ended March 31 (Millions) | 2017 | 2016 | ||||||
Cash Flows from Operating Activities | ||||||||
Net income | $ | 1,237 | $ | 1,426 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Provisions for losses | 573 | 434 | ||||||
Depreciation and amortization | 296 | 261 | ||||||
Deferred taxes and other | 8 | 218 | ||||||
Stock-based compensation | 89 | 70 | ||||||
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: | ||||||||
Other receivables | 795 | 427 | ||||||
Other assets | 349 | 232 | ||||||
Accounts payable and other liabilities | (2,069 | ) | (296 | ) | ||||
Travelers Cheques and other prepaid products | (118 | ) | (243 | ) | ||||
Net cash provided by operating activities | 1,160 | 2,529 | ||||||
Cash Flows from Investing Activities | ||||||||
Sales of available-for-sale investment securities | ― | 45 | ||||||
Maturities and redemptions of available-for-sale investment securities | 860 | 226 | ||||||
Purchases of investments | (1,294 | ) | (345 | ) | ||||
Net decrease in Card Member receivables and loans, including held for sale | 1,450 | 4,039 | ||||||
Purchase of premises and equipment, net of sales: 2017, nil; 2016, $1 | (277 | ) | (302 | ) | ||||
Acquisitions/dispositions, net of cash acquired | (28 | ) | (155 | ) | ||||
Net (increase) decrease in restricted cash | (11 | ) | 132 | |||||
Net cash provided by investing activities | 700 | 3,640 | ||||||
Cash Flows from Financing Activities | ||||||||
Net increase in customer deposits | 735 | 773 | ||||||
Net decrease in short-term borrowings | (1,941 | ) | (2,217 | ) | ||||
Issuance of long-term debt | 8,420 | 35 | ||||||
Principal payments on long-term debt | (3,801 | ) | (1,036 | ) | ||||
Issuance of American Express common shares | 31 | 11 | ||||||
Repurchase of American Express common shares | (926 | ) | (1,188 | ) | ||||
Dividends paid | (313 | ) | (302 | ) | ||||
Net cash provided by (used in) financing activities | 2,205 | (3,924 | ) | |||||
Effect of foreign currency exchange rates on cash and cash equivalents | 93 | 38 | ||||||
Net increase in cash and cash equivalents | 4,158 | 2,283 | ||||||
Cash and cash equivalents at beginning of period | 25,208 | 22,762 | ||||||
Cash and cash equivalents at end of period | $ | 29,366 | $ | 25,045 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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Nine Months Ended September 30 (Millions) | 2016 | 2015 | ||||||
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Cash Flows from Operating Activities |
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Net income | $ | 4,583 | $ | 4,264 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Provisions for losses | 1,401 | 1,416 | ||||||
Depreciation and amortization | 810 | 780 | ||||||
Deferred taxes and other | (1,076 | ) | 135 | |||||
Stock-based compensation | 190 | 200 | ||||||
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: | ||||||||
Other receivables | 485 | (203 | ) | |||||
Other assets | 115 | 1,864 | ||||||
Accounts payable and other liabilities | (1,028 | ) | (53 | ) | ||||
Travelers Cheques and other prepaid products | (594 | ) | (579 | ) | ||||
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Net cash provided by operating activities | 4,886 | 7,824 | ||||||
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Cash Flows from Investing Activities | ||||||||
Sales of available-for-sale investment securities | 51 | 12 | ||||||
Maturities and redemptions of available-for-sale investment securities | 1,209 | 1,821 | ||||||
Purchases of investments | (1,355 | ) | (1,564 | ) | ||||
Net decrease (increase) in Card Member receivables and loans, including held for sale (a) | 11,818 | (1,292 | ) | |||||
Purchase of premises and equipment, net of sales: 2016, $2; 2015, $32 | (975 | ) | (879 | ) | ||||
Acquisitions/dispositions, net of cash acquired | (191 | ) | (122 | ) | ||||
Net increase in restricted cash | (427 | ) | (683 | ) | ||||
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Net cash provided by (used in) investing activities | 10,130 | (2,707 | ) | |||||
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Cash Flows from Financing Activities | ||||||||
Net (decrease) increase in customer deposits | (1,499 | ) | 5,171 | |||||
Net decrease in short-term borrowings | (2,040 | ) | (273 | ) | ||||
Issuance of long-term debt | 5,926 | 7,923 | ||||||
Principal payments on long-term debt | (9,349 | ) | (16,858 | ) | ||||
Issuance of American Express preferred shares | — | 841 | ||||||
Issuance of American Express common shares | 78 | 169 | ||||||
Repurchase of American Express common shares | (3,477 | ) | (3,330 | ) | ||||
Dividends paid | (892 | ) | (868 | ) | ||||
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Net cash used in financing activities | (11,253 | ) | (7,225 | ) | ||||
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Effect of foreign currency exchange rates on cash and cash equivalents | (5 | ) | (242 | ) | ||||
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Net increase (decrease) in cash and cash equivalents | 3,758 | (2,350 | ) | |||||
Cash and cash equivalents at beginning of period | 22,762 | 22,288 | ||||||
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Cash and cash equivalents at end of period | $ | 26,520 | $ | 19,938 | ||||
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See Notes to Consolidated Financial Statements
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 & Other.
The accompanying Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20152016 (the Annual Report). If not materially different, certain footnote disclosures included therein have been omitted from this Quarterly Report on Form 10-Q.
AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
There is no impact to the Consolidated Statements of Income or Consolidated Balance Sheets. The Company has evaluated the effects of these misclassifications and concluded that none are material to any of its previously issued quarterly or annual Consolidated Financial Statements. Nevertheless, the Company has elected to revise prospectively the comparative periods mentioned above. For the nine months ended September 30, 2015, this revision resulted in a $250 million decrease to both Net cash used in financing activities and Net cash provided by operating activities. In addition, travel commissions and fees, which were separately disclosed on the Consolidated Statements of Income historically, are now included within Other fees and commissions.
standard.
and in preparation for the implementation, is evaluating the impact the guidance will have on its cost method investments, as well as the impact the standard will have on its accounting policies, business processes, systems and internal controls.
In March 2016, the FASB issued new accounting guidance on employee share-based payments. The guidance, which is effective January 1, 2017, with early adoption permitted, simplifies various aspects of the accounting for share-based payment transactions, including the income tax consequences, accounting for award forfeitures, and classification on the Consolidated Statements of Cash Flows. Among other items, the guidance requires excess tax benefits and deficiencies, which under previous guidance would have been recorded within additional paid-in capital, to now be recognized in the income tax provision within the results of operations. The Company continues to evaluate the impact this guidance will have on its financial position, results of operations and cash flows, among other items, but does not expect the impacts of the standard to be material upon adoption. The Company will adopt the standard, prospectively, effective January 1, 2017.
AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| ||||||||
(Millions) | 2016 | 2015 | ||||||
|
|
|
|
| ||||
U.S. Consumer Services(a) | $ | 44,857 | $ | 43,495 | ||||
International Consumer and Network Services | 6,700 | 7,072 | ||||||
Global Commercial Services | 9,061 | 8,006 | ||||||
|
|
|
|
| ||||
Card Member loans | 60,618 | 58,573 | ||||||
Less: Reserve for losses | 1,114 | 1,028 | ||||||
|
|
|
|
| ||||
Card Member loans, net | $ | 59,504 | $ | 57,545 | ||||
|
|
|
|
| ||||
Other loans, net(b) | $ | 1,157 | $ | 1,254 | ||||
|
(Millions) | 2017 | 2016 | ||||||
U.S. Consumer Services(a) | $ | 46,714 | $ | 48,758 | ||||
International Consumer and Network Services | 6,814 | 6,971 | ||||||
Global Commercial Services | 10,040 | 9,536 | ||||||
Card Member loans | 63,568 | 65,265 | ||||||
Less: Reserve for losses | 1,248 | 1,223 | ||||||
Card Member loans, net | $ | 62,320 | $ | 64,042 | ||||
Other loans, net(b) | $ | 1,635 | $ | 1,419 |
(a) | Includes approximately |
(b) | Other loans primarily represent |
| ||||||||
(Millions) | 2016 | 2015 | ||||||
|
|
|
|
| ||||
U.S. Consumer Services (a) | $ | 10,101 | $ | 11,807 | ||||
International Consumer and Network Services | 5,551 | 5,599 | ||||||
Global Commercial Services | 29,606 | 26,727 | ||||||
|
|
|
|
| ||||
Card Member receivables (b) | 45,258 | 44,133 | ||||||
Less: Reserve for losses | 437 | 462 | ||||||
|
|
|
|
| ||||
Card Member receivables, net | $ | 44,821 | $ | 43,671 | ||||
|
|
|
|
| ||||
Other receivables, net (c) | $ | 2,510 | $ | 3,024 | ||||
|
(Millions) | 2017 | 2016 | ||||||
U.S. Consumer Services (a) | $ | 10,918 | $ | 12,302 | ||||
International Consumer and Network Services | 5,543 | 5,966 | ||||||
Global Commercial Services | 31,184 | 29,040 | ||||||
Card Member receivables | 47,645 | 47,308 | ||||||
Less: Reserve for losses | 491 | 467 | ||||||
Card Member receivables, net | $ | 47,154 | $ | 46,841 | ||||
Other receivables, net (b) | $ | 2,812 | $ | 3,232 |
(a) | Includes |
(b) |
Other receivables primarily represent amounts related to (i) |
| ||||||||||||||||||||
2016(Millions) | Current |
| 30-59 Days Past Due |
|
| 60-89 Days Past Due |
| | 90+ Days Past Due | | Total | |||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Card Member Loans: | ||||||||||||||||||||
U.S. Consumer Services | $ | 44,367 | $ | 149 | $ | 105 | $ | 236 | $ | 44,857 | ||||||||||
International Consumer and Network Services | 6,589 | 34 | 25 | 52 | 6,700 | |||||||||||||||
Global Commercial Services | ||||||||||||||||||||
Global Small Business Services | 8,918 | 29 | 20 | 46 | 9,013 | |||||||||||||||
Global Corporate Payments(a) | (b | ) | (b | ) | (b | ) | 1 | 48 | ||||||||||||
Card Member Receivables: | ||||||||||||||||||||
U.S. Consumer Services | $ | 9,963 | $ | 51 | $ | 28 | $ | 59 | $ | 10,101 | ||||||||||
International Consumer and Network Services | 5,470 | 25 | 17 | 39 | 5,551 | |||||||||||||||
Global Commercial Services | ||||||||||||||||||||
Global Small Business Services | 13,605 | 77 | 44 | 83 | 13,809 | |||||||||||||||
Global Corporate Payments(a) | (b | ) | (b | ) | (b | ) | 124 | 15,797 | ||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
2015 (Millions) | Current |
| 30-59 Days Past Due |
|
| 60-89 Days Past Due |
| | 90+ Days Past Due | | Total | |||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Card Member Loans: | ||||||||||||||||||||
U.S. Consumer Services | $ | 43,063 | $ | 128 | $ | 94 | $ | 210 | $ | 43,495 | ||||||||||
International Consumer and Network Services | 6,961 | 34 | 25 | 52 | 7,072 | |||||||||||||||
Global Commercial Services | ||||||||||||||||||||
Global Small Business Services | 7,867 | 26 | 18 | 40 | 7,951 | |||||||||||||||
Global Corporate Payments(a) | (b | ) | (b | ) | (b | ) | 1 | 55 | ||||||||||||
Card Member Receivables: | ||||||||||||||||||||
U.S. Consumer Services | $ | 11,646 | $ | 54 | $ | 32 | $ | 75 | $ | 11,807 | ||||||||||
International Consumer and Network Services | 5,515 | 24 | 18 | 42 | 5,599 | |||||||||||||||
Global Commercial Services | ||||||||||||||||||||
Global Small Business Services | 12,734 | 69 | 45 | 102 | 12,950 | |||||||||||||||
Global Corporate Payments(a) | (b | ) | (b | ) | (b | ) | 124 | 13,777 | ||||||||||||
|
2017 (Millions) | Current | 30-59 Days Past Due | 60-89 Days Past Due | 90+ Days Past Due | Total | |||||||||||||||
Card Member Loans: | ||||||||||||||||||||
U.S. Consumer Services | $ | 46,158 | $ | 160 | $ | 120 | $ | 276 | $ | 46,714 | ||||||||||
International Consumer and Network Services | 6,698 | 37 | 25 | 54 | 6,814 | |||||||||||||||
Global Commercial Services | ||||||||||||||||||||
Global Small Business Services | $ | 9,850 | $ | 37 | $ | 28 | $ | 56 | $ | 9,971 | ||||||||||
Global Corporate Payments(a) | (b) | (b) | (b) | $ | 1 | $ | 69 | |||||||||||||
Card Member Receivables: | ||||||||||||||||||||
U.S. Consumer Services | $ | 10,778 | $ | 48 | $ | 32 | $ | 60 | $ | 10,918 | ||||||||||
International Consumer and Network Services | 5,462 | 25 | 17 | 39 | 5,543 | |||||||||||||||
Global Commercial Services | ||||||||||||||||||||
Global Small Business Services | $ | 14,351 | $ | 84 | $ | 52 | $ | 104 | $ | 14,591 | ||||||||||
Global Corporate Payments(a) | (b) | (b) | (b) | $ | 122 | $ | 16,593 | |||||||||||||
2016 (Millions) | Current | 30-59 Days Past Due | 60-89 Days Past Due | 90+ Days Past Due | Total | |||||||||||||||
Card Member Loans: | ||||||||||||||||||||
U.S. Consumer Services | $ | 48,216 | $ | 156 | $ | 119 | $ | 267 | $ | 48,758 | ||||||||||
International Consumer and Network Services | 6,863 | 32 | 24 | 52 | 6,971 | |||||||||||||||
Global Commercial Services | ||||||||||||||||||||
Global Small Business Services | $ | 9,378 | $ | 34 | $ | 23 | $ | 49 | $ | 9,484 | ||||||||||
Global Corporate Payments(a) | (b) | (b) | (b) | $ | ― | $ | 52 | |||||||||||||
Card Member Receivables: | ||||||||||||||||||||
U.S. Consumer Services | $ | 12,158 | $ | 45 | $ | 30 | $ | 69 | $ | 12,302 | ||||||||||
International Consumer and Network Services | 5,888 | 22 | 15 | 41 | 5,966 | |||||||||||||||
Global Commercial Services | ||||||||||||||||||||
Global Small Business Services | $ | 14,047 | $ | 77 | $ | 47 | $ | 102 | $ | 14,273 | ||||||||||
Global Corporate Payments(a) | (b) | (b) | (b) | $ | 135 | $ | 14,767 |
(a) | For |
(b) | Delinquency data for periods other than 90 days past billing is not available due to system constraints. Therefore, such data has not been utilized for risk management purposes. The balances that are current to 89 days past due can be derived as the difference between the Total and the 90+ Days Past Due balances. |
| ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Net Write-Off Rate | Net Write-Off Rate | |||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
| Principal Only(a) | | | Principal, Interest & Fees(a) | | | 30+ Days Past Due as a % of Total | | | Principal Only(a) | | | Principal, Interest & Fees(a) | | | 30+ Days Past Due as a % of Total | | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Card Member Loans: | ||||||||||||||||||||||||
U.S. Consumer Services | 1.5 | % | 1.8 | % | 1.1 | % | 1.4 | % | 1.6 | % | 1.0 | % | ||||||||||||
International Consumer and Network Services | 2.0 | % | 2.5 | % | 1.7 | % | 2.0 | % | 2.4 | % | 1.6 | % | ||||||||||||
Global Small Business Services | 1.4 | % | 1.7 | % | 1.1 | % | 1.3 | % | 1.5 | % | 1.0 | % | ||||||||||||
Card Member Receivables: | ||||||||||||||||||||||||
U.S. Consumer Services | 1.4 | % | 1.6 | % | 1.4 | % | 1.6 | % | 1.8 | % | 1.6 | % | ||||||||||||
International Consumer and Network Services | 2.1 | % | 2.3 | % | 1.5 | % | 2.1 | % | 2.3 | % | 1.6 | % | ||||||||||||
Global Small Business Services | 1.6 | % | 1.8 | % | 1.5 | % | 1.9 | % | 2.2 | % | 1.6 | % | ||||||||||||
| ||||||||||||||||||||||||
| ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
| Net Loss Ratio as a % of Charge Volume | | | 90+ Days Past Billing as a % of Receivables | | | Net Loss Ratio as a % of Charge Volume | | | 90+ Days Past Billing as a % of Receivables | | |||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||
Card Member Receivables: | ||||||||||||||||||||||||
Global Corporate Payments |
| 0.09 | % | 0.8 | % | 0.09 | % | 0.7 | % | |||||||||||||||
|
2017 | 2016 | |||||||||||||
Net Write-Off Rate | Net Write-Off Rate | |||||||||||||
Principal Only(a) | Principal, Interest & Fees(a) | 30+ Days Past Due as a % of Total | Principal Only(a) | Principal, Interest & Fees(a) | 30+ Days Past Due as a % of Total | |||||||||
Card Member Loans: | ||||||||||||||
U.S. Consumer Services | 1.7 | % | 2.0 | % | 1.2 | % | 1.5 | % | 1.7 | % | 1.0 | % | ||
International Consumer and Network Services | 2.0 | % | 2.5 | % | 1.7 | % | 1.9 | % | 2.4 | % | 1.8 | % | ||
Global Small Business Services | 1.6 | % | 1.8 | % | 1.2 | % | 1.4 | % | 1.6 | % | 1.0 | % | ||
Card Member Receivables: | ||||||||||||||
U.S. Consumer Services | 1.5 | % | 1.7 | % | 1.3 | % | 1.8 | % | 2.0 | % | 1.4 | % | ||
International Consumer and Network Services | 2.1 | % | 2.3 | % | 1.5 | % | 2.2 | % | 2.4 | % | 1.5 | % | ||
Global Small Business Services | 1.8 | % | 2.0 | % | 1.6 | % | 1.8 | % | 2.1 | % | 1.6 | % | ||
2017 | 2016 | |||||||||||||
Net Loss Ratio as a % of Charge Volume | 90+ Days Past Billing as a % of Receivables | Net Loss Ratio as a % of Charge Volume | 90+ Days Past Billing as a % of Receivables | |||||||||||
Card Member Receivables: | ||||||||||||||
Global Corporate Payments | 0.11 | % | 0.7 | % | 0.08 | % | 0.7 | % |
(a) | 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 considers uncollectible interest and/or fees in estimating its reserves for credit losses, a net write-off rate including principal, interest and/or fees is also presented. |
As of March 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
As of September 30, 2016 | Accounts Classified as a TDR(c) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Classified as a TDR(c) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016(Millions) | Over 90 days Past Due & Accruing Interest(a) | Non- Accruals(b) | In Program(d) | Out of Program(e) | Total Impaired Balance | Unpaid Principal Balance | Allowance for TDRs | |||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
2017 (Millions) | Over 90 days Past Due & Accruing Interest(a) | Non-Accruals(b) | In Program(d) | Out of Program(e) | Total Impaired Balance | Unpaid Principal Balance | Allowance for TDRs | |||||||||||||||||||||||||||||||||||||||||||||||||
Card Member Loans: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Consumer Services | $ | 156 | $ | 133 | 168 | $ | 124 | $ | 581 | $ | 532 | $ | 50 | $ | 179 | $ | 150 | $ | 160 | $ | 132 | $ | 621 | $ | 565 | $ | 50 | |||||||||||||||||||||||||||||
International Consumer and Network Services | 52 | — | — | — | 52 | 51 | — | 54 | ― | ― | ― | 54 | 53 | ― | ||||||||||||||||||||||||||||||||||||||||||
Global Commercial Services | 27 | 29 | 27 | 25 | 108 | 100 | 10 | 33 | 34 | 26 | 27 | 120 | 111 | 10 | ||||||||||||||||||||||||||||||||||||||||||
Card Member Receivables: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Consumer Services | — | — | 9 | 5 | 14 | 14 | 6 | ― | ― | 11 | 7 | 18 | 18 | 8 | ||||||||||||||||||||||||||||||||||||||||||
Global Commercial Services | — | — | 24 | 8 | 32 | 32 | 18 | ― | ― | 29 | 13 | 42 | 42 | 20 | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 235 | $ | 162 | 228 | $ | 162 | $ | 787 | $ | 729 | $ | 84 | $ | 266 | $ | 184 | $ | 226 | $ | 179 | $ | 855 | $ | 789 | $ | 88 | |||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Classified as a TDR(c) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015(Millions) | Over 90 days Past Due & Accruing Interest(a) | Non- Accruals(b) | In Program(d) | Out of Program(e) | Total Impaired | Unpaid Principal Balance | Allowance for TDRs | |||||||||||||||||||||||||||||||||||||||||||||||||
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|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Card Member Loans: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Consumer Services | $ | 140 | $ | 124 | 149 | $ | 89 | $ | 502 | $ | 463 | $ | 44 | |||||||||||||||||||||||||||||||||||||||||||
International Consumer and Network Services | 52 | — | — | — | 52 | 51 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Global Commercial Services | 24 | 26 | 23 | 18 | 91 | 85 | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||
Card Member Receivables: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Consumer Services | — | — | 11 | 3 | 14 | 14 | 8 | |||||||||||||||||||||||||||||||||||||||||||||||||
Global Commercial Services | — | — | 16 | 3 | 19 | 19 | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 216 | $ | 150 | 199 | $ | 113 | $ | 678 | $ | 632 | $ | 73 | |||||||||||||||||||||||||||||||||||||||||||
|
As of December 31, 2016 | ||||||||||||||||||||||||||||
Accounts Classified as a TDR(c) | ||||||||||||||||||||||||||||
2016 (Millions) | Over 90 days Past Due & Accruing Interest(a) | Non-Accruals(b) | In Program(d) | Out of Program(e) | Total Impaired Balance | Unpaid Principal Balance | Allowance for TDRs | |||||||||||||||||||||
Card Member Loans: | ||||||||||||||||||||||||||||
U.S. Consumer Services | $ | 178 | $ | 139 | $ | 165 | $ | 129 | $ | 611 | $ | 558 | $ | 51 | ||||||||||||||
International Consumer and Network Services | 52 | ― | ― | ― | 52 | 51 | ― | |||||||||||||||||||||
Global Commercial Services | 30 | 30 | 26 | 26 | 112 | 103 | 9 | |||||||||||||||||||||
Card Member Receivables: | ||||||||||||||||||||||||||||
U.S. Consumer Services | ― | ― | 11 | 6 | 17 | 17 | 7 | |||||||||||||||||||||
Global Commercial Services | ― | ― | 28 | 10 | 38 | 38 | 21 | |||||||||||||||||||||
Total | $ | 260 | $ | 169 | $ | 230 | $ | 171 | $ | 830 | $ | 767 | $ | 88 |
(a) | The Company’s policy is generally to accrue interest through the date of write-off (typically 180 days past due). The Company establishes reserves for interest that it believes will not be collected. Amounts presented exclude Card Member loans classified as a TDR. |
