Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | May 07, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-6908 | |
Entity Registrant Name | AMERICAN EXPRESS CREDIT CORP | |
Entity Central Index Key | 0000004969 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 11-1988350 | |
Entity Address, Address Line One | 200 Vesey Street | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10285 | |
City Area Code | 212 | |
Local Phone Number | 640-2000 | |
Title of 12(b) Security | 0.625 percent Senior Notes, due November 22, 2021 | |
Trading Symbol | AXP/21 | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 1,504,938 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Shell Company | false |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues | ||
Discount revenue earned from purchased Card Member receivables and Card Member loans | $ 207 | $ 303 |
Interest income from affiliates and other | 37 | 110 |
Finance revenue | 22 | 19 |
Total revenues | 266 | 432 |
Expenses | ||
Provisions for credit losses | 103 | 63 |
Interest expense | 79 | 169 |
Interest expense to affiliates | 53 | 104 |
Other, net | (11) | (23) |
Total expenses | 224 | 313 |
Pretax income | 42 | 119 |
Income tax provision | 20 | 16 |
Net income | $ 22 | $ 103 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 22 | $ 103 |
Other comprehensive (loss) income: | ||
Foreign currency translation adjustments, net of tax | (137) | 7 |
Other comprehensive (loss) income | (137) | 7 |
Comprehensive (loss) income | $ (115) | $ 110 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Assets | ||
Cash and cash equivalents | $ 35 | $ 33 |
Card Member receivables, less reserves for credit losses | 9,337 | 25,395 |
Card Member loans, less reserves for credit losses | 588 | 687 |
Loans to affiliates and other | 13,959 | 10,345 |
Due from affiliates | 2,095 | 652 |
Other assets | 1,107 | 245 |
Total assets | 27,121 | 37,357 |
Liabilities | ||
Short-term debt | 1,574 | 3,216 |
Short-term debt to affiliates | 8,246 | 6,225 |
Long-term debt | 11,074 | 13,469 |
Long-term debt to affiliates | 981 | 9,292 |
Total debt | 21,875 | 32,202 |
Due to affiliates | 2,392 | 2,133 |
Accrued interest and other liabilities | 263 | 435 |
Total liabilities | 24,530 | 34,770 |
Shareholder’s Equity | ||
Common stock | 0 | 0 |
Additional paid-in capital | 161 | 161 |
Retained earnings | 3,654 | 3,513 |
Accumulated other comprehensive loss | ||
Foreign currency translation adjustments, net of tax | (1,224) | (1,087) |
Total accumulated other comprehensive loss | (1,224) | (1,087) |
Total shareholder’s equity | 2,591 | 2,587 |
Total liabilities and shareholder’s equity | $ 27,121 | $ 37,357 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Assets | ||
Card Member receivables, reserves for credit losses | $ 69 | $ 162 |
Card Member loans, reserves for credit losses | $ 18 | $ 10 |
Shareholder’s Equity | ||
Common shares, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common shares, authorized | 3,000,000 | 3,000,000 |
Common shares, issued | 1,500,000 | 1,500,000 |
Common shares, outstanding | 1,500,000 | 1,500,000 |
Accumulated other comprehensive loss | ||
Foreign currency translation adjustments, tax | $ 154 | $ 25 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
Cash Flows from Operating Activities | |||
Net income | $ 22 | $ 103 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Provisions for credit losses | 103 | 63 | |
Amortization of underwriting expense | 4 | 6 | |
Deferred taxes | (6) | (3) | |
Changes in operating assets and liabilities: | |||
Interest, taxes and other amounts due to/from affiliates | (4) | 18 | |
Other operating assets and liabilities | 108 | 153 | |
Net cash provided by operating activities | 227 | 340 | |
Cash Flows from Investing Activities | |||
Net decrease (increase) in Card Member receivables and Card Member loans | [1] | 10,640 | (1,396) |
Net (increase) decrease in loans to affiliates and other | [1] | (4,364) | 130 |
Net (increase) decrease in due to/from affiliates | (1,199) | 358 | |
Net cash provided by (used in) investing activities | 5,077 | (908) | |
Cash Flows from Financing Activities | |||
Net decrease in short-term debt | (1,642) | (733) | |
Net increase in short-term debt to affiliates | 2,021 | 453 | |
Principal payments of long-term debt | (2,450) | (2,250) | |
Proceeds from long-