(b) | Non-accrual loans not in modification programs primarily include certain Card Member loans placed with outside collection agencies for which the Company has ceased accruing interest. Amounts presented exclude Card Member loans classified as a TDR. |
(c) | Accounts classified as a TDR include |
(d) | In Program TDRs include Card Member accounts that are currently enrolled in a modification program. |
(e) | Out of Program TDRs include |
2017 | 2016 | |||||||||||||||||||||||||||||||
|
| Interest | Interest | |||||||||||||||||||||||||||||
Three Months Ended September 30, 2016 | Nine Months Ended September 30, 2016 | Average | Income | Average | Income | |||||||||||||||||||||||||||
(Millions) | Average Balance | Interest Income Recognized | Average Balance | Interest Income Recognized | Balance | Recognized | Balance | Recognized | ||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||
Card Member Loans: | ||||||||||||||||||||||||||||||||
U.S. Consumer Services | $ | 587 | $ | 14 | $ | 555 | $ | 38 | $ | 616 | $ | 16 | $ | 505 | $ | 12 | ||||||||||||||||
International Consumer and Network Services | 53 | 4 | 52 | 12 | 53 | 4 | 53 | 4 | ||||||||||||||||||||||||
Global Commercial Services | 111 | 4 | 102 | 10 | 116 | 4 | 92 | 3 | ||||||||||||||||||||||||
Card Member Receivables: | ||||||||||||||||||||||||||||||||
U.S. Consumer Services | 13 | — | 13 | — | 18 | ― | 14 | ― | ||||||||||||||||||||||||
Global Commercial Services | 29 | — | 24 | — | 40 | ― | 22 | ― | ||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Total | $ | 793 | $ | 22 | $ | 746 | $ | 60 | $ | 843 | $ | 24 | $ | 686 | $ | 19 | ||||||||||||||||
| ||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
Three Months Ended September 30, 2015 | Nine Months Ended September 30, 2015 | |||||||||||||||||||||||||||||||
(Millions) | Average Balance | Interest Income Recognized | Average Balance | Interest Income Recognized | ||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||
Card Member Loans: | ||||||||||||||||||||||||||||||||
U.S. Consumer Services | $ | 585 | $ | 13 | $ | 580 | $ | 34 | ||||||||||||||||||||||||
International Consumer and Network Services | 53 | 3 | 55 | 10 | ||||||||||||||||||||||||||||
Global Commercial Services | 108 | 3 | 105 | 9 | ||||||||||||||||||||||||||||
Card Member Receivables: | ||||||||||||||||||||||||||||||||
U.S. Consumer Services | 11 | — | 14 | — | ||||||||||||||||||||||||||||
Global Commercial Services | 17 | — | 21 | — | ||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Total | $ | 774 | $ | 19 | $ | 775 | $ | 53 | ||||||||||||||||||||||||
|
AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| ||||||||||||||||||||||||||||||||
Three Months Ended
September 30, 2016 |
Nine Months Ended
September 30, 2016 | |||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
| Number of Accounts (in thousands) | Outstanding Balances(a) ($ in millions) | Average Interest Rate Reduction (% Points) | Average Payment Term Extension (# of Months) | Number of Accounts (in thousands) | Outstanding Balances(a) ($ in millions) | Average Interest Rate Reduction (% Points) | Average Payment Term Extension (# of Months) | ||||||||||||||||||||||||
Troubled Debt Restructurings: | ||||||||||||||||||||||||||||||||
Card Member Loans | 8 | $ | 56 | 9 | (b | ) | 23 | $ | 163 | 10 | (b | ) | ||||||||||||||||||||
Card Member Receivables | 2 | 29 | (c | ) | 19 | 7 | 94 | (c | ) | 17 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Total | 10 | $ | 85 | 30 | $ | 257 | ||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
Three Months Ended
September 30, 2015 | Nine Months Ended
September 30, 2015 | |||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
| Number of Accounts (in thousands) | Outstanding Balances(a) ($ in millions) | Average Interest Rate Reduction (% Points) | Average Payment Term Extension (# of Months) | Number of Accounts (in thousands) | Outstanding Balances(a) ($ in millions) | Average Interest Rate Reduction (% Points) | Average Payment Term Extension (# of Months) | ||||||||||||||||||||||||
Troubled Debt Restructurings: | ||||||||||||||||||||||||||||||||
Card Member Loans | 10 | $ | 69 | 9 | (b | ) | 31 | $ | 218 | 10 | (b | ) | ||||||||||||||||||||
Card Member Receivables | 3 | 37 | (c | ) | 12 | 9 | 111 | (c | ) | 12 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Total | 13 | $ | 106 | 40 | $ | 329 | ||||||||||||||||||||||||||
|
Three Months Ended March 31, 2017 | ||||||||||||||||
Number of | Outstanding | Average Interest | Average Payment | |||||||||||||
Accounts | Balances(a) | Rate Reduction | Term Extensions | |||||||||||||
(in thousands) | ($ in millions) | (% Points) | (# of Months) | |||||||||||||
Troubled Debt Restructurings: | ||||||||||||||||
Card Member Loans | 8 | $ | 57 | 13 | (b) | |||||||||||
Card Member Receivables | 2 | 28 | (c) | 22 | ||||||||||||
Total | 10 | $ | 85 | |||||||||||||
Three Months Ended March 31, 2016 | ||||||||||||||||
Number of | Outstanding | Average Interest | Average Payment | |||||||||||||
Accounts | Balances(a) | Rate Reduction | Term Extensions | |||||||||||||
(in thousands) | ($ in millions) | (% Points) | (# of Months) | |||||||||||||
Troubled Debt Restructurings: | ||||||||||||||||
Card Member Loans | 8 | $ | 57 | 13 | (b) | |||||||||||
Card Member Receivables | 3 | 38 | (c) | 16 | ||||||||||||
Total | 11 | $ | 95 |
(a) | Represents the outstanding balance immediately prior to modification. The outstanding balance includes principal, fees and accrued interest on Card Member loans and principal and fees on Card Member receivables. |
(b) | For Card Member loans, there have been no payment term extensions. |
(c) | The Company does not offer interest rate reduction programs for Card Member receivables as the receivables are non-interest bearing. |
2017 | 2016 | |||||||||||||||
Number of Accounts | Aggregated Outstanding Balances Upon Default(a) | Number of Accounts | Aggregated Outstanding Balances Upon Default(a) | |||||||||||||
(thousands) | (millions) | (thousands) | (millions) | |||||||||||||
Troubled Debt Restructurings That Subsequently Defaulted: | ||||||||||||||||
Card Member Loans | 2 | $ | 11 | 1 | $ | 9 | ||||||||||
Card Member Receivables | 1 | 1 | 1 | 1 | ||||||||||||
Total | 3 | $ | 12 | 2 | $ | 10 |
Three Months Ended
September 30, 2016 | Nine Months Ended
September 30, 2016 | |||||||||||||||
|
|
|
| |||||||||||||
Number of (in thousands) | Aggregated ($ in millions) | Number of (in thousands) | Aggregated ($ in millions) | |||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Troubled Debt Restructurings That Subsequently Defaulted: | ||||||||||||||||
Card Member Loans | 3 | $ | 12 | 5 | $ | 30 | ||||||||||
Card Member Receivables | 1 | 1 | 3 | 3 | ||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Total | 4 | $ | 13 | 8 | $ | 33 | ||||||||||
| ||||||||||||||||
| ||||||||||||||||
Three Months Ended
September 30, 2015 | Nine Months Ended
September 30, 2015 | |||||||||||||||
|
|
|
| |||||||||||||
Number of (in thousands) | Aggregated ($ in millions) | Number of Accounts (in thousands) | Aggregated Outstanding Balances Upon Default(a) ($ in millions) | |||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Troubled Debt Restructurings That Subsequently Defaulted: | ||||||||||||||||
Card Member Loans | 1 | $ | 14 | 6 | $ | 39 | ||||||||||
Card Member Receivables | 1 | 1 | 3 | 3 | ||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Total | 2 | $ | 15 | 9 | $ | 42 | ||||||||||
|
(a) | The outstanding balances upon default include principal, fees and accrued interest on Card Member loans, and principal and fees on Card Member receivables. |
AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| ||||||||
(Millions) | 2016 | 2015 | ||||||
|
|
|
|
| ||||
Balance, January 1 | $ | 1,028 | $ | 1,201 | ||||
Provisions(a) | 831 | 829 | ||||||
Net write-offs | ||||||||
Principal(b) | (687 | ) | (733 | ) | ||||
Interest and fees(b) | (128 | ) | (122 | ) | ||||
Other(c) | 70 | (11 | ) | |||||
|
|
|
|
| ||||
Balance, September 30 | $ | 1,114 | $ | 1,164 | ||||
|
(Millions) | 2017 | 2016 | ||||||
Balance, January 1 | $ | 1,223 | $ | 1,028 | ||||
Provisions(a) | 337 | 227 | ||||||
Net write-offs(b) | ||||||||
Principal | (272 | ) | (214 | ) | ||||
Interest and fees | (51 | ) | (40 | ) | ||||
Other(c) | 11 | 11 | ||||||
Balance, March 31 | $ | 1,248 | $ | 1,012 |
(a) | Provisions for principal, interest and fee reserve components. |
(b) |
(c) | Includes foreign currency translation adjustments of |
| ||||||||||||||||
(Millions) | 2016 | 2015 | 2017 | 2016 | ||||||||||||
|
|
| ||||||||||||||
Card Member loans evaluated individually for impairment(a) | $ | 344 | $ | 279 | $ | 345 | $ | 346 | ||||||||
Related reserves(a) | $ | 60 | $ | 53 | $ | 60 | $ | 60 | ||||||||
| ||||||||||||||||
Card Member loans evaluated collectively for impairment(b) | $ | 60,274 | $ | 58,294 | $ | 63,223 | $ | 64,919 | ||||||||
Related reserves(b) | $ | 1,054 | $ | 975 | $ | 1,188 | $ | 1,163 | ||||||||
|
(a) | Represents loans modified as a TDR and related reserves. |
(b) | Represents current loans and loans less than 90 days past due, loans over 90 days past due and accruing interest, and non-accrual loans. The reserves include the quantitative results of analytical models that are specific to individual pools of loans, and reserves for internal and external qualitative risk factors that apply to loans that are collectively evaluated for impairment. |
| ||||||||
(Millions) | 2016 | 2015 | ||||||
|
|
|
|
| ||||
Balance, January 1 | $ | 462 | $ | 465 | ||||
Provisions(a) | 496 | 542 | ||||||
Net write-offs(b) | (518 | ) | (544 | ) | ||||
Other(c) | (3 | ) | (22 | ) | ||||
|
|
|
|
| ||||
Balance, September 30 | $ | 437 | $ | 441 | ||||
|
(Millions) | 2017 | 2016 | ||||||
Balance, January 1 | $ | 467 | $ | 462 | ||||
Provisions(a) | 213 | 169 | ||||||
Net write-offs(b) | (194 | ) | (186 | ) | ||||
Other(c) | 5 | 1 | ||||||
Balance, March 31 | $ | 491 | $ | 446 |
(a) | Provisions for principal and fee reserve components. |
(b) |
(c) | Includes foreign currency translation adjustments of |
AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| ||||||||||||||||
(Millions) | 2016 | 2015 | 2017 | 2016 | ||||||||||||
|
|
| ||||||||||||||
Card Member receivables evaluated individually for impairment(a) | $ | 46 | $ | 33 | $ | 60 | $ | 55 | ||||||||
Related reserves(a) | $ | 24 | $ | 20 | $ | 28 | $ | 28 | ||||||||
| ||||||||||||||||
Card Member receivables evaluated collectively for impairment | $ | 45,212 | $ | 44,100 | $ | 47,585 | $ | 47,253 | ||||||||
Related reserves(b) | $ | 413 | $ | 442 | $ | 463 | $ | 439 | ||||||||
|
(a) | Represents receivables modified as a TDR and related reserves. |
(b) | The reserves include the quantitative results of analytical models that are specific to individual pools of receivables, and reserves for internal and external qualitative risk factors that apply to receivables that are collectively evaluated for impairment. |
| ||||||||||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Description of Securities(Millions) | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Value | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Value | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
State and municipal obligations | $ | 2,255 | $ | 50 | $ | — | $ | 2,305 | $ | 2,813 | $ | 85 | $ | (5 | ) | $ | 2,893 | |||||||||||||||
U.S. Government agency obligations | 12 | — | — | 12 | 2 | — | — | 2 | ||||||||||||||||||||||||
U.S. Government treasury obligations | 529 | 12 | — | 541 | 406 | 4 | (1 | ) | 409 | |||||||||||||||||||||||
Corporate debt securities | 20 | 1 | — | 21 | 29 | 1 | — | 30 | ||||||||||||||||||||||||
Mortgage-backed securities(a) | 103 | 5 | — | 108 | 117 | 4 | — | 121 | ||||||||||||||||||||||||
Equity securities | 1 | — | — | 1 | 1 | — | — | 1 | ||||||||||||||||||||||||
Foreign government bonds and obligations | 682 | 10 | — | 692 | 250 | 6 | (1 | ) | 255 | |||||||||||||||||||||||
Other(b) | 50 | — | (2 | ) | 48 | 50 | — | (2 | ) | 48 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Total | $ | 3,652 | $ | 78 | $ | (2 | ) | $ | 3,728 | $ | 3,668 | $ | 100 | $ | (9 | ) | $ | 3,759 | ||||||||||||||
|
2017 | 2016 | |||||||||||||||||||||||||||||||
Gross | Gross | Estimated | Gross | Gross | Estimated | |||||||||||||||||||||||||||
Unrealized | Unrealized | Fair | Unrealized | Unrealized | Fair | |||||||||||||||||||||||||||
Description of Securities (Millions) | Cost | Gains | Losses | Value | Cost | Gains | Losses | Value | ||||||||||||||||||||||||
State and municipal obligations | $ | 1,686 | $ | 24 | $ | (4 | ) | $ | 1,706 | $ | 2,019 | $ | 28 | $ | (11 | ) | $ | 2,036 | ||||||||||||||
U.S. Government agency obligations | 12 | ― | ― | 12 | 12 | ― | ― | 12 | ||||||||||||||||||||||||
U.S. Government treasury obligations | 1,135 | 7 | (6 | ) | 1,136 | 465 | 3 | (8 | ) | 460 | ||||||||||||||||||||||
Corporate debt securities | 19 | ― | ― | 19 | 19 | ― | ― | 19 | ||||||||||||||||||||||||
Mortgage-backed securities (a) | 87 | 3 | ― | 90 | 92 | 3 | ― | 95 | ||||||||||||||||||||||||
Equity securities | 1 | ― | ― | 1 | 1 | ― | ― | 1 | ||||||||||||||||||||||||
Foreign government bonds and obligations | 549 | 1 | (1 | ) | 549 | 486 | 1 | (1 | ) | 486 | ||||||||||||||||||||||
Other (b) | 50 | ― | (2 | ) | 48 | 50 | ― | (2 | ) | 48 | ||||||||||||||||||||||
Total | $ | 3,539 | $ | 35 | $ | (13 | ) | $ | 3,561 | $ | 3,144 | $ | 35 | $ | (22 | ) | $ | 3,157 |
(a) | Represents mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae. |
(b) | Other comprises investments in various mutual funds. |
AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| 2017 | 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less than 12 months | 12 months or more | Less than 12 months | 12 months or more | Less than 12 months | 12 months or more | Less than 12 months | 12 months or more | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| Gross | Gross | Gross | Gross | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Description of Securities (Millions) | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Unrealized Losses | Estimated Fair Value | Unrealized Losses | Estimated Fair Value | Unrealized Losses | Estimated Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
State and municipal obligations | $ | — | $ | — | $ | — | — | $ | 100 | $ | (3 | ) | $ | 13 | $ | (2 | ) | $ | 98 | $ | (4 | ) | $ | ― | $ | ― | $ | 153 | $ | (11 | ) | $ | ― | $ | ― | |||||||||||||||||||||||||||||
U.S. Government treasury obligations | — | — | — | — | 253 | (1 | ) | — | — | 299 | (6 | ) | ― | ― | 298 | (8 | ) | ― | ― | |||||||||||||||||||||||||||||||||||||||||||||
Foreign government bonds and obligations | — | — | — | — | 99 | (1 | ) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | 33 | (1 | ) | — | — | 33 | (2 | ) | ― | ― | 32 | (2 | ) | ― | ― | 32 | (2 | ) | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | — | $ | — | $ | 33 | $ | (1 | ) | $ | 452 | $ | (5 | ) | $ | 46 | $ | (4 | ) | $ | 397 | $ | (10 | ) | $ | 32 | $ | (2 | ) | $ | 451 | $ | (19 | ) | $ | 32 | $ | (2 | ) | |||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Ratio of Fair Value to Amortized Cost (Dollars in millions) | Number of Securities | Estimated Fair Value | Gross Unrealized Losses | Number of Securities | Estimated Fair Value | Gross Unrealized Losses | Number of Securities | Estimated Fair Value | Gross Unrealized Losses | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
2016: | ||||||||||||||||||||||||||||||||||||
90%–100% | — | $ | — | $ | — | 6 | $ | 33 | $ | (1 | ) | 6 | $ | 33 | $ | (1 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Total as of September 30, 2016 | — | $ | — | $ | — | 6 | $ | 33 | $ | (1 | ) | 6 | $ | 33 | $ | (1 | ) | |||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
2015: | ||||||||||||||||||||||||||||||||||||
90%–100% | 52 | $ | 450 | $ | (5 | ) | 15 | $ | 37 | $ | (2 | ) | 67 | $ | 487 | $ | (7 | ) | ||||||||||||||||||
Less than 90% | — | — | — | 2 | 9 | (2 | ) | 2 | 9 | (2 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Total as of December 31, 2015 | 52 | $ | 450 | $ | (5 | ) | 17 | $ | 46 | $ | (4 | ) | 69 | $ | 496 | $ | (9 | ) | ||||||||||||||||||
|
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||||||||||||
Ratio of Fair Value to | Gross | Gross | Gross | |||||||||||||||||||||||||||||||||
Amortized Cost | Number of | Estimated | Unrealized | Number of | Estimated | Unrealized | Number of | Estimated | Unrealized | |||||||||||||||||||||||||||
(Dollars in millions) | Securities | Fair Value | Losses | Securities | Fair Value | Losses | Securities | Fair Value | Losses | |||||||||||||||||||||||||||
2017: | ||||||||||||||||||||||||||||||||||||
90%–100% | 21 | $ | 397 | $ | (10 | ) | 6 | $ | 32 | $ | (2 | ) | 27 | $ | 429 | $ | (12 | ) | ||||||||||||||||||
Total as of March 31, 2017 | 21 | $ | 397 | $ | (10 | ) | 6 | $ | 32 | $ | (2 | ) | 27 | $ | 429 | $ | (12 | ) | ||||||||||||||||||
2016: | ||||||||||||||||||||||||||||||||||||
90%–100% | 33 | $ | 411 | $ | (13 | ) | 6 | $ | 32 | $ | (2 | ) | 39 | $ | 443 | $ | (15 | ) | ||||||||||||||||||
Less than 90% | 4 | 40 | (6 | ) | ― | ― | ― | 4 | 40 | (6 | ) | |||||||||||||||||||||||||
Total as of December 31, 2016 | 37 | $ | 451 | $ | (19 | ) | 6 | $ | 32 | $ | (2 | ) | 43 | $ | 483 | $ | (21 | ) |
| ||||||||
(Millions) | Cost | Estimated Fair Value | ||||||
|
|
|
|
| ||||
Due within 1 year | $ | 788 | $ | 789 | ||||
Due after 1 year but within 5 years | 347 | 352 | ||||||
Due after 5 years but within 10 years | 399 | 418 | ||||||
Due after 10 years | 2,067 | 2,120 | ||||||
|
|
|
|
| ||||
Total | $ | 3,601 | $ | 3,679 | ||||
|
Estimated | ||||||||
(Millions) | Cost | Fair Value | ||||||
Due within 1 year | $ | 689 | $ | 690 | ||||
Due after 1 year but within 5 years | 990 | 992 | ||||||
Due after 5 years but within 10 years | 365 | 369 | ||||||
Due after 10 years | 1,446 | 1,462 | ||||||
Total | $ | 3,490 | $ | 3,513 |
AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
assets to third-party investors.
| ||||||||
(Millions) | 2016 | 2015 | ||||||
|
|
|
|
| ||||
Lending Trust | $ | 611 | $ | 153 | ||||
Charge Trust | 1 | 2 | ||||||
|
|
|
|
| ||||
Total | $ | 612 | $ | 155 | ||||
|
(Millions) | 2017 | 2016 | ||||||
Lending Trust | $ | 52 | $ | 35 | ||||
Charge Trust | 3 | 3 | ||||||
Total | $ | 55 | $ | 38 |
| ||||||||
(Millions) | 2016 | 2015 | ||||||
|
|
|
|
| ||||
U.S.: | ||||||||
Interest bearing | $ | 52,767 | $ | 54,102 | ||||
Non-interest bearing (includes Card Member credit balances of: 2016, $297 million; 2015, $389 million) | 333 | 478 | ||||||
Non-U.S.: | ||||||||
Interest bearing | 88 | 82 | ||||||
Non-interest bearing (includes Card Member credit balances of: 2016, $297 million; 2015, $323 million) | 312 | 335 | ||||||
|
|
|
|
| ||||
Total customer deposits | $ | 53,500 | $ | 54,997 | ||||
|
(Millions) | 2017 | 2016 | ||||||
U.S.: | ||||||||
Interest bearing | $ | 53,123 | $ | 52,316 | ||||
Non-interest bearing (includes Card Member credit balances of: 2017, $286 million; 2016, $331 million) | 322 | 367 | ||||||
Non-U.S.: | ||||||||
Interest bearing | 34 | 58 | ||||||
Non-interest bearing (includes Card Member credit balances of: 2017, $299 million; 2016, $285 million) | 311 | 301 | ||||||
Total customer deposits | $ | 53,790 | $ | 53,042 |
| ||||||||
(Millions) | 2016 | 2015 | ||||||
|
|
|
|
| ||||
U.S. retail deposits: | ||||||||
Savings accounts – Direct | $ | 30,672 | $ | 29,023 | ||||
Certificates of deposit: | ||||||||
Direct | 290 | 281 | ||||||
Third-party (brokered) | 12,879 | 13,856 | ||||||
Sweep accounts – Third-party (brokered) | 8,926 | 10,942 | ||||||
Other retail deposits: | ||||||||
Non-U.S. deposits and U.S. non-interest bearing deposits | 139 | 183 | ||||||
Card Member credit balances — U.S. and non-U.S. | 594 | 712 | ||||||
|
|
|
|
| ||||
Total customer deposits | $ | 53,500 | $ | 54,997 | ||||
|
(Millions) | 2017 | 2016 | ||||||
U.S. retail deposits: | ||||||||
Savings accounts – Direct | $ | 31,420 | $ | 30,980 | ||||
Certificates of deposit:(a) | ||||||||
Direct | 284 | 291 | ||||||
Third-party (brokered) | 11,617 | 11,925 | ||||||
Sweep accounts – Third-party (brokered) | 9,802 | 9,120 | ||||||
Other retail deposits: | ||||||||
Non-U.S. deposits and U.S. non-interest bearing deposits | 82 | 110 | ||||||
Card Member credit balances ― U.S. and non-U.S. | 585 | 616 | ||||||
Total customer deposits | $ | 53,790 | $ | 53,042 |
(a) | The weighted average remaining maturity and weighted average interest rate at issuance on the total portfolio of U.S. retail certificates of deposit issued through direct and third-party programs were 47 months and 1.96 percent, respectively, as of March 31, 2017. |
| ||||||||||||||||||||||||
(Millions) | U.S. | Non-U.S. | Total | U.S. | Non-U.S. | Total | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||
2016 | $ | 1,416 | $ | 2 | $ | 1,418 | ||||||||||||||||||
2017 | 3,662 | 8 | 3,670 | $ | 3,401 | $ | 8 | $ | 3,409 | |||||||||||||||
2018 | 3,203 | — | 3,203 | 3,445 | 8 | 3,453 | ||||||||||||||||||
2019 | 2,336 | — | 2,336 | 2,398 | ― | 2,398 | ||||||||||||||||||
2020 | 2,518 | — | 2,518 | 2,543 | ― | 2,543 | ||||||||||||||||||
2021 | 107 | ― | 107 | |||||||||||||||||||||
After 5 years | 34 | — | 34 | 7 | ― | 7 | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Total | $ | 13,169 | $ | 10 | $ | 13,179 | $ | 11,901 | $ | 16 | $ | 11,917 | ||||||||||||
|
| ||||||||
(Millions) | 2016 | 2015 | ||||||
|
|
|
|
| ||||
U.S. | $ | 116 | $ | 105 | ||||
Non-U.S. | 1 | 1 | ||||||
|
|
|
|
| ||||
Total | $ | 117 | $ | 106 | ||||
|
(Millions) | 2017 | 2016 | ||||||
U.S. | $ | 106 | $ | 117 | ||||
Non-U.S. | 7 | 7 | ||||||
Total | $ | 113 | $ | 124 |
reserves.
portfolio was required.
| ||||||||||||||||
Other Assets Fair Value | Other Liabilities Fair Value | |||||||||||||||
|
|
|
| |||||||||||||
(Millions) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||
Interest rate contracts - Fair value hedges | $ | 330 | $ | 236 | $ | — | $ | 9 | ||||||||
Foreign exchange contracts - Net investment hedges | 189 | 191 | 92 | 57 | ||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Total derivatives designated as hedging instruments | 519 | 427 | 92 | 66 | ||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||
Foreign exchange contracts, including certain embedded derivatives(a) | 201 | 117 | 149 | 135 | ||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Total derivatives, gross | 720 | 544 | 241 | 201 | ||||||||||||
Less: Cash collateral netting on interest rate contracts(b) | (256 | ) | (155 | ) | — | — | ||||||||||
Derivative asset and derivative liability netting(c) | (99 | ) | (107 | ) | (99 | ) | (107 | ) | ||||||||
|
|
|
|
|
|
|
|
| ||||||||
Total derivatives, net(d) | $ | 365 | $ | 282 | $ | 142 | $ | 94 | ||||||||
|
Other Assets Fair Value | Other Liabilities Fair Value | |||||||||||||||
(Millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||
Fair value hedges - Interest rate contracts(a) | $ | 57 | $ | 111 | $ | ― | $ | 69 | ||||||||
Net investment hedges - Foreign exchange contracts | 53 | 347 | 196 | 35 | ||||||||||||
Total derivatives designated as hedging instruments | 110 | 458 | 196 | 104 | ||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||
Foreign exchange contracts, including certain embedded derivatives(b) | 120 | 308 | 216 | 176 | ||||||||||||
Total derivatives, gross | 230 | 766 | 412 | 280 | ||||||||||||
Less: Cash collateral netting(c)(d) | (30 | ) | (54 | ) | ― | (68 | ) | |||||||||
Derivative asset and derivative liability netting(e) | (94 | ) | (157 | ) | (94 | ) | (157 | ) | ||||||||
Total derivatives, net(f) | $ | 106 | $ | 555 | $ | 318 | $ | 55 |
(a) |
(b) | Includes foreign currency derivatives embedded in certain operating agreements. |
(c) |
(d) | The Company held no non-cash collateral as of March 31, 2017. As of December 31, 2016, the Company received non-cash collateral from a counterparty in the form of security interests in U.S. Treasury securities, with a fair value of |
Represents the amount of netting of derivative assets and derivative liabilities executed with the same counterparty under an enforceable master netting arrangement. |
The Company has no individually significant derivative counterparties and therefore, no significant risk exposure to any single derivative counterparty. The total net derivative assets and net derivative liabilities are presented within Other assets and Other liabilities, respectively, on the Consolidated Balance Sheets. |
| ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
|
|
|
| |||||||||||||
(Millions) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
| ||||||||||||||||
Interest rate derivative contracts | $ | (123 | ) | $ | 108 | $ | 103 | $ | 82 | |||||||
Hedged items | 134 | (114 | ) | (90 | ) | (85 | ) | |||||||||
|
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|
|
|
|
|
| |||||||||
Net hedge ineffectiveness | $ | 11 | $ | (6 | ) | $ | 13 | $ | (3 | ) | ||||||
|
Three Months Ended March 31, | ||||||||
(Millions) | 2017 | 2016 | ||||||
Interest rate derivative contracts | $ | 75 | $ | 165 | ||||
Hedged items | (50 | ) | (171 | ) | ||||
Net hedge ineffectiveness gains (losses) | $ | 25 | $ | (6 | ) |
2016.
Related to its derivatives not designated as hedges, the Company previously disclosed in Note 9 to the Consolidated Financial Statements in its Quarterly Report on Form 10-Q for the period ended September 30, 2015, gains of $19 million and $15 million for the three and nine months ended September 30, 2015, respectively. These amounts should have been disclosed as gains of $8 million and $389 million, respectively, which are the amounts used to calculate the above-referenced net loss of $3 million and net gain of $102 million. These changes to the previously disclosed amounts have no impact on the Consolidated Statements of Income, Balance Sheets or Cash Flows.
AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| ||||||||||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||||||||||
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|
| |||||||||||||||||||||||||||||
(Millions) | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||
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Assets: | ||||||||||||||||||||||||||||||||
Investment securities:(a) | ||||||||||||||||||||||||||||||||
Equity securities and other | $ | 49 | $ | 1 | $ | 48 | $ | — | $ | 50 | $ | 1 | $ | 49 | $ | — | ||||||||||||||||
Debt securities | 3,679 | 541 | 3,138 | — | 3,709 | 409 | 3,300 | — | ||||||||||||||||||||||||
Derivatives(a) | 720 | — | 720 | — | 544 | — | 544 | — | ||||||||||||||||||||||||
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| ||||||||||||||||
Total assets | 4,448 | 542 | 3,906 | — | 4,303 | 410 | 3,893 | — | ||||||||||||||||||||||||
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Liabilities: | ||||||||||||||||||||||||||||||||
Derivatives(a) | 241 | — | 241 | — | 201 | — | 201 | — | ||||||||||||||||||||||||
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| ||||||||||||||||
Total liabilities | $ | 241 | $ | — | $ | 241 | $ | — | $ | 201 | $ | — | $ | 201 | $ | — | ||||||||||||||||
|
2017 | 2016 | |||||||||||||||||||||||||||||||
(Millions) | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Investment securities:(a) | ||||||||||||||||||||||||||||||||
Equity securities and other | $ | 49 | $ | 1 | $ | 48 | $ | ― | $ | 49 | $ | 1 | $ | 48 | $ | ― | ||||||||||||||||
Debt securities | 3,512 | 1,136 | 2,376 | ― | 3,108 | 460 | 2,648 | ― | ||||||||||||||||||||||||
Derivatives(a) | 230 | ― | 230 | ― | 765 | ― | 765 | ― | ||||||||||||||||||||||||
Total Assets | 3,791 | 1,137 | 2,654 | ― | 3,922 | 461 | 3,461 | ― | ||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Derivatives(a) | 412 | ― | 412 | ― | 280 | ― | 280 | ― | ||||||||||||||||||||||||
Total Liabilities | $ | 412 | $ | ― | $ | 412 | $ | ― | $ | 280 | $ | ― | $ | 280 | $ | ― |
(a) | Refer to Note 5 for the fair values of investment securities and to Note 9 for the fair values of derivative assets and liabilities, on a further disaggregated basis. |
Carrying | Corresponding Fair Value Amount | |||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
Carrying | Corresponding Fair Value Amount | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
2016(Billions) | Value | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||||
2017 (Billions) | Value | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||||||||||||||||
Financial assets for which carrying values equal or approximate fair value | ||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents(a) | $ | 27 | $ | 27 | $ | 25 | $ | 2 | $ | — | $ | 29 | $ | 29 | $ | 27 | $ | 2 | $ | ― | ||||||||||||||||||||
Other financial assets(b) | 48 | 48 | — | 48 | — | 50 | 50 | ― | 50 | ― | ||||||||||||||||||||||||||||||
Financial assets carried at other than fair value | ||||||||||||||||||||||||||||||||||||||||
Loans, net(c) | 61 | 61 | — | — | 61 | 64 | 65 | ― | ― | 65 | ||||||||||||||||||||||||||||||
Financial Liabilities: | ||||||||||||||||||||||||||||||||||||||||
Financial liabilities for which carrying values equal or approximate fair value | 63 | 63 | — | 63 | — | |||||||||||||||||||||||||||||||||||
Financial liabilities carried at other than fair value | ||||||||||||||||||||||||||||||||||||||||
Certificates of deposit(d) | 13 | 13 | — | 13 | — | |||||||||||||||||||||||||||||||||||
Long-term debt(c) | $ | 45 | $ | 46 | $ | — | $ | 46 | $ | — | ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
Carrying | Corresponding Fair Value Amount | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
2015(Billions) | Value | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||||||||
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Financial Assets: | ||||||||||||||||||||||||||||||||||||||||
Financial assets for which carrying values equal or approximate fair value | ||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents(a) | $ | 23 | $ | 23 | $ | 22 | $ | 1 | $ | — | ||||||||||||||||||||||||||||||
Other financial assets(b) | 47 | 47 | — | 47 | — | |||||||||||||||||||||||||||||||||||
Financial assets carried at other than fair value | ||||||||||||||||||||||||||||||||||||||||
Card Member loans and receivables HFS(e) | 15 | 15 | — | — | 15 | |||||||||||||||||||||||||||||||||||
Loans, net(c) | 59 | 60 | — | — | 60 | |||||||||||||||||||||||||||||||||||
Financial Liabilities: | ||||||||||||||||||||||||||||||||||||||||
Financial liabilities for which carrying values equal or approximate fair value | 67 | 67 | — | 67 | — | 65 | 65 | ― | 65 | ― | ||||||||||||||||||||||||||||||
Financial liabilities carried at other than fair value | ||||||||||||||||||||||||||||||||||||||||
Certificates of deposit(d) | 14 | 14 | — | 14 | — | 12 | 12 | ― | 12 | ― | ||||||||||||||||||||||||||||||
Long-term debt(c) | $ | 48 | $ | 49 | $ | — | $ | 49 | $ | — | $ | 52 | $ | 53 | $ | ― | $ | 53 | $ | ― | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Carrying | Corresponding Fair Value Amount | |||||||||||||||||||||||||||||||||||||||
2016 (Billions) | Value | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||||||||||||||||
Financial assets for which carrying values equal or approximate fair value | ||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents(a) | $ | 25 | $ | 25 | $ | 22 | $ | 3 | $ | ― | ||||||||||||||||||||||||||||||
Other financial assets(b) | 51 | 51 | ― | 51 | ― | |||||||||||||||||||||||||||||||||||
Financial assets carried at other than fair value | ||||||||||||||||||||||||||||||||||||||||
Loans, net(c) | 65 | 66 | ― | ― | 66 | |||||||||||||||||||||||||||||||||||
Financial Liabilities: | ||||||||||||||||||||||||||||||||||||||||
Financial liabilities for which carrying values equal or approximate fair value | 67 | 67 | ― | 67 | ― | |||||||||||||||||||||||||||||||||||
Financial liabilities carried at other than fair value | ||||||||||||||||||||||||||||||||||||||||
Certificates of deposit(d) | 12 | 12 | ― | 12 | ― | |||||||||||||||||||||||||||||||||||
Long-term debt(c) | $ | 47 | $ | 48 | $ | ― | $ | 48 | $ | ― |
(a) | Level 2 amounts reflect time deposits and short-term investments. |
(b) | Includes Card Member receivables (including fair values of Card Member receivables of |
(c) | Balances include amounts held by a consolidated VIE for which the fair values of Card Member loans were |
(d) | Presented as a component of customer deposits on the Consolidated Balance Sheets. |
AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| ||||||||||||||||
Maximum potential (Billions) | Related liability(b) (Millions) | |||||||||||||||
|
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|
| |||||||||||||
Type of Guarantee | 2016 | 2015 | 2016 | 2015 | ||||||||||||
|
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| ||||||||
Return and Merchant Protection | $ | 42 | $ | 42 | $ | 41 | $ | 49 | ||||||||
Other(c) | 6 | 6 | 49 | 37 | ||||||||||||
|
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|
|
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| ||||||||
Total | $ | 48 | $ | 48 | $ | 90 | $ | 86 | ||||||||
|
Maximum potential | ||||||||||||||||
undiscounted future | ||||||||||||||||
payments(a) | Related liability(b) | |||||||||||||||
(Billions) | (Millions) | |||||||||||||||
Type of Guarantee | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Return and Merchant Protection | $ | 45 | $ | 42 | $ | 37 | $ | 37 | ||||||||
Other(c) | 6 | 6 | 49 | 49 | ||||||||||||
Total | $ | 51 | $ | 48 | $ | 86 | $ | 86 |
(a) | Represents the notional amounts that could be lost under the guarantees and indemnifications if there were a total default by the guaranteed or indemnified parties. The maximum potential undiscounted future payments for Merchant Protection are measured using management’s best estimate of the maximum exposure, which is based on all eligible claims in relation to annual billed business volumes. |
(b) | Included in Other liabilities on the Consolidated Balance Sheets. |
(c) | Primarily includes guarantees related to the Company’s purchase protection, real estate and business dispositions. |
| ||||||||||||||||
Three Months Ended September 30, 2016 (Millions), net of tax | | Net Unrealized Gains (Losses) on Investment Securities | | | Foreign Currency Translation Adjustments | | | Net Unrealized Pension and Other Postretirement Benefit (Losses) Gains | | | Accumulated Other Comprehensive (Loss) Income | | ||||
|
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|
|
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|
|
| ||||||||
Balances as of June 30, 2016 | $ | 65 | $ | (2,170 | ) | $ | (516 | ) | $ | (2,621 | ) | |||||
|
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|
|
|
|
|
| ||||||||
Net unrealized losses | (14 | ) | — | — | (14 | ) | ||||||||||
Decrease due to amounts reclassified into earnings | (1 | ) | — | — | (1 | ) | ||||||||||
Net translation gain of investments in foreign operations | — | 29 | — | 29 | ||||||||||||
Net losses related to hedges of investments in foreign operations | — | (18 | ) | — | (18 | ) | ||||||||||
Pension and other postretirement benefit gains | — | — | 7 | 7 | ||||||||||||
|
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|
|
|
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|
| ||||||||
Net change in accumulated other comprehensive loss | (15 | ) | 11 | 7 | 3 | |||||||||||
|
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|
|
|
|
|
| ||||||||
Balances as of September 30, 2016 | $ | 50 | $ | (2,159 | ) | $ | (509 | ) | $ | (2,618 | ) | |||||
| ||||||||||||||||
| ||||||||||||||||
Nine Months Ended September 30, 2016 (Millions), net of tax | | Net Unrealized Gains (Losses) on Investment Securities | | | Foreign Currency Translation Adjustments | | | Net Unrealized Pension and Other Postretirement Benefit (Losses) Gains | | | Accumulated Other Comprehensive (Loss) Income | | ||||
|
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|
|
|
|
|
|
| ||||||||
Balances as of December 31, 2015 | $ | 58 | $ | (2,044 | ) | $ | (548 | ) | $ | (2,534 | ) | |||||
|
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|
|
|
|
|
|
| ||||||||
Net unrealized losses | (5 | ) | — | — | (5 | ) | ||||||||||
Decrease due to amounts reclassified into earnings | (3 | ) | — | — | (3 | ) | ||||||||||
Net translation loss of investments in foreign operations | — | (140 | ) | — | (140 | ) | ||||||||||
Net gains related to hedges of investments in foreign operations | — | 25 | — | 25 | ||||||||||||
Pension and other postretirement benefit gains | — | — | 39 | 39 | ||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Net change in accumulated other comprehensive loss | (8 | ) | (115 | ) | 39 | (84 | ) | |||||||||
|
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|
|
|
|
|
|
| ||||||||
Balances as of September 30, 2016 | $ | 50 | $ | (2,159 | ) | $ | (509 | ) | $ | (2,618 | ) | |||||
|
2017 (Millions), net of tax | Net Unrealized Gains (Losses) on Investment Securities | Foreign Currency Translation Adjustments | Net Unrealized Pension and Other Postretirement Benefit Gains (Losses) | Accumulated Other Comprehensive (Loss) Income | ||||||||||||
Balances as of December 31, 2016 | $ | 7 | $ | (2,262 | ) | $ | (529 | ) | $ | (2,784 | ) | |||||
Net unrealized gains | 6 | ― | ― | 6 | ||||||||||||
Decrease due to amounts reclassified into earnings | ― | ― | ― | ― | ||||||||||||
Net translation gain of investments in foreign operations(a) | ― | 545 | ― | 545 | ||||||||||||
Net losses related to hedges of investments in foreign operations | ― | (229 | ) | ― | (229 | ) | ||||||||||
Pension and other postretirement benefit costs | ― | ― | (8 | ) | (8 | ) | ||||||||||
Net change in accumulated other comprehensive loss | 6 | 316 | (8 | ) | 314 | |||||||||||
Balances as of March 31, 2017 | $ | 13 | $ | (1,946 | ) | $ | (537 | ) | $ | (2,470 | ) | |||||
(a) Includes $289 million of tax benefits recognized in the three months ended March 31, 2017 (Refer to Note 14). | ||||||||||||||||
2016 (Millions), net of tax | Net Unrealized Gains (Losses) on Investment Securities | Foreign Currency Translation Adjustments | Net Unrealized Pension and Other Postretirement Benefit Gains (Losses) | Accumulated Other Comprehensive (Loss) Income | ||||||||||||
Balances as of December 31, 2015 | $ | 58 | $ | (2,044 | ) | $ | (548 | ) | $ | (2,534 | ) | |||||
Net unrealized gains | 4 | ― | ― | 4 | ||||||||||||
Decrease due to amounts reclassified into earnings | (2 | ) | ― | ― | (2 | ) | ||||||||||
Net translation gain of investments in foreign operations | ― | 96 | ― | 96 | ||||||||||||
Net losses related to hedges of investments in foreign operations | ― | (92 | ) | ― | (92 | ) | ||||||||||
Pension and other postretirement benefit gains | ― | ― | 26 | 26 | ||||||||||||
Net change in accumulated other comprehensive loss | 2 | 4 | 26 | 32 | ||||||||||||
Balances as of March 31, 2016 | $ | 60 | $ | (2,040 | ) | $ | (522 | ) | $ | (2,502 | ) |
Tax expense (benefit) | ||||||||
(Millions) | 2017 | 2016 | ||||||
Investment securities | $ | 3 | $ | (1 | ) | |||
Foreign currency translation adjustments(a) | (191 | ) | 15 | |||||
Net investment hedges | (140 | ) | (53 | ) | ||||
Pension and other postretirement benefits | (9 | ) | 19 | |||||
Total tax impact | $ | (337 | ) | $ | (20 | ) |
(a) | ||||
Includes $289 million of tax benefits recognized in the three months ended March 31, 2017 (Refer to Note 14). |
| ||||||||||||||||||
Gains (losses) recognized in earnings | ||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
Amount | Amount | |||||||||||||||||
Description (Millions) | Income Statement Line Item | 2016 | 2015 | 2016 | 2015 | |||||||||||||
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|
|
|
| |||||||||
Available-for-sale securities | ||||||||||||||||||
Reclassifications for previously unrealized net gains on investment securities | Other non-interest revenues | $ | 1 | $ | 1 | $ | 5 | $ | 1 | |||||||||
Related income tax expense | Income tax provision | — | — | (2 | ) | — | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
Reclassification to net income related to available-for-sale securities | 1 | 1 | 3 | 1 | ||||||||||||||
Foreign currency translation adjustments | ||||||||||||||||||
Reclassification of realized losses on translation adjustments and related net investments hedges | Other expenses | — | — | — | 1 | |||||||||||||
Related income tax benefit | Income tax provision | — | — | — | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
Reclassification to net income related to foreign currency translation adjustments | — | — | — | 1 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
Total | $ | 1 | $ | 1 | $ | 3 | $ | 2 | ||||||||||
|
AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Gains (losses) recognized in earnings | |||||||||
Amount | |||||||||
Description (Millions) | Income Statement Line Item | 2017 | 2016 | ||||||
Available-for-sale securities | |||||||||
Reclassifications for previously unrealized net gains on investment securities | Other non-interest revenues | $ | ― | $ | 4 | ||||
Related income tax expense | Income tax provision | ― | (2 | ) | |||||
Reclassification to net income related to available-for-sale securities | ― | 2 | |||||||
Total | $ | ― | $ | 2 |
| ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
|
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|
| |||||||||||||
(Millions) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
|
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|
|
|
|
|
|
| ||||||||
Foreign currency conversion fee revenue | $ | 207 | $ | 213 | $ | 610 | $ | 646 | ||||||||
Delinquency fees | 183 | 197 | 575 | 586 | ||||||||||||
Loyalty coalition-related fees | 106 | 100 | 304 | 279 | ||||||||||||
Travel commissions and fees | 89 | 87 | 256 | 271 | ||||||||||||
Service fees | 71 | 97 | 228 | 279 | ||||||||||||
Other(a) | 38 | 33 | 103 | 101 | ||||||||||||
|
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|
|
|
|
|
|
| ||||||||
Total Other fees and commissions | $ | 694 | $ | 727 | $ | 2,076 | $ | 2,162 | ||||||||
| ||||||||||||||||
(a) Other primarily includes revenues from fees related to Membership Rewards programs.
The following is a detail of Other revenues:
|
| |||||||||||||||
| ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
|
|
|
| |||||||||||||
(Millions) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Global Network Services partner revenues | $ | 156 | $ | 156 | $ | 498 | $ | 474 | ||||||||
Gross realized gains on sale of investment securities | 1 | 1 | 5 | 1 | ||||||||||||
Other(a) | 326 | 347 | 1,011 | 1,018 | ||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Total Other revenues | $ | 483 | $ | 504 | $ | 1,514 | $ | 1,493 | ||||||||
| ||||||||||||||||
(a) Other includes revenues arising from net revenue earned on cross-border Card Member spending, insurance premiums earned from Card Member travel and other insurance programs, merchant-related fees, Travelers Cheques-related revenues, revenues related to the GBT JV transition services agreement, earnings from equity method investments (including the GBT JV) and other miscellaneous revenue and fees.
The following is a detail of Other expenses:
|
| |||||||||||||||
| ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
|
|
|
| |||||||||||||
(Millions) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Professional services | $ | 630 | $ | 687 | $ | 1,862 | $ | 1,966 | ||||||||
Occupancy and equipment | 429 | 523 | 1,332 | 1,372 | ||||||||||||
Communications | 68 | 84 | 231 | 257 | ||||||||||||
Card and merchant-related fraud losses | 67 | 64 | 182 | 247 | ||||||||||||
Gain on sale of HFS portfolios(a) | — | — | (1,218 | ) | — | |||||||||||
Other(b) | 304 | 277 | 999 | 727 | ||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Total Other expenses | $ | 1,498 | $ | 1,635 | $ | 3,388 | $ | 4,569 | ||||||||
|
(Millions) | 2017 | 2016 | ||||||
Delinquency fees | $ | 214 | $ | 200 | ||||
Foreign currency conversion fee revenue | 199 | 196 | ||||||
Loyalty coalition-related fees | 102 | 94 | ||||||
Travel commissions and fees | 84 | 80 | ||||||
Other(a) | 114 | 110 | ||||||
Total Other fees and commissions | $ | 713 | $ | 680 |
(a) | Other primarily includes service fees and fees related to Membership Rewards programs. |
(Millions) | 2017 | 2016 | ||||||
Global Network Services partner revenues | $ | 156 | $ | 145 | ||||
Other(a) | 253 | 341 | ||||||
Total Other revenues | $ | 409 | $ | 486 |
(a) | Other includes revenues arising from net revenue earned on cross-border Card Member spending, insurance premiums earned from Card Member travel and other insurance programs, merchant-related fees, revenues related to the GBT JV transition services agreement, prepaid card and Travelers Cheque-related revenues, earnings from equity method investments (including the GBT JV) and other miscellaneous revenue and fees. |
(Millions) | 2017 | 2016 | ||||||
Professional services | $ | 512 | $ | 604 | ||||
Occupancy and equipment | 475 | 465 | ||||||
Communications | 63 | 83 | ||||||
Gain on sale of JetBlue HFS portfolio(a) | ― | (127 | ) | |||||
Other(b) | 357 | 395 | ||||||
Total Other expenses | $ | 1,407 | $ | 1,420 |
(a) | Refer to Note 2 for additional information. |
(b) | Other expense primarily includes general operating expenses, Card and merchant-related fraud losses, foreign currency-related gains and losses, |
certain prior years’ tax items.
specifically within AOCI.
| ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
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| |||||||||||||
(Millions, except per share amounts) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
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Numerator: | ||||||||||||||||
Basic and diluted: | ||||||||||||||||
Net income | $ | 1,142 | $ | 1,266 | $ | 4,583 | $ | 4,264 | ||||||||
Preferred dividends | (21 | ) | (22 | ) | (61 | ) | (42 | ) | ||||||||
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Net income available to common shareholders | 1,121 | 1,244 | 4,522 | 4,222 | ||||||||||||
Earnings allocated to participating share awards(a) | (9 | ) | (10 | ) | (37 | ) | (32 | ) | ||||||||
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Net income attributable to common shareholders | $ | 1,112 | $ | 1,234 | $ | 4,485 | $ | 4,190 | ||||||||
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Denominator: (a) | ||||||||||||||||
Basic: Weighted-average common stock | 920 | 994 | 940 | 1,007 | ||||||||||||
Add: Weighted-average stock options(b) | 3 | 3 | 3 | 4 | ||||||||||||
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Diluted | 923 | 997 | 943 | 1,011 | ||||||||||||
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Basic EPS | $ | 1.21 | $ | 1.24 | $ | 4.77 | $ | 4.16 | ||||||||
Diluted EPS | $ | 1.20 | $ | 1.24 | $ | 4.76 | $ | 4.15 | ||||||||
|
(Millions, except per share amounts) | 2017 | 2016 | ||||||
Numerator: | ||||||||
Basic and diluted: | ||||||||
Net income | $ | 1,237 | $ | 1,426 | ||||
Preferred dividends | (21 | ) | (21 | ) | ||||
Net income available to common shareholders | $ | 1,216 | $ | 1,405 | ||||
Earnings allocated to participating share awards(a) | (10 | ) | (11 | ) | ||||
Net income attributable to common shareholders | $ | 1,206 | $ | 1,394 | ||||
Denominator:(a) | ||||||||
Basic: Weighted-average common stock | 899 | 961 | ||||||
Add: Weighted-average stock options (b) | 4 | 2 | ||||||
Diluted | 903 | 963 | ||||||
Basic EPS | $ | 1.34 | $ | 1.45 | ||||
Diluted EPS | $ | 1.34 | $ | 1.45 |
(a) | The Company’s unvested restricted stock awards, which include the right to receive non-forfeitable dividends or dividend equivalents, are considered participating securities. Calculations of EPS under the two-class method exclude from the numerator any dividends paid or owed on participating securities and any undistributed earnings considered to be attributable to participating securities. The related participating securities are similarly excluded from the denominator. |
(b) | The dilutive effect of unexercised stock options excludes from the computation of EPS |
| ||||||||||||||||||||||||
Three Months Ended September 30, 2016 (Millions, except where indicated) | USCS | ICNS | GCS | GMS | Corporate & Other(a) | Consolidated | ||||||||||||||||||
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| ||||||||||||||||||||
Non-interest revenues | $ | 1,849 | $ | 1,205 | $ | 2,240 | $ | 1,044 | $ | 102 | $ | 6,440 | ||||||||||||
Interest income | 1,178 | 231 | 282 | — | 73 | 1,764 | ||||||||||||||||||
Interest expense | 125 | 55 | 98 | (60 | ) | 212 | 430 | |||||||||||||||||
Total revenues net of interest expense | 2,902 | 1,381 | 2,424 | 1,104 | (37 | ) | 7,774 | |||||||||||||||||
Net income (loss) | $ | 401 | $ | 155 | $ | 466 | $ | 359 | $ | (239 | ) | $ | 1,142 | |||||||||||
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Total assets(billions) | $ | 79 | $ | 34 | $ | 47 | $ | 23 | $ | (30 | ) | $ | 153 | |||||||||||
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Total equity (billions) | $ | 8 | $ | 3 | $ | 7 | $ | 2 | $ | 1 | $ | 21 | ||||||||||||
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Nine Months Ended September 30, 2016 (Millions, except where indicated) | USCS | ICNS | GCS | GMS | Corporate & Other(a) | Consolidated | ||||||||||||||||||
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| ||||||||||||||||||||
Non-interest revenues | $ | 5,947 | $ | 3,587 | $ | 6,710 | $ | 3,172 | $ | 318 | $ | 19,734 | ||||||||||||
Interest income | 3,847 | 692 | 913 | 1 | 201 | 5,654 | ||||||||||||||||||
Interest expense | 404 | 167 | 297 | (180 | ) | 603 | 1,291 | |||||||||||||||||
Total revenues net of interest expense | 9,390 | 4,112 | 7,326 | 3,353 | (84 | ) | 24,097 | |||||||||||||||||
Net income (loss) | $ | 2,162 | $ | 571 | $ | 1,527 | $ | 1,089 | $ | (766 | ) | $ | 4,583 | |||||||||||
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Total assets(billions) | $ | 79 | $ | 34 | $ | 47 | $ | 23 | $ | (30 | ) | $ | 153 | |||||||||||
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Total equity (billions) | $ | 8 | $ | 3 | $ | 7 | $ | 2 | $ | 1 | $ | 21 | ||||||||||||
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Three Months Ended September 30, 2015 (Millions, except where indicated) | USCS | ICNS | GCS | GMS | Corporate & Other(a) | Consolidated | ||||||||||||||||||
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|
| ||||||||||||||||||||
Non-interest revenues | $ | 2,117 | $ | 1,141 | $ | 2,217 | $ | 1,123 | $ | 90 | $ | 6,688 | ||||||||||||
Interest income | 1,324 | 228 | 297 | — | 55 | 1,904 | ||||||||||||||||||
Interest expense | 123 | 55 | 91 | (46 | ) | 176 | 399 | |||||||||||||||||
Total revenues net of interest expense | 3,318 | 1,314 | 2,423 | 1,169 | (31 | ) | 8,193 | |||||||||||||||||
Net income (loss) | $ | 542 | $ | 154 | $ | 468 | $ | 397 | $ | (295 | ) | $ | 1,266 | |||||||||||
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| ||||||||||||||||||||
Total assets(billions) | $ | 84 | $ | 35 | $ | 46 | $ | 23 | $ | (34 | ) | $ | 154 | |||||||||||
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Total equity (billions) | $ | 7 | $ | 3 | $ | 7 | $ | 3 | $ | 1 | $ | 21 | ||||||||||||
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Nine Months Ended September 30, 2015 (Millions, except where indicated) | USCS | ICNS | GCS | GMS | Corporate & Other(a) | Consolidated | ||||||||||||||||||
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|
| ||||||||||||||||||||
Non-interest revenues | $ | 6,324 | $ | 3,449 | $ | 6,677 | $ | 3,323 | $ | 279 | $ | 20,052 | ||||||||||||
Interest income | 3,849 | 710 | 864 | 1 | 174 | 5,598 | ||||||||||||||||||
Interest expense | 358 | 176 | 271 | (154 | ) | 572 | 1,223 | |||||||||||||||||
Total revenues net of interest expense | 9,815 | 3,983 | 7,270 | 3,478 | (119 | ) | 24,427 | |||||||||||||||||
Net income (loss) | $ | 1,814 | $ | 544 | $ | 1,535 | $ | 1,135 | $ | (764 | ) | $ | 4,264 | |||||||||||
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| ||||||||||||||||||||
Total assets(billions) | $ | 84 | $ | 35 | $ | 46 | $ | 23 | $ | (34 | ) | $ | 154 | |||||||||||
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| ||||||||||||||||||||
Total equity (billions) | $ | 7 | $ | 3 | $ | 7 | $ | 3 | $ | 1 | $ | 21 | ||||||||||||
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|
|
Corporate & | ||||||||||||||||||||||||
(Millions, except where indicated) | USCS | ICNS | GCS | GMS | Other(a) | Consolidated | ||||||||||||||||||
2017 | ||||||||||||||||||||||||
Non-interest revenues | $ | 1,857 | $ | 1,195 | $ | 2,271 | $ | 1,017 | $ | 49 | $ | 6,389 | ||||||||||||
Interest income | 1,308 | 235 | 319 | ― | 81 | 1,943 | ||||||||||||||||||
Interest expense | 146 | 53 | 109 | (58 | ) | 193 | 443 | |||||||||||||||||
Total revenues net of interest expense | 3,019 | 1,377 | 2,481 | 1,075 | (63 | ) | 7,889 | |||||||||||||||||
Net income (loss) | $ | 469 | $ | 218 | $ | 418 | $ | 363 | $ | (231 | ) | $ | 1,237 | |||||||||||
Total assets (billions) | $ | 81 | $ | 36 | $ | 48 | $ | 25 | $ | (29 | ) | $ | 161 | |||||||||||
Total equity (billions) | $ | 7 | $ | 3 | $ | 7 | $ | 3 | $ | 1 | $ | 21 | ||||||||||||
2016 | ||||||||||||||||||||||||
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 | |||||||||||||||||
Net income (loss) | $ | 694 | $ | 188 | $ | 485 | $ | 357 | $ | (298 | ) | $ | 1,426 | |||||||||||
Total assets (billions) | $ | 86 | $ | 34 | $ | 47 | $ | 24 | $ | (32 | ) | $ | 159 | |||||||||||
Total equity (billions) | $ | 7 | $ | 3 | $ | 7 | $ | 2 | $ | 2 | $ | 21 |
(a) | Corporate & Other includes adjustments and eliminations for intersegment activity. |
Business travel-related services are offered through our non-consolidated joint venture, American Express Global Business Travel (the GBT JV).
Our products and services generate the
For the third quarter,shareholders through share repurchases and dividends.
Card Member loans declined reflecting the sales of the HFS portfolios in the first half of the year. Adjusted Card Member loans grew year-over-year, after excluding from the prior year Card Member loans related to these portfolios. Provision expenses on a reported basis were also down year-over-year as the prior period included credit costs associated with the HFS portfolios. Provision expenses, adjusted for these credit costs, increased primarily as a result of growth in adjusted Card Member loans and seasoning of loans related to newnewer Card Members.Members and a shift towards non-cobrand lending products, which have a slightly higher write-off rate. We expect thatthese trends will result in provisions growing faster than loans during the balance of the year.
TotalMember spending and earn their loyalty. Operating expenses decreased versus the prior year, reflecting a decline in rewards expense, partially offset by an increase in investment spending on growth initiatives. The decrease in rewards expense was driven by the Costco cobrand expenses included in the prior year and the continued shift in volumes to cash rebate products, for which the rewards costs are classified as contra-discount revenue. After adjusting for the Costco cobrand, we expect rewards expense, including costs associated with cash rebate products, to grow faster than billings as we continue to enhance our card product value propositions over time. In addition, we expect that our investment spending on growth initiatives, including marketing and promotion, during the fourth quarter will be significantly higher than in the third quarter.
cost reduction initiatives.
card, resulting in a lack of comparability between 2017 and 2016.
| ||||||||||||||||||||||||||||||||
Three Months Ended September 30, | Change | Nine Months Ended
September 30, | Change | |||||||||||||||||||||||||||||
(Millions, except percentages and per share amounts) | 2016 | 2015 | 2016 vs. 2015 | 2016 | 2015 | 2016 vs. 2015 | ||||||||||||||||||||||||||
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|
|
|
|
|
|
| ||||||||||||||||||||
Total revenues net of interest expense | $ | 7,774 | $ | 8,193 | $ | (419 | ) | (5 | )% | $ | 24,097 | $ | 24,427 | $ | (330 | ) | (1 | )% | ||||||||||||||
Provisions for losses | 504 | 529 | (25 | ) | (5 | ) | 1,401 | 1,416 | (15 | ) | (1 | ) | ||||||||||||||||||||
Expenses | 5,535 | 5,726 | (191 | ) | (3 | ) | 15,761 | 16,527 | (766 | ) | (5 | ) | ||||||||||||||||||||
Net income | 1,142 | 1,266 | (124 | ) | (10 | ) | 4,583 | 4,264 | 319 | 7 | ||||||||||||||||||||||
Earnings per common share - diluted(a) | $ | 1.20 | $ | 1.24 | $ | (0.04 | ) | (3 | )% | $ | 4.76 | $ | 4.15 | $ | 0.61 | 15 | % | |||||||||||||||
Return on average equity(b) | 26.1 | % | 26.8 | % | 26.1 | % | 26.8 | % | ||||||||||||||||||||||||
|
Three Months Ended | ||||||||||||||||
March 31, | Change | |||||||||||||||
(Millions, except percentages and per share amounts) | 2017 | 2016 | 2017 vs. 2016 | |||||||||||||
Total revenues net of interest expense | $ | 7,889 | $ | 8,088 | $ | (199 | ) | (2 | )% | |||||||
Provisions for losses | 573 | 434 | 139 | 32 | ||||||||||||
Expenses | 5,499 | 5,470 | 29 | 1 | ||||||||||||
Net income | 1,237 | 1,426 | (189 | ) | (13 | ) | ||||||||||
Earnings per common share — diluted(a) | $ | 1.34 | $ | 1.45 | $ | (0.11 | ) | (8 | )% | |||||||
Return on average equity(b) | 25.1 | % | 23.6 | % |
(a) | Earnings per common share |
(b) | Return on average equity (ROE) is computed by dividing (i) one-year period net income ($ |
| ||||||||||||||||||||||||||||||||
Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | |||||||||||||||||||||||||||||
(Millions, except percentages) | 2016 | 2015 | 2016 vs. 2015 | 2016 | 2015 | 2016 vs. 2015 | ||||||||||||||||||||||||||
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| ||||||||||||||||||||
Discount revenue | $ | 4,516 | $ | 4,778 | $ | (262 | ) | (5 | )% | $ | 13,983 | $ | 14,384 | $ | (401 | ) | (3 | )% | ||||||||||||||
Net card fees | 747 | 679 | 68 | 10 | 2,161 | 2,013 | 148 | 7 | ||||||||||||||||||||||||
Other fees and commissions | 694 | 727 | (33 | ) | (5 | ) | 2,076 | 2,162 | (86 | ) | (4 | ) | ||||||||||||||||||||
Other | 483 | 504 | (21 | ) | (4 | ) | 1,514 | 1,493 | 21 | 1 | ||||||||||||||||||||||
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| |||||||||||||||||||||
Total non-interest revenues | 6,440 | 6,688 | (248 | ) | (4 | ) | 19,734 | 20,052 | (318 | ) | (2 | ) | ||||||||||||||||||||
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| |||||||||||||||||||||
Total interest income | 1,764 | 1,904 | (140 | ) | (7 | ) | 5,654 | 5,598 | 56 | 1 | ||||||||||||||||||||||
Total interest expense | 430 | 399 | 31 | 8 | 1,291 | 1,223 | 68 | 6 | ||||||||||||||||||||||||
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|
|
|
|
|
|
|
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|
| |||||||||||||||||||||
Net interest income | 1,334 | 1,505 | (171 | ) | (11 | ) | 4,363 | 4,375 | (12 | ) | — | |||||||||||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total revenues net of interest expense | $ | 7,774 | $ | 8,193 | $ | (419 | ) | (5 | )% | $ | 24,097 | $ | 24,427 | $ | (330 | ) | (1 | )% | ||||||||||||||
|
Three Months Ended | ||||||||||||||||
March 31, | Change | |||||||||||||||
(Millions, except percentages) | 2017 | 2016 | 2017 vs. 2016 | |||||||||||||
Discount revenue | $ | 4,519 | $ | 4,643 | $ | (124 | ) | (3 | )% | |||||||
Net card fees | 748 | 699 | 49 | 7 | ||||||||||||
Other fees and commissions | 713 | 680 | 33 | 5 | ||||||||||||
Other | 409 | 486 | (77 | ) | (16 | ) | ||||||||||
Total non-interest revenues | 6,389 | 6,508 | (119 | ) | (2 | ) | ||||||||||
Total interest income | 1,943 | 2,005 | (62 | ) | (3 | ) | ||||||||||
Total interest expense | 443 | 425 | 18 | 4 | ||||||||||||
Net interest income | 1,500 | 1,580 | (80 | ) | (5 | ) | ||||||||||
Total revenues net of interest expense | $ | 7,889 | $ | 8,088 | $ | (199 | ) | (2 | )% |
Billedcorporate client and cobrand partner incentives, as volumes in those categories increased.
The average discount rate was 2.47 percent and 2.45 percent for the three and nine months ended September 30, 2016, respectively, and 2.46 percent and 2.48 percent for the three and nine months ended September 30, 2015, respectively. The increase for the three-month periodprimarily reflects the absence of Costco merchant volumes in the current year, which were at a lower discount rate than the average. The decrease for the nine-month period was driven primarilyaverage, partially offset by a prior-year benefit related to certain merchant rebate accruals, growth of the OptBlue program andrate pressure from merchant negotiations, including those resulting from the recent European regulatory changes partially offset by the benefit to the discount rate from the decline in Costco merchant volumesaffecting competitor pricing in the current period.European Union, and continued growth of the OptBlue program. We expect the average discount rate will likely decline over time due to further expansiona greater shift of existing merchants into OptBlue, overall changes in the mix of spending by locationmerchant negotiations and industry, merchant incentives and concessions,competition, volume related pricing discounts strategic investments,and certain pricing initiatives competition,mainly driven by pricing regulation (including regulation of competitors’ interchange rates) and other factors. See Tables 5, 6 and 7 for more details on billed business performance and the average discount rate.
.
portfolios as well as growth in certain international markets, including Japan and Australia.
Other revenues decreased $21 million or 4 percent and increased $21 million or 1 percent for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year. Both periods reflect Costco-related revenues in the prior year and lower revenues related to the GBT JV transition services agreementmodestly higher yields in the current period, both of which were more than offset in the nine-month period by a contractual payment from a GNS partner in the second quarter of 2016 and higher revenues from our Prepaid Services business.
Interest income decreased $140 million or 7 percent and increased $56 million or 1 percent for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year. Both periods reflect Costco-related interest income in the prior year which was more than offset in the nine-month period by modestly higher yields and an increase in average Card Member loans (including Card Member loans HFS).
across other lending products.
debt and marginally higher interest rates.
| ||||||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
September 30, | Change | September 30, | Change | |||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||
(Millions, except percentages) | 2016 | 2015 | 2016 vs. 2015 | 2016 | 2015 | 2016 vs. 2015 | ||||||||||||||||||||||||||
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| ||||||||||||||||||||
Charge card | $ | 174 | $ | 203 | $ | (29 | ) | (14 | )% | $ | 496 | $ | 542 | $ | (46 | ) | (8 | )% | ||||||||||||||
Card Member loans | 319 | 309 | 10 | 3 | 831 | 829 | 2 | — | ||||||||||||||||||||||||
Other | 11 | 17 | (6 | ) | (35 | ) | 74 | 45 | 29 | 64 | ||||||||||||||||||||||
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Total provisions for losses(a) | $ | 504 | $ | 529 | $ | (25 | ) | (5 | )% | $ | 1,401 | $ | 1,416 | $ | (15 | ) | (1 | )% | ||||||||||||||
|
Three Months Ended | ||||||||||||||||
March 31, | Change | |||||||||||||||
(Millions, except percentages) | 2017 | 2016 | 2017 vs. 2016 | |||||||||||||
Charge card | $ | 213 | $ | 169 | $ | 44 | 26 | % | ||||||||
Card Member loans | 337 | 227 | 110 | 48 | ||||||||||||
Other | 23 | 38 | (15 | ) | (39 | ) | ||||||||||
Total provisions for losses(a) | $ | 573 | $ | 434 | $ | 139 | 32 | % |
(a) | Beginning December 1, 2015 through to the sale completion dates, does not reflect the HFS portfolios. |
Card Member loans provision for losses increased $10 million or 3 percent and remained flat for the three and nine months ended September 30, 2016, respectively, compared to the same periodsgrowth in charge volume in the prior year, as the current year periods do not reflect credit costs associated with the HFS portfolios, as previously mentioned, which was offset by strong momentum in our lending growth initiatives,GCS segment and increasing delinquencies resulting in higher loan balances and net write-offs.
Other provision for losses decreased $6 million and increased $29 million for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year. The increase in the nine-month period was primarily driven by higher net write-offs in the merchant financing loan portfolio as a result of historic growth, whereas the decrease in the three-month period was due to improving merchant financing loan credit performance.
Table 4: Expenses Summary
| ||||||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
September 30, | Change | September 30, | Change | |||||||||||||||||||||||||||||
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|
| |||||||||||||||||||||||||||||
(Millions, except percentages) | 2016 | 2015 | 2016 vs. 2015 | 2016 | 2015 | 2016 vs. 2015 | ||||||||||||||||||||||||||
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Marketing and promotion | $ | 930 | $ | 847 | $ | 83 | 10 | % | $ | 2,445 | $ | 2,217 | $ | 228 | 10 | % | ||||||||||||||||
Card Member rewards | 1,566 | 1,763 | (197 | ) | (11 | ) | 5,035 | 5,202 | (167 | ) | (3 | ) | ||||||||||||||||||||
Card Member services and other | 278 | 269 | 9 | 3 | 841 | 772 | 69 | 9 | ||||||||||||||||||||||||
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Total marketing, promotion, rewards, Card Member services and other | 2,774 | 2,879 | (105 | ) | (4 | ) | 8,321 | 8,191 | 130 | 2 | ||||||||||||||||||||||
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Salaries and employee benefits | 1,263 | 1,212 | 51 | 4 | 4,052 | 3,767 | 285 | 8 | ||||||||||||||||||||||||
Other, net(a) | 1,498 | 1,635 | (137 | ) | (8 | ) | 3,388 | 4,569 | (1,181 | ) | (26 | ) | ||||||||||||||||||||
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|
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| ||||||||||||||||||||
Total expenses | $ | 5,535 | $ | 5,726 | $ | (191 | ) | (3 | )% | $ | 15,761 | $ | 16,527 | $ | (766 | ) | (5 | )% | ||||||||||||||
|
Expenses
Marketing and promotion expenses increased $83 million or 10 percent and $228 million or 10 percent for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year, driven by higher levels of spending on growth initiatives, predominantly within the USCS and ICNS segments.
Card Member rewards expenses decreased $197 million or 11 percent and $167 million or 3 percent for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year. The decreases were primarily driven by lower cobrand rewards expense of $236 million and $289 million, in the same respective periods, primarily reflecting Costco-related expenses in the prior year, as well as, in the current year, a shift in volumes to cash rebate products for which the rewards costs are classified as contra-discount revenue, partially offset in both periods by increased spending volumes across other cobrand card products. The lower cobrand rewards expense was partially offset by higher Membership Rewards expense of $38 million and $122 million, in the same respective periods, primarily driven by an increase in new points earned as a result of higher spending volumes and a lower benefit in the weighted average cost per point (WAC).
The Membership Rewards URR for current program participants was 95 percent (rounded down) at September 30, 2016, compared to 95 percent (rounded up) at September 30, 2015.
Card Member services and other expenses increased $9 million or 3 percent and $69 million or 9 percent for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year, driven by increased usage of travel-related benefits.
Salaries and employee benefits expenses increased $51 million or 4 percent and $285 million or 8 percent for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year, primarily driven by restructuring in the current year.
Other expenses decreased $137 million or 8 percent and $1.2 billion or 26 percent for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year. The decreases in both periods reflected an impairment charge related to previously capitalized software development costs, partially offset by a litigation reserve release, both in the prior year, and lower technology-related costs in the current year. The decrease in the nine-month period also reflected the gains on the sales of the HFS portfolios, partially offset by the benefit in the prior year from both the reassessment of the functional currency of certain UK legal entities and other foreign exchange (FX) related activity.
Income Taxes
The effective tax rate was 34.2 percent and 33.9 percent for the three and nine months ended September 30, 2016, respectively, and 34.7 percent and 34.2 percent for the three and nine months ended September 30, 2015, respectively. The changes in tax rates primarily reflected the level of pretax income in relation to recurring permanent tax benefits and the geographic mix of business.
Table 5: Selected Card-Related Statistical Information
| ||||||||||||||||||||||||
As of or for the | Change | As of or for the | Change | |||||||||||||||||||||
Three Months Ended | 2016 | Nine Months Ended | 2016 | |||||||||||||||||||||
September 30, | vs. | September 30, | vs. | |||||||||||||||||||||
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2016 | 2015 | 2015 | 2016 | 2015 | 2015 | |||||||||||||||||||
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Card billed business:(billions) | ||||||||||||||||||||||||
United States | $ | 164.6 | $ | 180.4 | (9 | )% | $ | 526.0 | $ | 531.6 | (1 | )% | ||||||||||||
Outside the United States | 86.6 | 78.5 | 10 | 248.3 | 234.9 | 6 | ||||||||||||||||||
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Worldwide | $ | 251.2 | $ | 258.9 | (3 | ) | $ | 774.3 | $ | 766.5 | 1 | |||||||||||||
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| |||||||||||||||||
Total cards-in-force:(millions) | ||||||||||||||||||||||||
United States | 47.1 | 56.4 | (16 | ) | 47.1 | 56.4 | (16 | ) | ||||||||||||||||
Outside the United States | 61.7 | 59.4 | 4 | 61.7 | 59.4 | 4 | ||||||||||||||||||
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Worldwide | 108.8 | 115.8 | (6 | ) | 108.8 | 115.8 | (6 | ) | ||||||||||||||||
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Basic cards-in-force: (millions) | ||||||||||||||||||||||||
United States | 37.0 | 43.6 | (15 | ) | 37.0 | 43.6 | (15 | ) | ||||||||||||||||
Outside the United States | 51.1 | 49.0 | 4 | 51.1 | 49.0 | 4 | ||||||||||||||||||
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Worldwide | 88.1 | 92.6 | (5 | ) | 88.1 | 92.6 | (5 | ) | ||||||||||||||||
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Average basic Card Member spending:(dollars)(a) | ||||||||||||||||||||||||
United States | $ | 4,937 | $ | 4,503 | 10 | $ | 13,732 | $ | 13,432 | 2 | ||||||||||||||
Outside the United States | 3,264 | 3,197 | 2 | 9,667 | 9,620 | — | ||||||||||||||||||
Worldwide Average | 4,433 | 4,165 | 6 | 12,628 | 12,437 | 2 | ||||||||||||||||||
Card Member loans: (billions) | ||||||||||||||||||||||||
United States | 53.9 | 62.1 | (13 | ) | 53.9 | 62.1 | (13 | ) | ||||||||||||||||
Outside the United States | 6.7 | 6.8 | (1 | ) | 6.7 | 6.8 | (1 | ) | ||||||||||||||||
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Worldwide | $ | 60.6 | $ | 68.9 | (12 | ) | $ | 60.6 | $ | 68.9 | (12 | ) | ||||||||||||
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Average discount rate | 2.47 | % | 2.46 | % | 2.45 | % | 2.48 | % | ||||||||||||||||
Average fee per card(dollars)(a) | $ | 49 | $ | 39 | 26 | % | $ | 43 | $ | 39 | 10 | % | ||||||||||||
|
Table 6: Billed Business Growth
| ||||||||
Three Months Ended | ||||||||
September 30, 2016 | ||||||||
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| |||||||
| Percentage Increase | | | Percentage Increase (Decrease) Assuming No Changes in FX Rates(a) | | |||
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| ||||
Worldwide(b) | ||||||||
Total billed business | (3 | )% | (3 | )% | ||||
Proprietary billed business | (5 | ) | (5 | ) | ||||
GNS billed business(c) | 10 | 10 | ||||||
Airline-related volume (8% of worldwide billed business) | (6 | ) | (5 | ) | ||||
United States(b) | ||||||||
Billed business | (9 | ) | ||||||
Proprietary consumer card billed business(d) | (15 | ) | ||||||
Proprietary small business and corporate services billed business(e) | (1 | ) | ||||||
T&E-related volume (26% of U.S. billed business) | (7 | ) | ||||||
Non-T&E-related volume | (9 | ) | ||||||
Airline-related volume (7% of U.S. billed business) | (11 | ) | ||||||
Outside the United States(b) | ||||||||
Billed business | 10 | 11 | ||||||
Japan, Asia Pacific & Australia billed business | 22 | 16 | ||||||
Latin America & Canada billed business | — | 7 | ||||||
Europe, the Middle East & Africa billed business | 2 | 7 | ||||||
Proprietary consumer card billed business(c) | 6 | 8 | ||||||
Proprietary small business and corporate services billed business(e) | 6 | % | 6 | % | ||||
|
Table 7: Billed Business Growth
| ||||||||
Nine Months Ended | ||||||||
September 30, 2016 | ||||||||
|
| |||||||
| Percentage Increase | | | Percentage Increase (Decrease) Assuming No Changes in FX Rates(a) | | |||
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| ||||
Worldwide(b) | ||||||||
Total billed business | 1 | % | 2 | % | ||||
Proprietary billed business | — | 1 | ||||||
GNS billed business(c) | 7 | 11 | ||||||
Airline-related volume (8% of worldwide billed business) | (5 | ) | (3 | ) | ||||
United States(b) | ||||||||
Billed business | (1 | ) | ||||||
Proprietary consumer card billed business(d) | (4 | ) | ||||||
Proprietary small business and corporate services billed business(e) | 3 | |||||||
T&E-related volume (26% of U.S. billed business) | (3 | ) | ||||||
Non-T&E-related volume | (1 | ) | ||||||
Airline-related volume (7% of U.S. billed business) | (8 | ) | ||||||
Outside the United States(b) | ||||||||
Billed business | 6 | 10 | ||||||
Japan, Asia Pacific & Australia billed business | 14 | 14 | ||||||
Latin America & Canada billed business | (8 | ) | 6 | |||||
Europe, the Middle East & Africa billed business | 3 | 7 | ||||||
Proprietary consumer card billed business(c) | 4 | 8 | ||||||
Proprietary small business and corporate services billed business(e) | 2 | % | 5 | % | ||||
|
Table 8: Selected Credit-Related Statistical Information
As of or for the | Change | As of or for the | Change | |||||||||||||||||||||
Three Months Ended | 2016 | Nine Months Ended | 2016 | |||||||||||||||||||||
September 30, | vs. | September 30, | vs. | |||||||||||||||||||||
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| |||||||||||||||||||||
(Millions, except percentages and where indicated) | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | ||||||||||||||||||
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| ||||||||||||
Worldwide Card Member receivables:(a) | ||||||||||||||||||||||||
Total receivables(billions) | $ | 45.3 | $ | 44.3 | 2 | % | $ | 45.3 | $ | 44.3 | 2 | % | ||||||||||||
Loss reserves: | ||||||||||||||||||||||||
Beginning balance | $ | 423 | $ | 420 | 1 | $ | 462 | $ | 465 | (1 | ) | |||||||||||||
Provisions (b) | 174 | 203 | (14 | ) | 496 | 542 | (8 | ) | ||||||||||||||||
Net write-offs (c) | (159 | ) | (174 | ) | (9 | ) | (518 | ) | (544 | ) | (5 | ) | ||||||||||||
Other | (1 | ) | (8 | ) | (88 | ) | (3 | ) | (22 | ) | (86 | ) | ||||||||||||
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Ending balance | $ | 437 | $ | 441 | (1 | ) | $ | 437 | $ | 441 | (1 | ) | ||||||||||||
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| |||||||||||||||||
% of receivables | 1.0 | % | 1.0 | % | 1.0 | % | 1.0 | % | ||||||||||||||||
Net write-off rate — principal only (d) | 1.4 | 1.8 | 1.6 | 1.8 | ||||||||||||||||||||
Net write-off rate — principal and fees(d) | 1.6 | 2.0 | 1.8 | 2.1 | ||||||||||||||||||||
30+ days past due as a % of total(d) | 1.4 | 1.6 | 1.4 | 1.6 | ||||||||||||||||||||
Net loss ratio as a % of charge volume — GCP | 0.11 | 0.08 | 0.09 | 0.09 | ||||||||||||||||||||
90+ days past billing as a % of total — GCP | 0.8 | % | 0.7 | % | 0.8 | % | 0.7 | % | ||||||||||||||||
Worldwide Card Member loans:(a) | ||||||||||||||||||||||||
Total loans(billions) | $ | 60.6 | $ | 68.9 | (12 | ) | $ | 60.6 | $ | 68.9 | (12 | ) | ||||||||||||
Loss reserves: | ||||||||||||||||||||||||
Beginning balance | $ | 1,091 | $ | 1,132 | (4 | ) | $ | 1,028 | $ | 1,201 | (14 | ) | ||||||||||||
Provisions (b) | 319 | 309 | 3 | 831 | 829 | — | ||||||||||||||||||
Net write-offs — principal only (c) | (250 | ) | (231 | ) | 8 | (687 | ) | (733 | ) | (6 | ) | |||||||||||||
Net write-offs — interest and fees (c) | (48 | ) | (37 | ) | 30 | (128 | ) | (122 | ) | 5 | ||||||||||||||
Other(e) | 2 | (9 | ) | # | 70 | (11 | ) | # | ||||||||||||||||
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| |||||||||||||||||
Ending balance | $ | 1,114 | $ | 1,164 | (4 | ) | $ | 1,114 | $ | 1,164 | (4 | ) | ||||||||||||
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| |||||||||||||||||
Ending reserves — principal | $ | 1,050 | $ | 1,114 | (6 | ) | $ | 1,050 | $ | 1,114 | (6 | ) | ||||||||||||
Ending reserves — interest and fees | $ | 64 | $ | 50 | 28 | $ | 64 | $ | 50 | 28 | ||||||||||||||
% of loans | 1.8 | % | 1.7 | % | 1.8 | % | 1.7 | % | ||||||||||||||||
% of past due | 160 | % | 164 | % | 160 | % | 164 | % | ||||||||||||||||
Average loans(billions)(a) | $ | 60.3 | $ | 69.0 | (13 | )% | $ | 58.9 | $ | 68.3 | (14 | )% | ||||||||||||
Net write-off rate — principal only (d) | 1.7 | % | 1.3 | % | 1.6 | % | 1.4 | % | ||||||||||||||||
Net write-off rate — principal, interest and fees (d) | 2.0 | 1.6 | 1.8 | 1.7 | ||||||||||||||||||||
30+ days past due as a % of total (d) | 1.1 | % | 1.0 | % | 1.1 | % | 1.0 | % | ||||||||||||||||
Table 9: Net Interest Yield on Card Member Loans
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(Millions, except percentages and where indicated) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
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|
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| ||||||||
Net interest income | $ | 1,334 | $ | 1,505 | $ | 4,363 | $ | 4,375 | ||||||||
Exclude: | ||||||||||||||||
Interest expense not attributable to the Company’s Card Member loan portfolio | 261 | 232 | 746 | 726 | ||||||||||||
Interest income not attributable to the Company’s Card Member loan portfolio | (104 | ) | (89 | ) | (309 | ) | (266 | ) | ||||||||
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| |||||||||
Adjusted net interest income (a) | $ | 1,491 | $ | 1,648 | $ | 4,800 | $ | 4,835 | ||||||||
Average loans including HFS loan portfolios (billions) | $ | 60.3 | $ | 69.0 | $ | 66.6 | $ | 68.3 | ||||||||
Net interest income divided by average loans | 8.8 | % | 8.7 | % | 8.7 | % | 8.5 | % | ||||||||
Net interest yield on Card Member loans (a) | 9.8 | % | 9.5 | % | 9.6 | % | 9.5 | % | ||||||||
Business Segment Results
U.S. Consumer Services
Table 10: USCS Selected Income Statement Data
| ||||||||||||||||||||||||||||||||
Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | |||||||||||||||||||||||||||||
(Millions, except percentages) | 2016 | 2015 | 2016 vs. 2015 | 2016 | 2015 | 2016 vs. 2015 | ||||||||||||||||||||||||||
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| ||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||
Non-interest revenues | $ | 1,849 | $ | 2,117 | $ | (268 | ) | (13 | )% | $ | 5,947 | $ | 6,324 | (377 | ) | (6 | )% | |||||||||||||||
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| |||||||||||||||||||||
Interest income | 1,178 | 1,324 | (146 | ) | (11 | ) | 3,847 | 3,849 | (2 | ) | — | |||||||||||||||||||||
Interest expense | 125 | 123 | 2 | 2 | 404 | 358 | 46 | 13 | ||||||||||||||||||||||||
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| |||||||||||||||||||||
Net interest income | 1,053 | 1,201 | (148 | ) | (12 | ) | 3,443 | 3,491 | (48 | ) | (1 | ) | ||||||||||||||||||||
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| |||||||||||||||||||||
Total revenues net of interest expense | 2,902 | 3,318 | (416 | ) | (13 | ) | 9,390 | 9,815 | (425 | ) | (4 | ) | ||||||||||||||||||||
Provisions for losses | 275 | 294 | (19 | ) | (6 | ) | 702 | 730 | (28 | ) | (4 | ) | ||||||||||||||||||||
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| |||||||||||||||||||||
Total revenues net of interest expense after provisions for losses | 2,627 | 3,024 | (397 | ) | (13 | ) | 8,688 | 9,085 | (397 | ) | (4 | ) | ||||||||||||||||||||
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Expenses | ||||||||||||||||||||||||||||||||
Marketing, promotion, rewards, Card Member services and other | 1,274 | 1,396 | (122 | ) | (9 | ) | 3,991 | 3,972 | 19 | — | ||||||||||||||||||||||
Salaries and employee benefits and other operating expenses | 738 | 768 | (30 | ) | (4 | ) | 1,297 | 2,273 | (976 | ) | (43 | ) | ||||||||||||||||||||
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Total expenses | 2,012 | 2,164 | (152 | ) | (7 | ) | 5,288 | 6,245 | (957 | ) | (15 | ) | ||||||||||||||||||||
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| |||||||||||||||||||||
Pretax segment income | 615 | 860 | (245 | ) | (28 | ) | 3,400 | 2,840 | 560 | 20 | ||||||||||||||||||||||
Income tax provision | 214 | 318 | (104 | ) | (33 | ) | 1,238 | 1,026 | 212 | 21 | ||||||||||||||||||||||
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Segment income | $ | 401 | $ | 542 | $ | (141 | ) | (26 | )% | $ | 2,162 | $ | 1,814 | 348 | 19 | % | ||||||||||||||||
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| |||||||||||||||||||||
Effective tax rate | 34.8 | % | 37.0 | % | 36.4 | % | 36.1 | % | ||||||||||||||||||||||||
|
USCS issues a wide range of proprietary consumer cards and provides services to consumers in the United States, including consumer travel services.
Non-interest revenues decreased $268 million or 13 percent and $377 million or 6 percent for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year. The decreases in both periods were primarily due to lower discount revenue, which decreased $266 million or 17 percent and $413 million or 9 percent for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year, reflecting Costco-related revenues in the prior year and higher cash rebate rewards in the current year, for which the rewards costs are classified as contra-discount revenue. Billed business decreased 15 percent and 4 percent for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year, primarily driven by Costco-related volumes included in the prior year. The decrease in discount revenue was partially offset by an increase in net card fees, resulting from growth in the Platinum, Gold and Delta portfolios.
Net interest income decreased $148 million or 12 percent and $48 million or 1 percent for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year, primarily driven by Costco-related interest income included in the prior year and higher interest expense in the current year, partially offset in the nine-month period by modestly higher yields and an increase in average Card Member loans (including Card Member loans HFS).
Overall, provisions for losses decreased $19 million or 6 percent and $28 million or 4 percent for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year, as the current year periods do not reflect credit costs associated with the HFS portfolios, as previously mentioned, which was partially offset by strong momentum in our lending growth initiatives, resulting in higher loan balances and net write-offs.
Marketing, promotion, rewards, Card Member services and other expenses decreased $122 million or 9 percent and was relatively flat for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year. Both periods reflect lower cobrand rewards expense due to Costco-related expenses in the prior year, which was offset in the nine-month period by an increase in marketing and promotion expense, driven by higher levels of spending on growth initiatives, and an increase in Card Member services expense, driven by increased usage of new benefits.
Salaries and employee benefits and other operating expenses decreased $30 million or 4 percent and $976 million or 43 percent for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year. The decrease in the three-month period was primarily driven by lower operating expenses, partially offset by restructuring in the current year. The decrease in the nine-month period primarily reflects the gains on the sales of the HFS portfolios.
Table 11: USCS Selected Statistical Information
| ||||||||||||||||||||||||
As of or for the Three Months Ended September 30, | Change 2016 vs. | As of or for the Nine Months Ended September 30, | Change 2016 vs. | |||||||||||||||||||||
(Millions, except percentages and where indicated) | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | ||||||||||||||||||
Card billed business (billions) | $ | 78.6 | $ | 92.3 | (15 | )% | $ | 261.0 | $ | 271.6 | (4 | )% | ||||||||||||
Total cards-in-force | 32.3 | 40.0 | (19 | ) | 32.3 | 40.0 | (19 | ) | ||||||||||||||||
Basic cards-in-force | 22.9 | 28.0 | (18 | ) | 22.9 | 28.0 | (18 | ) | ||||||||||||||||
Average basic Card Member spending (dollars) | $ | 3,452 | $ | 3,337 | 3 | $ | 9,878 | $ | 9,969 | (1 | ) | |||||||||||||
Total segment assets (billions)(a) | $ | 79.4 | $ | 84.0 | (5 | ) | $ | 79.4 | $ | 84.0 | (5 | ) | ||||||||||||
Segment capital (billions) | $ | 7.5 | $ | 7.3 | 3 | $ | 7.5 | $ | 7.3 | 3 | ||||||||||||||
Return on average segment capital (b) | 37.4 | % | 30.1 | % | 37.4 | % | 30.1 | % | ||||||||||||||||
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| ||||||||||||
Card Member receivables: (c) | ||||||||||||||||||||||||
Total receivables (billions) | $ | 10.1 | $ | 10.5 | (4 | ) | $ | 10.1 | $ | 10.5 | (4 | ) | ||||||||||||
Net write-off rate – principal only (d) | 1.1 | % | 1.5 | % | 1.4 | % | 1.6 | % | ||||||||||||||||
Net write-off rate – principal and fees (d) | 1.3 | % | 1.7 | % | 1.6 | % | 1.8 | % | ||||||||||||||||
30+ days past due as a % of total | 1.4 | % | 1.6 | % | 1.4 | % | 1.6 | % | ||||||||||||||||
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| ||||||||||||
Card Member loans: (c) | ||||||||||||||||||||||||
Total loans (billions) | $ | 44.9 | $ | 52.2 | (14 | )% | $ | 44.9 | $ | 52.2 | (14 | )% | ||||||||||||
Average loans (billions) | $ | 44.8 | $ | 52.1 | (14 | )% | $ | 43.7 | $ | 51.4 | (15 | )% | ||||||||||||
Net write-off rate – principal only (d) | 1.6 | % | 1.3 | % | 1.5 | % | 1.4 | % | ||||||||||||||||
Net write-off rate – principal, interest and fees (d) | 1.9 | % | 1.5 | % | 1.8 | % | 1.6 | % | ||||||||||||||||
30+ days past due loans as a % of total | 1.1 | % | 1.0 | % | 1.1 | % | 1.0 | % | ||||||||||||||||
Calculation of Net Interest Yield on | ||||||||||||||||||||||||
Card Member loans: | ||||||||||||||||||||||||
Net interest income | $ | 1,053 | $ | 1,201 | $ | 3,443 | $ | 3,491 | ||||||||||||||||
Exclude: | ||||||||||||||||||||||||
Interest expense not attributable to the Company’s Card Member loan portfolio | 20 | 18 | 59 | 53 | ||||||||||||||||||||
Interest income not attributable to the Company’s Card Member loan portfolio | (6 | ) | (5 | ) | (16 | ) | (11 | ) | ||||||||||||||||
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| |||||||||||||||||
Adjusted net interest income (e) | $ | 1,067 | $ | 1,214 | $ | 3,487 | $ | 3,533 | ||||||||||||||||
Average loans including HFS loan portfolios(billions) | $ | 44.8 | $ | 52.1 | $ | 50.1 | $ | 51.4 | ||||||||||||||||
Net interest income divided by average loans | 9.4 | % | 9.2 | % | 9.2 | % | 9.1 | % | ||||||||||||||||
Net interest yield on Card Member loans(e) | 9.5 | % | 9.2 | % | 9.3 | % | 9.2 | % | ||||||||||||||||
|
International Consumer and Network Services
Table 12: ICNS Selected Income Statement Data
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Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | |||||||||||||||||||||||||||||
(Millions, except percentages) | 2016 | 2015 | 2016 vs. 2015 | 2016 | 2015 | 2016 vs. 2015 | ||||||||||||||||||||||||||
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Revenues | ||||||||||||||||||||||||||||||||
Non-interest revenues | $ | 1,205 | $ | 1,141 | $ | 64 | 6 | % | $ | 3,587 | $ | 3,449 | $ | 138 | 4 | % | ||||||||||||||||
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Interest income | 231 | 228 | 3 | 1 | 692 | 710 | (18 | ) | (3 | ) | ||||||||||||||||||||||
Interest expense | 55 | 55 | — | — | 167 | 176 | (9 | ) | (5 | ) | ||||||||||||||||||||||
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Net interest income | 176 | 173 | 3 | 2 | 525 | 534 | (9 | ) | (2 | ) | ||||||||||||||||||||||
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Total revenues net of interest expense | 1,381 | 1,314 | 67 | 5 | 4,112 | 3,983 | 129 | 3 | ||||||||||||||||||||||||
Provisions for losses | 84 | 77 | 7 | 9 | 233 | 223 | 10 | 4 | ||||||||||||||||||||||||
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Total revenues net of interest expense after provisions for losses | 1,297 | 1,237 | 60 | 5 | 3,879 | 3,760 | 119 | 3 | ||||||||||||||||||||||||
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Expenses | ||||||||||||||||||||||||||||||||
Marketing, promotion, rewards, Card Member services and other | 554 | 504 | 50 | 10 | 1,535 | 1,433 | 102 | 7 | ||||||||||||||||||||||||
Salaries and employee benefits and other operating expenses | 535 | 532 | 3 | 1 | 1,608 | 1,608 | — | — | ||||||||||||||||||||||||
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Total expenses | 1,089 | 1,036 | 53 | 5 | 3,143 | 3,041 | 102 | 3 | ||||||||||||||||||||||||
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Pretax segment income | 208 | 201 | 7 | 3 | 736 | 719 | 17 | 2 | ||||||||||||||||||||||||
Income tax provision | 53 | 47 | 6 | 13 | 165 | 175 | (10 | ) | (6 | ) | ||||||||||||||||||||||
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Segment income | $ | 155 | $ | 154 | $ | 1 | 1 | % | $ | 571 | $ | 544 | $ | 27 | 5 | % | ||||||||||||||||
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Effective tax rate | 25.5 | % | 23.4 | % | 22.4 | % | 24.3 | % | ||||||||||||||||||||||||
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ICNS issues a wide range of proprietary consumer cards outside the United States and enters into partnership agreements with third-party card issuers and acquirers, licensing the American Express brand and extending the reach of the global network. It also provides travel services to consumers outside the United States.
Non-interest revenues increased $64 million or 6 percent and $138 million or 4 percent for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year, primarily driven by higher discount revenue, due to an increase in both proprietary and non-proprietary (i.e., GNS) billed business, and higher net card fees. The increase in the nine-month period also reflected a contractual payment from a GNS partner in the second quarter of 2016. Total billed business increased 8 percent and 6 percent for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year, primarily due to increased proprietary and GNS cards-in-force and average spend per card. Refer to Tables 6 and 7 for additional information on billed business by region.
Interest income was relatively flat and decreased $18 million or 3 percent for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year, reflecting the impact of changes in FX rates year-over-year. FX-adjusted interest income increased 8 percent and 7 percent, in the same respective periods, primarily driven by higher average FX-adjusted loan balances.
1 The foreign currency 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 the current period apply to the corresponding period against which such results are being compared). FX-adjusted revenues and expenses constitute non-GAAP measures. We believe the presentation of information on a foreign currency adjusted basis is helpful to investors by making it easier to compare our performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates.
Three Months Ended | ||||||||||||||||
March 31, | Change | |||||||||||||||
(Millions, except percentages) | 2017 | 2016 | 2017 vs. 2016 | |||||||||||||
Marketing and promotion | $ | 700 | $ | 727 | $ | (27 | ) | (4 | )% | |||||||
Card Member rewards | 1,807 | 1,703 | 104 | 6 | ||||||||||||
Card Member services and other | 321 | 282 | 39 | 14 | ||||||||||||
Total marketing, promotion, rewards, Card Member services and other | 2,828 | 2,712 | 116 | 4 | ||||||||||||
Salaries and employee benefits | 1,264 | 1,338 | (74 | ) | (6 | ) | ||||||||||
Other, net(a) | 1,407 | 1,420 | (13 | ) | (1 | ) | ||||||||||
Total expenses | $ | 5,499 | $ | 5,470 | $ | 29 | 1 | % |
(a) | ||||
Beginning December 1, 2015 through to the portfolio sale completion dates, includes the valuation allowance adjustment associated with the HFS portfolios. |
Interest
usage of travel-related benefits.
As of or for the | Change | |||||||||||
Three Months Ended | 2017 | |||||||||||
March 31, | vs. | |||||||||||
2017 | 2016 | 2016 | ||||||||||
Card billed business: (billions) | ||||||||||||
United States | $ | 165.4 | $ | 176.3 | (6 | )% | ||||||
Outside the United States | 86.9 | 77.5 | 12 | |||||||||
Worldwide | $ | 252.3 | $ | 253.8 | (1 | ) | ||||||
Total cards-in-force: (millions) | ||||||||||||
United States | 48.2 | 57.9 | (17 | ) | ||||||||
Outside the United States | 63.0 | 60.7 | 4 | |||||||||
Worldwide | 111.2 | 118.6 | (6 | ) | ||||||||
Basic cards-in-force: (millions) | ||||||||||||
United States | 38.1 | 45.1 | (16 | ) | ||||||||
Outside the United States | 52.2 | 50.0 | 4 | |||||||||
Worldwide | 90.3 | 95.1 | (5 | ) | ||||||||
Average basic Card Member spending: (dollars)(a) | ||||||||||||
United States | $ | 4,859 | $ | 4,249 | 14 | |||||||
Outside the United States | 3,283 | 3,082 | 7 | |||||||||
Worldwide Average | $ | 4,387 | $ | 3,952 | 11 | |||||||
Card Member loans: (billions) | ||||||||||||
United States | $ | 56.6 | $ | 50.7 | 12 | |||||||
Outside the United States | 7.0 | 6.7 | 4 | |||||||||
Worldwide | $ | 63.6 | $ | 57.4 | 11 | |||||||
Average discount rate | 2.45 | % | 2.44 | % | ||||||||
Average fee per card (dollars)(a) | $ | 48 | $ | 40 | 20 | % |
(a) | 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 divided by average worldwide proprietary cards-in-force. |
Three Months Ended | |||||
March 31, 2017 | |||||
Percentage Increase | |||||
Percentage | (Decrease) Assuming | ||||
Increase | No Changes in | ||||
(Decrease) | FX Rates(a) | ||||
Worldwide(b) | |||||
Total billed business | (1) | % | ― | % | |
Proprietary billed business | (2) | (2) | |||
GNS billed business(c) | 7 | 6 | |||
Airline-related volume (9% of worldwide billed business) | 1 | 2 | |||
United States(b) | |||||
Billed business | (6) | ||||
Proprietary consumer card billed business(d) | (13) | ||||
Proprietary small business and corporate services billed business(e) | 2 | ||||
T&E-related volume (27% of U.S. billed business) | (5) | ||||
Non-T&E-related volume (73% of U.S. billed business) | (7) | ||||
Airline-related volume (8% of U.S. billed business) | (4) | ||||
Outside the United States(b) | |||||
Billed business | 12 | 13 | |||
Japan, Asia Pacific & Australia (JAPA) billed business | 16 | 14 | |||
Latin America & Canada (LACC) billed business | 10 | 9 | |||
Europe, the Middle East & Africa (EMEA) billed business | 7 | 12 | |||
Proprietary consumer card billed business(c) | 8 | 11 | |||
Proprietary small business and corporate services billed business(e) | 13 | % | 14 | % |
(a) | The foreign currency 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 the current period apply to the corresponding prior year period against which such results are being compared). |
(b) | Captions in the table above not designated as “proprietary” or “GNS” include both proprietary and GNS data. |
(c) | Included in the ICNS segment. |
(d) | Included in the USCS segment. |
(e) | Included in the GCS segment. |
As of or for the | Change | |||||||||||
Three Months Ended | 2017 | |||||||||||
March 31, | vs. | |||||||||||
(Millions, except percentages and where indicated) | 2017 | 2016 | 2016 | |||||||||
Worldwide Card Member loans: (a) | ||||||||||||
Total loans (billions) | $ | 63.6 | $ | 57.4 | 11 | % | ||||||
Loss reserves: | ||||||||||||
Beginning balance | $ | 1,223 | $ | 1,028 | 19 | |||||||
Provisions (b) | 337 | 227 | 48 | |||||||||
Net write-offs — principal only (c) | (272 | ) | (214 | ) | 27 | |||||||
Net write-offs — interest and fees (c) | (51 | ) | (40 | ) | 28 | |||||||
Other | 11 | 11 | ― | |||||||||
Ending balance | $ | 1,248 | $ | 1,012 | 23 | |||||||
Ending reserves — principal | $ | 1,179 | $ | 959 | 23 | |||||||
Ending reserves — interest and fees | $ | 69 | $ | 53 | 30 | |||||||
% of loans | 2.0 | % | 1.8 | % | ||||||||
% of past due | 158 | % | 161 | % | ||||||||
Average loans (billions)(a) | $ | 63.9 | $ | 57.4 | 11 | |||||||
Net write-off rate — principal only (d) | 1.7 | % | 1.5 | % | ||||||||
Net write-off rate — principal, interest and fees (d) | 2.0 | % | 1.8 | % | ||||||||
30+ days past due as a % of total (d) | 1.2 | % | 1.1 | % | ||||||||
Worldwide Card Member receivables: (a) | ||||||||||||
Total receivables (billions) | $ | 47.6 | $ | 44.5 | 7 | |||||||
Loss reserves: | ||||||||||||
Beginning balance | $ | 467 | $ | 462 | 1 | |||||||
Provisions (b) | 213 | 169 | 26 | |||||||||
Net write-offs (c) | (194 | ) | (186 | ) | 4 | |||||||
Other | 5 | 1 | # | |||||||||
Ending balance | $ | 491 | $ | 446 | 10 | % | ||||||
% of receivables | 1.0 | % | 1.0 | % | ||||||||
Net write-off rate — principal only (d) | 1.7 | % | 1.9 | % | ||||||||
Net write-off rate — principal and fees (d) | 2.0 | % | 2.1 | % | ||||||||
30+ days past due as a % of total (d) | 1.5 | % | 1.5 | % | ||||||||
Net loss ratio as a % of charge volume — GCP | 0.11 | % | 0.08 | % | ||||||||
90+ days past billing as a % of total — GCP | 0.7 | % | 0.7 | % |
(a) | Beginning December 1, 2015 through to the sale completion dates, does not reflect the HFS portfolios. |
(b) | Reflects provisions for principal, interest and/or fees on Card Member loans and receivables. Refer to Table 3 footnote (a). |
(c) | Write-offs, less recoveries. |
(d) | We present 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 we consider uncollectible interest and/or fees in our reserves for credit losses, a net write-off rate including principal, interest and/or fees is also presented. The net write-off rates and 30+ days past due as a percentage of total for Card Member receivables relate to USCS, ICNS and Global Small Business Services (GSBS) Card Member receivables. |
Three Months Ended | ||||||||
March 31, | ||||||||
(Millions, except percentages and where indicated) | 2017 | 2016 | ||||||
Net interest income | $ | 1,500 | $ | 1,580 | ||||
Exclude: | ||||||||
Interest expense not attributable to our Card Member loan portfolio | 252 | 238 | ||||||
Interest income not attributable to our Card Member loan portfolio | (130 | ) | (103 | ) | ||||
Adjusted net interest income (a) | $ | 1,622 | $ | 1,715 | ||||
Average loans including HFS loan portfolios (billions)(b) | $ | 63.9 | $ | 70.8 | ||||
Net interest income divided by average loans | 9.4 | % | 8.9 | % | ||||
Net interest yield on Card Member loans (a) | 10.3 | % | 9.7 | % |
(a) | Adjusted net interest income and net interest yield on Card Member loans are non-GAAP measures. Refer to “Glossary of Selected Terminology” for definitions of these terms. We believe adjusted net interest income is useful to investors because it is a component of net interest yield on Card Member loans, which provides a measure of profitability of our Card Member loan portfolio. |
(b) | Beginning December 1, 2015 through to the sale completion dates, for the purposes of the calculation of net interest yield on Card Member loans, average loans included the HFS loan portfolios. |
Three Months Ended | ||||||||||||||||
March 31, | Change | |||||||||||||||
(Millions, except percentages) | 2017 | 2016 | 2017 vs. 2016 | |||||||||||||
Revenues | ||||||||||||||||
Non-interest revenues | $ | 1,857 | $ | 2,029 | $ | (172 | ) | (8 | )% | |||||||
Interest income | 1,308 | 1,391 | (83 | ) | (6 | ) | ||||||||||
Interest expense | 146 | 140 | 6 | 4 | ||||||||||||
Net interest income | 1,162 | 1,251 | (89 | ) | (7 | ) | ||||||||||
Total revenues net of interest expense | 3,019 | 3,280 | (261 | ) | (8 | ) | ||||||||||
Provisions for losses | 294 | 190 | 104 | 55 | ||||||||||||
Total revenues net of interest expense after provisions for losses | 2,725 | 3,090 | (365 | ) | (12 | ) | ||||||||||
Expenses | ||||||||||||||||
Marketing, promotion, rewards, Card Member services and other | 1,297 | 1,348 | (51 | ) | (4 | ) | ||||||||||
Salaries and employee benefits and other operating expenses | 728 | 655 | 73 | 11 | ||||||||||||
Total expenses | 2,025 | 2,003 | 22 | 1 | ||||||||||||
Pretax segment income | 700 | 1,087 | (387 | ) | (36 | ) | ||||||||||
Income tax provision | 231 | 393 | (162 | ) | (41 | ) | ||||||||||
Segment income | $ | 469 | $ | 694 | $ | (225 | ) | (32 | )% | |||||||
Effective tax rate | 33.0 | % | 36.2 | % |
write-off rates.
initiatives in the prior year. Card Member rewards expense decreased $49 million, reflecting Costco-related expenses in the prior year, partially offset by recent enhancements to Platinum rewards and spending volumes. Card Member services and other expenses increased $19 million, driven by higher usage of travel-related benefits.
year and the prior year HFS valuation allowance adjustment.
As of or for the Three Months Ended September 30, | Change 2016 vs. | As of or for the Nine Months Ended September 30, | Change 2016 vs. | |||||||||||||||||||||
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(Millions, except percentages and where indicated) | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | ||||||||||||||||||
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Card billed business (billions) | ||||||||||||||||||||||||
Proprietary | $ | 26.6 | $ | 25.1 | 6 | % | $ | 77.8 | $ | 75.0 | 4 | % | ||||||||||||
GNS | 44.8 | 40.8 | 10 | 129.1 | 121.0 | 7 | ||||||||||||||||||
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Total | $ | 71.4 | $ | 65.9 | 8 | $ | 206.9 | $ | 196.0 | 6 | ||||||||||||||
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Total cards-in-force | ||||||||||||||||||||||||
Proprietary | 14.8 | 14.5 | 2 | 14.8 | 14.5 | 2 | ||||||||||||||||||
GNS | 48.1 | 46.3 | 4 | 48.1 | 46.3 | 4 | ||||||||||||||||||
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Total | 62.9 | 60.8 | 3 | 62.9 | 60.8 | 3 | ||||||||||||||||||
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Proprietary basic cards-in-force | 10.3 | 9.9 | 4 | 10.3 | 9.9 | 4 | ||||||||||||||||||
Average proprietary basic Card Member spending(dollars) | $ | 2,596 | $ | 2,547 | 2 | $ | 7,665 | $ | 7,591 | 1 | ||||||||||||||
Total segment assets (billions)(a) | $ | 34.4 | $ | 34.5 | — | $ | 34.4 | $ | 34.5 | — | ||||||||||||||
Segment capital (billions) | $ | 2.7 | $ | 3.1 | (13 | ) | $ | 2.7 | $ | 3.1 | (13 | ) | ||||||||||||
Return on average segment capital(b) | 26.4 | % | 21.9 | % | 26.4 | % | 21.9 | % | ||||||||||||||||
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Card Member receivables:(c) | ||||||||||||||||||||||||
Total receivables (billions) | $ | 5.6 | $ | 5.2 | 8 | $ | 5.6 | $ | 5.2 | 8 | ||||||||||||||
Net write-off rate – principal only(d) | 2.0 | % | 2.3 | % | 2.1 | % | 2.1 | % | ||||||||||||||||
Net write-off rate – principal and fees(d) | 2.2 | % | 2.5 | % | 2.3 | % | 2.3 | % | ||||||||||||||||
30+ days past due as a % of total | 1.5 | % | 1.6 | % | 1.5 | % | 1.6 | % | ||||||||||||||||
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Card Member loans:(c) | ||||||||||||||||||||||||
Total loans (billions) | $ | 6.7 | $ | 6.7 | — | $ | 6.7 | $ | 6.7 | — | ||||||||||||||
Average loans (billions) | $ | 6.7 | $ | 6.9 | (3 | )% | $ | 6.8 | $ | 7.0 | (3 | )% | ||||||||||||
Net write-off rate – principal only(d) | 2.1 | % | 1.8 | % | 2.0 | % | 2.0 | % | ||||||||||||||||
Net write-off rate – principal, interest and fees(d) | 2.6 | % | 2.3 | % | 2.5 | % | 2.4 | % | ||||||||||||||||
30+ days past due loans as a % of total | 1.7 | % | 1.6 | % | 1.7 | % | 1.6 | % | ||||||||||||||||
Calculation of Net Interest Yield on Card Member loans: | ||||||||||||||||||||||||
Net interest income | $ | 176 | $ | 173 | $ | 525 | $ | 534 | ||||||||||||||||
Exclude: | ||||||||||||||||||||||||
Interest expense not attributable to the Company’s Card Member loan portfolio | 12 | 14 | 33 | 42 | ||||||||||||||||||||
Interest income not attributable to the Company’s Card Member loan portfolio | — | (6) | (7) | (15) | ||||||||||||||||||||
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Adjusted net interest income (e) | $ | 188 | $ | 181 | $ | 551 | $ | 561 | ||||||||||||||||
Average loans (billions) | $ | 6.7 | $ | 6.9 | $ | 6.8 | $ | 7.0 | ||||||||||||||||
Net interest income divided by average loans | 10.5 | % | 10.1 | % | 10.4 | % | 10.1 | % | ||||||||||||||||
Net interest yield on Card Member loans(e) | 11.2 | % | 10.5 | % | 10.9 | % | 10.7 | % |
As of or for the | Change | |||||||||||
Three Months Ended | 2017 | |||||||||||
March 31, | vs. | |||||||||||
(Millions, except percentages and where indicated) | 2017 | 2016 | 2016 | |||||||||
Card billed business (billions) | $ | 77.5 | $ | 89.0 | (13 | )% | ||||||
Total cards-in-force | 33.2 | 40.9 | (19 | ) | ||||||||
Basic cards-in-force | 23.7 | 28.8 | (18 | ) | ||||||||
Average basic Card Member spending (dollars) | $ | 3,297 | $ | 3,092 | 7 | |||||||
Total segment assets (billions) | $ | 81.2 | $ | 86.3 | (6 | ) | ||||||
Segment capital (billions) | $ | 7.1 | $ | 7.4 | (4 | ) | ||||||
Return on average segment capital (a) | 31.9 | % | 31.8 | % | ||||||||
Card Member loans: (b) | ||||||||||||
Total loans (billions) | $ | 46.7 | $ | 42.4 | 10 | |||||||
Average loans (billions) | $ | 47.2 | $ | 42.5 | 11 | |||||||
Net write-off rate – principal only (c) | 1.7 | % | 1.5 | % | ||||||||
Net write-off rate – principal, interest and fees (c) | 2.0 | % | 1.7 | % | ||||||||
30+ days past due loans as a % of total | 1.2 | % | 1.0 | % | ||||||||
Calculation of Net Interest Yield on Card Member loans: | ||||||||||||
Net interest income | $ | 1,162 | $ | 1,251 | ||||||||
Exclude: | ||||||||||||
Interest expense not attributable to our Card Member loan portfolio | 23 | 19 | ||||||||||
Interest income not attributable to our Card Member loan portfolio | (18 | ) | (5 | ) | ||||||||
Adjusted net interest income (d) | $ | 1,167 | $ | 1,265 | ||||||||
Average loans including HFS loan portfolios (billions)(e) | $ | 47.2 | $ | 53.8 | ||||||||
Net interest income divided by average loans | 9.8 | % | 9.3 | % | ||||||||
Net interest yield on Card Member loans(d) | 10.0 | % | 9.5 | % | ||||||||
Card Member receivables: (b) | ||||||||||||
Total receivables (billions) | $ | 10.9 | $ | 10.3 | 6 | % | ||||||
Net write-off rate – principal only (c) | 1.5 | % | 1.8 | % | ||||||||
Net write-off rate – principal and fees (c) | 1.7 | % | 2.0 | % | ||||||||
30+ days past due as a % of total | 1.3 | % | 1.4 | % |
(a) |
Return on average segment capital is calculated by dividing (i) one-year period segment income ($ |
(b) | Refer to Table 7 footnote (a). |
(c) | Refer to Table |
Adjusted net interest income and net interest yield on Card Member loans are non-GAAP measures. Refer to “Glossary of Selected Terminology” for the definitions of these terms. We believe adjusted net interest income is useful to investors because it is a component of net interest yield on Card Member loans, which provides a measure of profitability of our Card Member loan portfolio. |
(e) | ||||
Refer to Table 8 footnote (b). |
Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | |||||||||||||||||||||||||||||
(Millions, except percentages) | 2016 | 2015 | 2016 vs. 2015 | 2016 | 2015 | 2016 vs. 2015 | ||||||||||||||||||||||||||
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Revenues | ||||||||||||||||||||||||||||||||
Non-interest revenues | $ | 2,240 | $ | 2,217 | $ | 23 | 1 | % | $ | 6,710 | $ | 6,677 | $ | 33 | — | % | ||||||||||||||||
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Interest income | 282 | 297 | (15 | ) | (5 | ) | 913 | 864 | 49 | 6 | ||||||||||||||||||||||
Interest expense | 98 | 91 | 7 | 8 | 297 | 271 | 26 | 10 | ||||||||||||||||||||||||
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Net interest income | 184 | 206 | (22 | ) | (11 | ) | 616 | 593 | 23 | 4 | ||||||||||||||||||||||
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Total revenues net of interest expense | 2,424 | 2,423 | 1 | — | 7,326 | 7,270 | 56 | 1 | ||||||||||||||||||||||||
Provisions for losses | 134 | 148 | (14 | ) | (9 | ) | 433 | 435 | (2 | ) | — | |||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total revenues net of interest expense after provisions for losses | 2,290 | 2,275 | 15 | 1 | 6,893 | 6,835 | 58 | 1 | ||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||
Marketing, promotion, rewards, Card Member services and other | 808 | 826 | (18 | ) | (2 | ) | 2,415 | 2,358 | 57 | 2 | ||||||||||||||||||||||
Salaries and employee benefits and other operating expenses | 753 | 712 | 41 | 6 | 2,078 | 2,074 | 4 | — | ||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total expenses | 1,561 | 1,538 | 23 | 1 | 4,493 | 4,432 | 61 | 1 | ||||||||||||||||||||||||
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|
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|
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| |||||||||||||||||||||
Pretax segment income | 729 | 737 | (8 | ) | (1 | ) | 2,400 | 2,403 | (3 | ) | — | |||||||||||||||||||||
Income tax provision | 263 | 269 | (6 | ) | (2 | ) | 873 | 868 | 5 | 1 | ||||||||||||||||||||||
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|
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| |||||||||||||||||||||
Segment income | $ | 466 | $ | 468 | $ | (2 | ) | — | % | $ | 1,527 | $ | 1,535 | $ | (8 | ) | (1 | )% | ||||||||||||||
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|
|
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|
|
|
| |||||||||||||||||||||
Effective tax rate | 36.1 | % | 36.5 | % | 36.4 | % | 36.1 | % |
GCS
Three Months Ended | ||||||||||||||||
March 31, | Change | |||||||||||||||
(Millions, except percentages) | 2017 | 2016 | 2017 vs. 2016 | |||||||||||||
Revenues | ||||||||||||||||
Non-interest revenues | $ | 1,195 | $ | 1,140 | $ | 55 | 5 | % | ||||||||
Interest income | 235 | 227 | 8 | 4 | ||||||||||||
Interest expense | 53 | 54 | (1 | ) | (2 | ) | ||||||||||
Net interest income | 182 | 173 | 9 | 5 | ||||||||||||
Total revenues net of interest expense | 1,377 | 1,313 | 64 | 5 | ||||||||||||
Provisions for losses | 66 | 71 | (5 | ) | (7 | ) | ||||||||||
Total revenues net of interest expense after provisions for losses | 1,311 | 1,242 | 69 | 6 | ||||||||||||
Expenses | ||||||||||||||||
Marketing, promotion, rewards, Card Member services and other | 505 | 481 | 24 | 5 | ||||||||||||
Salaries and employee benefits and other operating expenses | 514 | 506 | 8 | 2 | ||||||||||||
Total expenses | 1,019 | 987 | 32 | 3 | ||||||||||||
Pretax segment income | 292 | 255 | 37 | 15 | ||||||||||||
Income tax provision | 74 | 67 | 7 | 10 | ||||||||||||
Segment income | $ | 218 | $ | 188 | $ | 30 | 16 | % | ||||||||
Effective tax rate | 25.3 | % | 26.3 | % |
to consumers outside the United States.
average spend per card. Refer to Tables 6 and 12 for additional information on billed business.
Provisions for losses decreased $14 million or 9 percent and remained relatively flat for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year. The decrease in the three-month period was primarily due to improving merchant financingaverage loan credit performance.
balances.
volumes.
pretax income.
| ||||||||||||||||||||||||
As of or for the Three Months Ended September 30, | Change 2016 vs. | As of or for the Nine Months Ended September 30, | Change 2016 vs. | |||||||||||||||||||||
(Millions, except percentages and where indicated) | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | ||||||||||||||||||
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| ||||||||||||
Card billed business (billions) | $ | 100.1 | $ | 99.5 | 1 | % | $ | 302.8 | $ | 295.4 | 3 | % | ||||||||||||
Total cards-in-force | 13.6 | 15.0 | (9 | ) | 13.6 | 15.0 | (9 | ) | ||||||||||||||||
Basic cards-in-force | 13.6 | 15.0 | (9 | ) | 13.6 | 15.0 | (9 | ) | ||||||||||||||||
Average basic Card Member spending (dollars) | $ | 7,386 | $ | 6,711 | 10 | $ | 20,857 | $ | 19,999 | 4 | ||||||||||||||
Total segment assets (billions)(a) | $ | 46.8 | $ | 45.9 | 2 | $ | 46.8 | $ | 45.9 | 2 | ||||||||||||||
Segment capital (billions) | $ | 7.3 | $ | 6.8 | 7 | $ | 7.3 | $ | 6.8 | 7 | ||||||||||||||
Return on average segment capital (b) | 28.0 | % | 34.1 | % | 28.0 | % | 34.1 | % | ||||||||||||||||
Card Member receivables (billions) | $ | 29.6 | $ | 28.6 | 3 | $ | 29.6 | $ | 28.6 | 3 | ||||||||||||||
Card Member loans (billions) | $ | 9.1 | $ | 10.0 | (9 | ) | $ | 9.1 | $ | 10.0 | (9 | ) | ||||||||||||
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| ||||||||||||
Card Member receivables:(c) | ||||||||||||||||||||||||
Total receivables - GCP (billions) | $ | 15.8 | $ | 15.7 | — | $ | 15.8 | $ | 15.7 | — | ||||||||||||||
90+ days past billing as a % of total - GCP(d) | 0.8 | % | 0.7 | % | 0.8 | % | 0.7 | % | ||||||||||||||||
Net loss ratio (as a % of charge volume) - GCP | 0.11 | % | 0.08 | % | 0.09 | % | 0.09 | % | ||||||||||||||||
Total receivables - GSBS (billions) | $ | 13.8 | $ | 12.9 | 7 | $ | 13.8 | $ | 12.9 | 7 | ||||||||||||||
Net write-off rate (principal only) - GSBS(e) | 1.3 | % | 1.8 | % | 1.6 | % | 1.9 | % | ||||||||||||||||
Net write-off rate (principal and fees) - GSBS(e) | 1.5 | % | 2.0 | % | 1.8 | % | 2.2 | % | ||||||||||||||||
30+ days past due as a % of total - GSBS | 1.5 | % | 1.6 | % | 1.5 | % | 1.6 | % | ||||||||||||||||
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| ||||||||||||
Card Member loans:(c) | ||||||||||||||||||||||||
Total loans - GSBS (billions) | $ | 9.0 | $ | 10.0 | (10 | ) | $ | 9.0 | $ | 10.0 | (10 | ) | ||||||||||||
Average loans - GSBS (billions) | $ | 8.8 | $ | 9.9 | (11 | )% | $ | 8.4 | $ | 9.8 | (14 | )% | ||||||||||||
Net write-off rate (principal only) - GSBS(e) | 1.5 | % | 1.3 | % | 1.4 | % | 1.3 | % | ||||||||||||||||
Net write-off rate (principal, interest and fees) - GSBS(e) | 1.8 | % | 1.5 | % | 1.7 | % | 1.5 | % | ||||||||||||||||
30+ days past due as a % of total - GSBS | 1.1 | % | 1.0 | % | 1.1 | % | 1.0 | % | ||||||||||||||||
Calculation of Net Interest Yield on Card Member loans: | ||||||||||||||||||||||||
Net interest income | $ | 184 | $ | 206 | $ | 616 | $ | 593 | ||||||||||||||||
Exclude: | ||||||||||||||||||||||||
Interest expense not attributable to the | ||||||||||||||||||||||||
Company’s Card Member loan portfolio | 79 | 71 | 231 | 213 | ||||||||||||||||||||
Interest income not attributable to the | ||||||||||||||||||||||||
Company’s Card Member loan portfolio | (28 | ) | (24 | ) | (85 | ) | (65 | ) | ||||||||||||||||
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| |||||||||||||||||
Adjusted net interest income(f) | $ | 235 | $ | 253 | $ | 762 | $ | 741 | ||||||||||||||||
Average loans including HFS loan portfolios(billions) | $ | 8.8 | $ | 10.0 | $ | 9.8 | $ | 9.8 | ||||||||||||||||
Net interest income divided by average loans | 8.3 | % | 8.3 | % | 8.4 | % | 8.1 | % | ||||||||||||||||
Net interest yield on Card Member loans(f) | 10.6 | % | 10.0 | % | 10.4 | % | 10.1 | % | ||||||||||||||||
|
As of or for the | Change | |||||||||||
Three Months Ended | 2017 | |||||||||||
March 31, | vs. | |||||||||||
(Millions, except percentages and where indicated) | 2017 | 2016 | 2016 | |||||||||
Card billed business (billions) | ||||||||||||
Proprietary | $ | 26.6 | $ | 24.7 | 8 | % | ||||||
GNS | 43.4 | 40.5 | 7 | |||||||||
Total | $ | 70.0 | $ | 65.2 | 7 | |||||||
Total cards-in-force | ||||||||||||
Proprietary | 15.3 | 14.8 | 3 | |||||||||
GNS | 49.0 | 47.7 | 3 | |||||||||
Total | 64.3 | 62.5 | 3 | |||||||||
Proprietary basic cards-in-force | 10.5 | 10.1 | 4 | |||||||||
Average proprietary basic Card Member spending (dollars) | $ | 2,542 | $ | 2,455 | 4 | |||||||
Total segment assets (billions) | $ | 36.1 | $ | 34.3 | 5 | |||||||
Segment capital (billions) | $ | 2.7 | $ | 2.5 | 8 | |||||||
Return on average segment capital (a) | 26.4 | % | 23.6 | % | ||||||||
Card Member loans: (b) | ||||||||||||
Total loans (billions) | $ | 6.8 | $ | 6.6 | 3 | |||||||
Average loans (billions) | $ | 6.9 | $ | 6.8 | 1 | |||||||
Net write-off rate – principal only (c) | 2.0 | % | 1.9 | % | ||||||||
Net write-off rate – principal, interest and fees (c) | 2.5 | % | 2.4 | % | ||||||||
30+ days past due loans as a % of total | 1.7 | % | 1.8 | % | ||||||||
Calculation of Net Interest Yield on Card Member loans: | ||||||||||||
Net interest income | $ | 182 | $ | 173 | ||||||||
Exclude: | ||||||||||||
Interest expense not attributable to our Card Member loan portfolio | 10 | 11 | ||||||||||
Interest income not attributable to our Card Member loan portfolio | (3 | ) | (3 | ) | ||||||||
Adjusted net interest income (d) | $ | 189 | $ | 181 | ||||||||
Average loans (billions) | $ | 6.9 | $ | 6.8 | ||||||||
Net interest income divided by average loans | 10.6 | % | 10.3 | % | ||||||||
Net interest yield on Card Member loans (d) | 11.1 | % | 10.8 | % | ||||||||
Card Member receivables: (b) | ||||||||||||
Total receivables (billions) | $ | 5.5 | $ | 5.6 | (2 | )% | ||||||
Net write-off rate – principal only (c) | 2.1 | % | 2.2 | % | ||||||||
Net write-off rate – principal and fees(c) | 2.3 | % | 2.4 | % | ||||||||
30+ days past due loans as a % of total | 1.5 | % | 1.5 | % |
(a) |
Return on average segment capital is calculated by dividing (i) one-year period segment income ($ |
(b) | Refer to Table 7 footnote (a). |
(c) | Refer to Table |
Adjusted net interest income and net interest yield on Card Member loans are non-GAAP measures. Refer to “Glossary of Selected Terminology” for the definitions of these terms. We believe adjusted net interest income is useful to investors because it is a component of net interest yield on Card Member loans, which provides a measure of profitability of our Card Member loan portfolio. |
Three Months Ended | ||||||||||||||||
March 31, | Change | |||||||||||||||
(Millions, except percentages) | 2017 | 2016 | 2017 vs. 2016 | |||||||||||||
Revenues | ||||||||||||||||
Non-interest revenues | $ | 2,271 | $ | 2,190 | $ | 81 | 4 | % | ||||||||
Interest income | 319 | 321 | (2 | ) | (1 | ) | ||||||||||
Interest expense | 109 | 95 | 14 | 15 | ||||||||||||
Net interest income | 210 | 226 | (16 | ) | (7 | ) | ||||||||||
Total revenues net of interest expense | 2,481 | 2,416 | 65 | 3 | ||||||||||||
Provisions for losses | 208 | 160 | 48 | 30 | ||||||||||||
Total revenues net of interest expense after provisions for losses | 2,273 | 2,256 | 17 | 1 | ||||||||||||
Expenses | ||||||||||||||||
Marketing, promotion, rewards, Card Member services and other | 938 | 766 | 172 | 22 | ||||||||||||
Salaries and employee benefits and other operating expenses | 705 | 729 | (24 | ) | (3 | ) | ||||||||||
Total expenses | 1,643 | 1,495 | 148 | 10 | ||||||||||||
Pretax segment income | 630 | 761 | (131 | ) | (17 | ) | ||||||||||
Income tax provision | 212 | 276 | (64 | ) | (23 | ) | ||||||||||
Segment income | $ | 418 | $ | 485 | $ | (67 | ) | (14 | )% | |||||||
Effective tax rate | 33.7 | % | 36.3 | % |
As of or for the | Change | |||||||||||
Three Months Ended | 2017 | |||||||||||
March 31, | vs. | |||||||||||
(Millions, except percentages and where indicated) | 2017 | 2016 | 2016 | |||||||||
Card billed business (billions) | $ | 102.8 | $ | 98.5 | 4 | % | ||||||
Total cards-in-force | 13.7 | 15.2 | (10 | ) | ||||||||
Basic cards-in-force | 13.7 | 15.2 | (10 | ) | ||||||||
Average basic Card Member spending (dollars) | $ | 7,533 | $ | 6,509 | 16 | |||||||
Total segment assets (billions) | $ | 48.3 | $ | 46.7 | 3 | |||||||
Segment capital (billions) | $ | 7.2 | $ | 7.2 | ― | |||||||
Return on average segment capital (a) | 25.4 | % | 28.0 | % | ||||||||
Card Member loans (billions) | $ | 10.0 | $ | 8.3 | 20 | |||||||
Card Member receivables (billions) | $ | 31.2 | $ | 28.6 | 9 | |||||||
Card Member loans: (b) | ||||||||||||
Total loans - GSBS (billions) | $ | 10.0 | $ | 8.3 | 20 | |||||||
Average loans - GSBS (billions) | $ | 9.6 | $ | 8.1 | 19 | |||||||
Net write-off rate (principal only) - GSBS (c) | 1.6 | % | 1.4 | % | ||||||||
Net write-off rate (principal, interest and fees) - GSBS (c) | 1.8 | % | 1.6 | % | ||||||||
30+ days past due as a % of total - GSBS | 1.2 | % | 1.0 | % | ||||||||
Calculation of Net Interest Yield on Card Member loans: | ||||||||||||
Net interest income | $ | 210 | $ | 226 | ||||||||
Exclude: | ||||||||||||
Interest expense not attributable to our Card Member loan portfolio | 83 | 72 | ||||||||||
Interest income not attributable to our Card Member loan portfolio | (27 | ) | (28 | ) | ||||||||
Adjusted net interest income(d) | $ | 266 | $ | 270 | ||||||||
Average loans including HFS loan portfolios (billions)(e) | $ | 9.7 | $ | 10.3 | ||||||||
Net interest income divided by average loans | 8.7 | % | 8.8 | % | ||||||||
Net interest yield on Card Member loans (d) | 11.1 | % | 10.5 | % | ||||||||
Card Member receivables: (b) | ||||||||||||
Total receivables - GCP (billions) | $ | 16.6 | $ | 15.4 | 8 | |||||||
90+ days past billing as a % of total - GCP (f) | 0.7 | % | 0.7 | % | ||||||||
Net loss ratio (as a % of charge volume) - GCP | 0.11 | % | 0.08 | % | ||||||||
Total receivables - GSBS (billions) | $ | 14.6 | $ | 13.2 | 11 | % | ||||||
Net write-off rate (principal only) - GSBS (c) | 1.8 | % | 1.8 | % | ||||||||
Net write-off rate (principal and fees) - GSBS (c) | 2.0 | % | 2.1 | % | ||||||||
30+ days past due as a % of total - GSBS | 1.6 | % | 1.6 | % |
(a) | Return on average segment capital is calculated by dividing (i) one-year period segment income ($1.8 billion and $2.0 billion for the twelve months ended March 31, 2017 and 2016, respectively) by (ii) one-year average segment capital ($7.3 billion and $7.1 billion for the twelve months ended March 31, 2017 and 2016, respectively). |
(b) | Refer to Table 7 footnote (a). |
(c) | Refer to Table 7 footnote (d). |
(d) | Adjusted net interest income and net interest yield on Card Member loans are non-GAAP measures. Refer to “Glossary of Selected Terminology” for the definitions of these terms. We believe adjusted net interest income is useful to investors because it is a component of net interest yield on Card Member loans, which provides a measure of profitability of our Card Member loan portfolio. |
(e) | Refer to Table 8 footnote (b). |
(f) | For GCP Card Member receivables, delinquency data is tracked based on days past billing status rather than days past due. A Card Member account is considered 90 days past billing if payment has not been received within 90 days of the Card Member’s billing statement date. In addition, if we initiate collection procedures on an account prior to the account becoming 90 days past billing, the associated Card Member receivable balance is classified as 90 days past billing. These amounts are shown above as 90+ Days Past Due for presentation purposes. |
| ||||||||||||||||||||||||||||||||
Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | |||||||||||||||||||||||||||||
(Millions, except percentages) | 2016 | 2015 | 2016 vs. 2015 | 2016 | 2015 | 2016 vs. 2015 | ||||||||||||||||||||||||||
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| ||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||
Non-interest revenues | $ | 1,044 | $ | 1,123 | $ | (79 | ) | (7 | )% | $ | 3,172 | $ | 3,323 | $ | (151 | ) | (5 | )% | ||||||||||||||
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| |||||||||||||||||||||
Interest income | — | — | — | — | 1 | 1 | — | — | ||||||||||||||||||||||||
Interest expense | (60 | ) | (46 | ) | (14 | ) | 30 | (180 | ) | (154 | ) | (26 | ) | 17 | ||||||||||||||||||
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|
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| |||||||||||||||||||||
Net interest income | 60 | 46 | 14 | 30 | 181 | 155 | 26 | 17 | ||||||||||||||||||||||||
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|
|
|
|
|
|
| |||||||||||||||||||||
Total revenues net of interest expense | 1,104 | 1,169 | (65 | ) | (6 | ) | 3,353 | 3,478 | (125 | ) | (4 | ) | ||||||||||||||||||||
Provisions for losses | 8 | 8 | — | — | 21 | 22 | (1 | ) | (5 | ) | ||||||||||||||||||||||
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|
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| |||||||||||||||||||||
Total revenues net of interest expense after provisions for losses | 1,096 | 1,161 | (65 | ) | (6 | ) | 3,332 | 3,456 | (124 | ) | (4 | ) | ||||||||||||||||||||
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| |||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||
Marketing, promotion, rewards, Card Member services and other | 55 | 78 | (23 | ) | (29 | ) | 171 | 210 | (39 | ) | (19 | ) | ||||||||||||||||||||
Salaries and employee benefits and other operating expenses | 470 | 449 | 21 | 5 | 1,422 | 1,440 | (18 | ) | (1 | ) | ||||||||||||||||||||||
|
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|
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| |||||||||||||||||||||
Total expenses | 525 | 527 | (2 | ) | — | 1,593 | 1,650 | (57 | ) | (3 | ) | |||||||||||||||||||||
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| |||||||||||||||||||||
Pretax segment income | 571 | 634 | (63 | ) | (10 | ) | 1,739 | 1,806 | (67 | ) | (4 | ) | ||||||||||||||||||||
Income tax provision | 212 | 237 | (25 | ) | (11 | ) | 650 | 671 | (21 | ) | (3 | ) | ||||||||||||||||||||
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| |||||||||||||||||||||
Segment income | $ | 359 | $ | 397 | $ | (38 | ) | (10 | )% | $ | 1,089 | $ | 1,135 | $ | (46 | ) | (4 | )% | ||||||||||||||
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|
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|
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|
|
| |||||||||||||||||||||
Effective tax rate | 37.1 | % | 37.4 | % | 37.4 | % | 37.2 | % | ||||||||||||||||||||||||
|
Three Months Ended | ||||||||||||||||
March 31, | Change | |||||||||||||||
(Millions, except percentages) | 2017 | 2016 | 2017 vs. 2016 | |||||||||||||
Revenues | ||||||||||||||||
Non-interest revenues | $ | 1,017 | $ | 1,041 | $ | (24 | ) | (2 | )% | |||||||
Interest expense | (58 | ) | (59 | ) | 1 | (2 | ) | |||||||||
Net interest income | 58 | 59 | (1 | ) | (2 | ) | ||||||||||
Total revenues net of interest expense | 1,075 | 1,100 | (25 | ) | (2 | ) | ||||||||||
Provisions for losses | 3 | 8 | (5 | ) | (63 | ) | ||||||||||
Total revenues net of interest expense after provisions for losses | 1,072 | 1,092 | (20 | ) | (2 | ) | ||||||||||
Expenses | ||||||||||||||||
Marketing, promotion, rewards, Card Member services and other | 32 | 58 | (26 | ) | (45 | ) | ||||||||||
Salaries and employee benefits and other operating expenses | 473 | 463 | 10 | 2 | ||||||||||||
Total expenses | 505 | 521 | (16 | ) | (3 | ) | ||||||||||
Pretax segment income | 567 | 571 | (4 | ) | (1 | ) | ||||||||||
Income tax provision | 204 | 214 | (10 | ) | (5 | ) | ||||||||||
Segment income | $ | 363 | $ | 357 | $ | 6 | 2 | % | ||||||||
Effective tax rate | 36.0 | % | 37.5 | % |
Net interest income increased $14 million or 30 percent and $26 million or 17 percent for the three and nine months ended September 30, 2016, respectively, compared to the same periods in the prior year, reflecting a higher interest expense credit relating to internal transfer pricing and funding rates, which resulted in a net benefit for GMS due to its merchant payables.
payments, and lower salaries and employee benefits costs.
| ||||||||||||||||||||||||
As of or for the Three Months Ended September 30, | Change 2016 vs. | As of or for the Nine Months Ended September 30, | Change 2016 vs. | |||||||||||||||||||||
(Millions, except percentages and where indicated) | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | ||||||||||||||||||
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| ||||||||||||
Loyalty Coalition revenue | $ | 106 | $ | 100 | 6 | % | $ | 304 | $ | 279 | 9 | % | ||||||||||||
Average discount rate | 2.47 | % | 2.46 | % | 2.45 | % | 2.48 | % | ||||||||||||||||
Total segment assets (billions)(a) | $ | 23.2 | $ | 23.3 | — | % | $ | 23.2 | $ | 23.3 | — | % | ||||||||||||
Segment capital(billions) | $ | 2.3 | $ | 2.6 | (12 | )% | $ | 2.3 | $ | 2.6 | (12 | )% | ||||||||||||
Return on average segment capital(b) | 59.9 | % | 66.9 | % | 59.9 | % | 66.9 | % | ||||||||||||||||
|
As of or for the | Change | |||||||||||
Three Months Ended | 2017 | |||||||||||
March 31, | vs. | |||||||||||
(Millions, except percentages and where indicated) | 2017 | 2016 | 2016 | |||||||||
Loyalty Coalition revenue | $ | 102 | $ | 94 | 9 | % | ||||||
Average discount rate | 2.45 | % | 2.44 | % | ||||||||
Total segment assets (billions) | $ | 24.5 | $ | 23.7 | 3 | % | ||||||
Segment capital (billions) | $ | 2.7 | $ | 2.4 | 13 | % | ||||||
Return on average segment capital(a) | 59.1 | % | 62.7 | % |
(a) |
Return on average segment capital is calculated by dividing (i) one-year period segment income ($1.5 billion for both the twelve months ended |
charges.
Consolidated Capital Resources and Liquidity
March 31, 2017.
Basel III | Ratios as of | |||||||||
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Common Equity Tier 1 | 5.8 | % | ||||||||
American Express Company | 12.7 | % | ||||||||
American Express Centurion Bank | 17.7 | |||||||||
American Express Bank, FSB | 14.3 | |||||||||
Tier 1 | 7.3 | |||||||||
American Express Company | 13.9 | |||||||||
American Express Centurion Bank | 17.7 | |||||||||
American Express Bank, FSB | 14.3 | |||||||||
Total | 9.3 | |||||||||
American Express Company | 15.6 | |||||||||
American Express Centurion Bank | 19.0 | |||||||||
American Express Bank, FSB | 15.6 | |||||||||
Tier 1 Leverage | 4.0 | |||||||||
American Express Company | 11.5 | |||||||||
American Express Centurion Bank | 17.4 | |||||||||
American Express Bank, FSB | 12.2 | |||||||||
Supplementary Leverage Ratio(b) | 3.0 | % | ||||||||
American Express Company | 9.9 | |||||||||
American Express Centurion Bank | 13.3 | |||||||||
American Express Bank, FSB | 10.1 | % |
(a) | Transitional Basel III minimum capital requirement and additional capital conservation buffer as defined by the Federal Reserve for calendar year |
(b) | The minimum supplementary leverage ratio (SLR) requirement of 3 percent is effective January 1, 2018. |
($ in Billions) | | September 30, 2016 | | |
Risk-Based Capital | ||||
Common Equity Tier 1 | $ | 16.8 | ||
Tier 1 Capital | 18.4 | |||
Tier 2 Capital(a) | 2.1 | |||
Total Capital | 20.5 | |||
Risk Weighted Assets | 123.6 | |||
Average Total Assets to calculate the Tier 1 Leverage Ratio | 154.2 | |||
Total Leverage Exposure to calculate SLR | $ | 178.7 |
American Express Company | March 31, | |||
($ in Billions) | 2017 | |||
Risk-Based Capital | ||||
Common Equity Tier 1 | $ | 16.3 | ||
Tier 1 Capital | 17.8 | |||
Tier 2 Capital(a) | 2.2 | |||
Total Capital | 20.0 | |||
Risk-Weighted Assets | 128.6 | |||
Average Total Assets to calculate the Tier 1 Leverage Ratio | 155.0 | |||
Total Leverage Exposure to calculate SLR | $ | 180.5 |
(a) | Tier 2 capital is the sum of the allowance for |
The minimum requirement for the Tier 1 risk-based capital ratio is 1.5 percent higher than the minimum for the CET1 risk-based capital ratio. We have $1.6 billion of preferred shares outstanding to help address a portion of the Tier 1 capital requirements in excess of common equity requirements.
($ in Billions) | | September 30, 2016 | | |
Estimated Common Equity Tier 1 Ratio under Fully Phased-In Basel III(a) | 13.1 | % | ||
Estimated Tier 1 Capital Ratio under Fully Phased-In Basel III(a) | 14.3 | |||
Estimated Tier 1 Leverage Ratio under Fully Phased-In Basel III(b) | 11.6 | |||
Estimated Supplementary Leverage Ratio under Fully Phased-In Basel III | 10.0 | % | ||
Estimated Risk-Weighted Assets under Fully Phased-In Basel III(c) | $ | 124.7 | ||
Estimated Average Total Assets to calculate the Tier 1 Leverage Ratio(b) | 154.0 | |||
Estimated Total Leverage Exposure to calculate SLR under Fully Phased-In Basel III(d) | $ | 178.4 |
March 31, | ||||
($ in Billions) | 2017 | |||
Estimated Common Equity Tier 1 Ratio under Fully Phased-In Basel III(a) | 12.3 | % | ||
Estimated Tier 1 Capital Ratio under Fully Phased-In Basel III (a) | 13.5 | |||
Estimated Tier 1 Leverage Ratio under Fully Phased-In Basel III(b) | 11.3 | |||
Estimated Supplementary Leverage Ratio under Fully Phased-In Basel III | 9.7 | % | ||
Estimated Risk-Weighted Assets under Fully Phased-In Basel III(c) | $ | 130.3 | ||
Estimated Average Total Assets to calculate the Tier 1 Leverage Ratio(b) | 154.8 | |||
Estimated Total Leverage Exposure to calculate SLR under Fully Phased-In Basel III (d) | $ | 180.4 |
(a) | The Fully Phased-in Basel III Common Equity Tier 1 and Tier 1 risk-based capital ratios, non-GAAP measures, are calculated as Common Equity Tier 1 or Tier 1 capital under Fully Phased-in Basel III rules, as applicable, divided by risk-weighted assets under Fully Phased-in Basel III rules. Refer to Table |
(b) | The Fully Phased-in Basel III Tier 1 and supplementary leverage ratios, non-GAAP measures, are calculated by dividing Fully Phased-in Basel III Tier 1 capital by our average total assets and Fully Phased-in total leverage exposure for supplementary leverage ratio purposes under Fully Phased-in Basel III, respectively. |
(c) | Estimated Fully Phased-in Basel III risk-weighted assets, a non-GAAP measure, reflect our Basel III risk-weighted assets, with all transition provisions fully phased in. This includes incremental risk weighting applied to deferred tax assets and significant investments in unconsolidated financial institutions, as well as exposures to past due accounts, equities and sovereigns. |
(d) | Estimated Fully Phased-in Basel III Leverage Exposure, a non-GAAP measure, reflects average total consolidated assets with adjustments for Tier 1 capital deductions on a fully phased-in basis, off-balance sheet derivatives, undrawn conditionally and unconditionally cancellable commitments and other off-balance sheet liabilities. |
The Basel capital standards establish minimum requirements for the Tier 1 risk-based capital ratios that are 1.5 percent higher than the minimum requirements for CET1 risk-based capital ratios. This difference between Tier 1 capital, which includes common equity and qualifying preferred securities, and CET1 is also present in the minimum capital requirements within Comprehensive Capital Analysis and Review (CCAR).
We issued $1.6 billion of preferred shares to help finance a portion of the Tier 1 capital requirements in excess of common equity requirements.
Our $750 million of subordinated debentures, which prior to 2014, were fully included in Tier 2 capital (but not in Tier 1 capital), do not meet the requirements of Tier 2 capital under Basel III and thus were redeemed for cash on September 1, 2016 at 100 percent of the principal amount outstanding. As previously mentioned, we issued $600 million of subordinated notes, which qualify as Tier 2 capital under Basel rules.
March 31, 2017.
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(Billions) | CET 1 | Tier 1 | ||||||
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Risk-Based Capital under Transitional Basel III | $ | 16.8 | $ | 18.4 | ||||
Adjustments related to: | ||||||||
AOCI | (0.2 | ) | (0.2 | ) | ||||
Transition provisions for intangible assets | (0.3 | ) | (0.3 | ) | ||||
Other | — | — | ||||||
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Estimated Common Equity Tier 1 (CET1) and Tier 1 Risk-Based Capital under Fully Phased-in Basel III | $ | 16.3 | $ | 17.9 | ||||
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(Billions) | CET1 | Tier 1 | ||||||
Risk-Based Capital under Transitional Basel III | $ | 16.3 | $ | 17.8 | ||||
Adjustments related to: | ||||||||
AOCI | (0.1 | ) | (0.1 | ) | ||||
Transition provisions for intangible assets | (0.2 | ) | (0.2 | ) | ||||
Other | ― | ― | ||||||
Estimated CET1 and Tier 1 Risk-Based Capital under Fully Phased-in Basel III | $ | 16.0 | $ | 17.5 |
quarter.
2016:
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(Billions) | | September 30, 2016 | | | December 31, 2015 | | ||
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Short-term borrowings | $ | 2.9 | $ | 4.8 | ||||
Long-term debt | 44.9 | 48.1 | ||||||
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Total debt | 47.8 | 52.9 | ||||||
Customer deposits | 53.5 | 55.0 | ||||||
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Total debt and customer deposits | $ | 101.3 | $ | 107.9 | ||||
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and Customer Deposits
(Billions) | March 31, 2017 | December 31, 2016 | ||||||
Short-term borrowings | $ | 3.6 | $ | 5.6 | ||||
Long-term debt | 51.6 | 47.0 | ||||||
Total debt | 55.2 | 52.6 | ||||||
Customer deposits | 53.8 | 53.0 | ||||||
Total debt and customer deposits | $ | 109.0 | $ | 105.6 |
Credit Agency | American Express Entity | Short-Term Ratings | Long-Term Ratings | Outlook | ||||
DBRS | All rated entities | R-1 (middle) | A (high) | Stable | ||||
Fitch | All rated entities | F1 | A | Negative | ||||
Moody’s | TRS and rated operating subsidiaries (a) | Prime 1 | A2 | Stable | ||||
| American Express Company | Prime 2 | A3 | Stable | ||||
S&P | TRS | N/A | A- | Stable | ||||
S&P | Other rated operating subsidiaries | A-2 | A- | Stable | ||||
S&P | American Express Company | A-2 | BBB+ | Stable | ||||
(a) | American Express Travel Related Services Company, Inc. |
Deposit Programs
We held the following deposits as of September 30, 2016 and December 31, 2015:
Table 24: Customer Deposits
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September 30, | December 31, | |||||||
(Billions) | 2016 | 2015 | ||||||
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U.S. retail deposits: | ||||||||
Savings accounts — Direct | $ | 30.7 | $ | 29.0 | ||||
Certificates of deposit:(a) | ||||||||
Direct | 0.3 | 0.3 | ||||||
Third-party (brokered) | 12.9 | 13.9 | ||||||
Sweep accounts — Third-party (brokered) | 8.9 | 10.9 | ||||||
Other retail deposits: | ||||||||
Non-U.S. deposits and U.S. non-interest bearing | 0.1 | 0.2 | ||||||
Card Member credit balances - U.S. and non-U.S. | 0.6 | 0.7 | ||||||
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Total customer deposits | $ | 53.5 | $ | 55.0 | ||||
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Asset Securitization Programs
We periodically securitize Card Member loans and receivables arising from our card business, as the securitization market provides us with cost-effective funding. Securitization of Card Member loans and receivables is accomplished through the transfer of those assets to a trust, which in turn issues securities collateralized by the transferred assets to third-party investors. The proceeds from issuance are distributed to us, through our wholly owned subsidiaries, as consideration for the transferred assets.
The loans and receivables being securitized are reported as Card Member loans and receivables on our Consolidated Balance Sheets, and the related securities issued to third-party investors are reported as long-term debt.
Under the respective terms of the securitization trust agreements, the occurrence of certain triggering events associated with the performance of the assets of each trust could result in payment of trust expenses, establishment of reserve funds, or in a worst-case scenario, early amortization of debt securities. During the three months ended September 30, 2016, no such triggering events occurred.
Facility
Certain Other Off-Balance Sheet Arrangements
March 31:
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(Billions) | 2016 | 2015 | ||||||
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Total cash provided by (used in): | ||||||||
Operating activities | $ | 4.9 | $ | 7.8 | ||||
Investing activities | 10.1 | (2.7 | ) | |||||
Financing activities | (11.2 | ) | (7.3 | ) | ||||
Effect of foreign currency exchange rates on cash and cash equivalents and other | — | (0.2 | ) | |||||
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Net increase in cash and cash equivalents | $ | 3.8 | $ | (2.4 | ) | |||
|
(Billions) | 2017 | 2016 | ||||||
Total cash provided by (used in): | ||||||||
Operating activities | $ | 1.2 | $ | 2.5 | ||||
Investing activities | 0.7 | 3.7 | ||||||
Financing activities | 2.2 | (3.9 | ) | |||||
Effect of foreign currency exchange rates on cash and cash equivalents and other | 0.1 | ― | ||||||
Net increase in cash and cash equivalents | $ | 4.2 | $ | 2.3 |
portfolio and a decrease in the remaining HFS portfolio balances in the prior period.
As a participant
In addition, legislatorsyear ended December 31, 2016 (the 2016 Form 10-K) for further information.
On June 23, 2016, the United Kingdom held a referendum in which voters approved an exit from the European Union, commonly referred to as “Brexit,” which has caused and may continue to cause significant volatility in capital and currency markets worldwide. The full impact of Brexit, however, remains uncertain. A process of negotiation, which is likely to take two years or longer, will determine the future terms of the U.K.’s relationship with the European Union. It is unclear at this stage what financial, trade and legal implications the withdrawal of the U.K. from the European Union would have and how such withdrawal would affect us.
European Union Payments Legislation
In 2015, the European Union adopted legislation in two parts, covering a wide range of topics across the payments industry. The first part was an EU-wide regulation on interchange fees (the Interchange Fee Regulation); the second consisted of revisions to the Payment Services Directive (the PSD2).
The Interchange Fee Regulation was formally adopted in April 2015. The substantive terms as adopted include the following:
The PSD2 was adopted on November 25, 2015, and was published in the Official Journal of the European Union on December 23, 2015. Eachare transposed into national law by each Member State, has until January 2018 to transpose the PSD2 into national law.
Among other terms, the published text of PSD2 includes provisions that will (i) further regulate surcharging so that transactions falling in scope of the interchange caps could notthere may be surcharged, but transactions falling outside the scope of the caps could be surcharged up to cost, subject potentially to the decision of an individual Member State to prohibit surcharging altogether; and (ii) require all networks, including “three party” payment networks that operate with licensing arrangements, such as our GNS business, to establish objective, proportionate and non-discriminatory criteria under which a financial institution may access the network, for example, as a licensed issuer or acquirer. The potential surcharging regulation may increaseincreased instances of differential surcharging of our cards, prompt customer and merchant confusion as to which transactions may be surcharged and lead to Card Member dissatisfaction. The access requirements will undermineIn addition, the flexibility and discretion we have had to date in deciding with whom to partner in our GNS business and, together with requirementslaws of a number of states in the Interchange Fee Regulation, may undermineUnited States that prohibit surcharging are being challenged in litigation brought by merchant groups.
Australia Payments Regulation
Following a formal reviewsurcharging and other actions that could impair the Card Member experience, please see the “Risk Factors” section of the regulatory framework for card payments in Australia,2016 Form 10-K.
The inclusion of our GNS business under interchange regulation may undermine our ability to attract and retain GNS partners. While the discount rates we agree to with merchants do not include an interchange component and are therefore not capped, the interchange caps, once effective, will likely exert downward pressure on merchant fees across the industry, including our discount rates.
Dodd-Frank Wall Street Reform and Consumer Protection Act
Dodd-Frank contains a wide array of provisions intended to govern the practices and oversight of financial institutions and other participants in the financial markets. Among other matters, the law created an independent Consumer Financial Protection Bureau (the CFPB)(CFPB), which has broad rulemaking and enforcement authority over providers of credit, savings and payment services and other consumer financial products and services with respectauthority to certain federal consumer financial laws. Moreover, the CFPB has examination and enforcement authority with respect to certain federal consumer financial laws for providers of consumer financial products and services, including certain of our subsidiaries. The CFPB is directed to prohibitprevent “unfair, deceptive or abusive” acts or practices. In addition, a number of U.S. states have significant consumer credit protection and disclosure laws (in certain cases more stringent than U.S. federal laws). U.S. federal law also regulates abusive debt collection practices, which along with bankruptcy and debtor relief laws, can affect our ability to ensure that all consumers have accesscollect amounts owed to fair, transparent and competitive markets for consumer financial products and services.
us.
On May 5,
On July 28, 2016, the CFPB outlined proposals under consideration that would set forth additional requirements forthird-party debt collection agencies, which we use in the ordinary course. This proposal is part of a rulemaking process that may not result in a final rule, if any, becoming effective before 2018.
As of March 1, 2017, regulations implementing Dodd-Frank’s margin requirements would result in us collecting and remitting cash and/or securities collateral relative to the value of certain uncleared derivative transactions (variation margin), which may create or increase collateral posting requirements for us.
Form 10-K.
business, please see the “Risk Factors” section of the 2016 Form 10-K.
”
2016.
|
We believe we are not a party to, nor are any of our properties the subject of, any legal proceeding that would have a material adverse effect on our consolidated financial condition or liquidity. However, in light of the uncertainties involved in such matters, including the fact that some pending legal proceedings are at preliminary stages and seek an indeterminate amount of damages, it is possible that the outcome of legal proceedings, including the possible resolution of merchant claims, described in our 2015 Form 10-K, could have a material impact on our results of operations. In addition, it is possible that significantly increased merchant steering or other actions impairing the Card Member experience could have a material adverse effect on our business. Certain legal proceedings involving us or our subsidiaries are further described in this section and others, for which there have been no subsequent material developments since the filing of our 20152016 Form 10-K, are described in such report.
For those legal proceedings described in this section and in the 2015 Form 10-K where a loss is reasonably possible in future periods, whether in excess of a related reserve for legal contingencies or where there is no such reserve, and for which we are able to estimate a range of possible loss, the current estimated range is zero to $190 million in excess of any reserves related to those matters. This range represents our estimate based on currently available information and does not represent our maximum loss exposure; actual results may vary significantly. As such proceedings evolve, including the merchant claims, we may need to increase our range of possible loss or reserves for legal contingencies.10-K. For additional information, see Note 8 to our Consolidated“Consolidated Financial Statements.
In 2010, the DOJ, along with Attorneys General from Arizona, Connecticut, Hawaii (Hawaii has since withdrawn its claim), Idaho, Illinois, Iowa, Maryland, Michigan, Missouri, Montana, Nebraska, New Hampshire, Ohio, Rhode Island, Tennessee, Texas, Utah and Vermont filed a complaint in the U.S. District Court for the Eastern District of New York against us, MasterCard International Incorporated and Visa, Inc., alleging a violation of Section 1 of the Sherman Antitrust Act (the “DOJ case”). The complaint included allegations that provisions in our merchant agreements prohibiting merchants from steering a customer to use another network’s card or another type of general-purpose card (“anti-steering” and “non-discrimination” contractual provisions) violate the antitrust laws. The complaint sought a judgment permanently enjoining us from enforcing our non-discrimination contractual provisions. The complaint did not seek monetary damages. Following a non-jury trial in the DOJ case, the trial court found that the challenged provisions were anticompetitive and on April 30, 2015, the court issued a final judgment entering a permanent injunction.
Following our appeal of this judgment, on September 26, 2016, the Court of Appeals for the Second Circuit reversed the trial court decision and directed the trial court to enter a judgment for American Express.
On November 6, 2015, a putative representative action, captioned People of the State of California, ex. rel. Dennis Herrera v. American Express Co. et al., was filed in California state court on behalf of the People of California by the San Francisco City Attorney for the benefit of California merchants that accept American Express cards. The complaint alleges that certain terms in our merchant agreements violate California law and seeks relief in the form of: (1) a declaratory judgment; (2) an injunction preventing us from enforcing those terms; (3) statutory civil penalties in an amount to be determined by the court; (4) restitution for alleged overcharges; and (5) attorney’s fees and cost of suit. On October 7, 2016, the San Francisco City Attorney filed a stipulation dismissing this action without prejudice.
We are a defendant in a class action captionedKaufman v. American Express Travel Related Services, which was filed on February 14, 2007, and is pending in the United States District Court for the Northern District of Illinois. Plaintiffs’ principal allegation is that our gift cards violated consumer protection statutes because consumers allegedly had difficulty spending small residual amounts on the gift cards prior to the imposition of monthly service fees. The Court preliminarily certified a settlement class consisting of (with some exceptions) “all purchasers, recipients and holders of all gift cards issued by American Express from January 1, 2002 through the date of preliminary approval of the settlement.” On March 2, 2016, the court granted final approval of the class-wide settlement. Notices of appeal have been filed.
On July 30, 2015, plaintiff Plumbers and Steamfitters Local 137 Pension Fund, on behalf of themselves and other purchasers of American Express stock, filed a suit, captionedPlumbers and Steamfitters Local 137 Pension Fund v. American Express Co., Kenneth I. Chenault and Jeffrey C. Campbell, for violation of federal securities law, alleging that the Company deliberately issued false and misleading statements to, and omitted important information from, the public relating to the financial importance of the Costco cobrand relationship to the Company, including, but not limited to, the decision to accelerate negotiations to renew the cobrand agreement. The plaintiff seeks damages and injunctive relief. The Company moved to dismiss the amended complaint on March 21, 2016.
On October 16, 2015, a putative class action, captionedHoussain v. American Express Company, et al., was filed in the United States District Court for the Southern District of New York under the Employee Retirement Income Security Act of 1974 (ERISA) relating to disclosures of the Costco cobrand relationship. On May 10, 2016, the plaintiff filed an amended complaint naming certain officers of the Company as defendants and alleging that the defendants violated certain ERISA fiduciary obligations by, among other things, allowing the investment of American Express Retirement Savings Plan (Plan) assets in American Express common stock when American Express common stock was not a prudent investment and misrepresenting and failing to disclose material facts to Plan participants in connection with the administration of the Plan. The amended complaint seeks, among other remedies, an unspecified amount of damages. The defendants moved to dismiss the amended complaint on May 31, 2016.
On March 8, 2016, plaintiffs B&R Supermarket, Inc. d/b/a Milam’s Market and Grove Liquors LLC, on behalf of themselves and others, filed a suit, captionedB&R Supermarket, Inc. d/b/a Milam’s Market, et al. v. Visa Inc., et al., for violations of the Sherman Antitrust Act, the Clayton Antitrust Act, California’s Cartwright Act and unjust enrichment in the United States District Court for the Northern District of California, against American Express Company, other credit and charge card networks, other issuing banks and EMVCo, LLC. Plaintiffs allege that the defendants, through EMVCo, conspired to shift liability for fraudulent, faulty and otherwise rejected consumer credit card transactions from themselves to merchants after the implementation of EMV chip payment terminals. Plaintiffs seek damages and injunctive relief. On June 24, 2016, the court granted our motion to transfer to the Southern District of New York the claims brought against us by merchants who accept American Express cards. The court also granted plaintiffs’ leave to file an amended complaint and, on September 30, 2016, denied our motion to dismiss as to claims brought by merchants who do not accept American Express cards.
In October 2009, a putative class action, captionedLopez, et al. v. American Express Bank, FSB and American Express Centurion Bank, was filed in the United States District Court for the Central District of California. The amended complaint sought to certify a class of California American Express Card Members whose interest rates were changed from fixed to variable in or around August 2009 or otherwise increased. On August 20, 2014, plaintiffs filed an amended nationwide complaint and an unopposed motion for preliminary approval of a settlement of the claims alleged in that complaint. The settlement provides for certain relief to class members, attorneys’ fees and costs of up to $6 million. On October 17, 2016, the court granted final approval of the settlement.
| ||||||||||||||||
Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(c) | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||||||||
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July 1-31, 2016 | ||||||||||||||||
Repurchase program(a) | 2,511,954 | $62.98 | 2,511,954 | 56,217,857 | ||||||||||||
Employee transactions(b) | 34 | $59.48 | N/A | N/A | ||||||||||||
August 1-31, 2016 | ||||||||||||||||
Repurchase program(a) | 3,799,200 | $65.13 | 3,799,200 | 52,418,657 | ||||||||||||
Employee transactions(b) | 63,497 | $64.46 | N/A | N/A | ||||||||||||
September 1-30, 2016 | ||||||||||||||||
Repurchase program(a) | 2,538,136 | $64.69 | 2,538,136 | 149,648,176 | ||||||||||||
Employee transactions(b) | (221 | ) | $53.39 | N/A | N/A | |||||||||||
Total | ||||||||||||||||
Repurchase program(a) | 8,849,290 | $64.39 | 8,849,290 | 149,648,176 | ||||||||||||
Employee transactions(b) | 63,310 | $64.50 | N/A | N/A | ||||||||||||
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Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(c) | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||||||||
January 1-31, 2017 | ||||||||||||||||
Repurchase program(a) | 3,999,747 | $ | 76.07 | 3,999,747 | 131,388,031 | |||||||||||
Employee transactions(b) | ― | ― | N/A | N/A | ||||||||||||
February 1-28, 2017 | ||||||||||||||||
Repurchase program(a) | 1,749,740 | $ | 78.85 | 1,749,740 | 129,638,291 | |||||||||||
Employee transactions(b) | 855,075 | $ | 76.86 | N/A | N/A | |||||||||||
March 1-31, 2017 | ||||||||||||||||
Repurchase program(a) | 5,116,427 | $ | 79.07 | 5,116,427 | 124,521,864 | |||||||||||
Employee transactions(b) | 7,322 | $ | 76.85 | N/A | N/A | |||||||||||
Total | ||||||||||||||||
Repurchase program(a) | 10,865,914 | $ | 77.93 | 10,865,914 | 124,521,864 | |||||||||||
Employee transactions(b) | 862,397 | $ | 76.86 | N/A | N/A |
(a) | On September 26, 2016, the |
(b) | Includes: (i) shares surrendered by holders of employee stock options who exercised options (granted under |
(c) | Share purchases under publicly announced programs are made pursuant to open market purchases or privately negotiated transactions (including employee benefit plans) as market conditions warrant and at prices |
During the third quarter of 2016, American Express Travel & Lifestyle Services obtained two visas from Iranian embassies in connection with certain travel arrangements on behalf of clients. In addition,
AMERICAN EXPRESS COMPANY | ||||||
(Registrant) | ||||||
Date: April 27, 2017 | By | /s/ Jeffrey C. Campbell | ||||
Jeffrey C. Campbell | ||||||
Executive Vice President and | ||||||
Chief Financial Officer | ||||||
Date: April 27, 2017 | By | /s/ Linda Zukauckas | ||||
Linda Zukauckas | ||||||
Executive Vice President and | ||||||
Corporate Controller | ||||||
(Principal Accounting Officer) |
Exhibit | ||
Description | ||
12 | Computation in Support of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. | |
31.1 | Certification of Kenneth I. Chenault pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended. | |
31.2 | Certification of Jeffrey C. Campbell pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended. | |
32.1 | Certification of Kenneth I. Chenault pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification of Jeffrey C. Campbell pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |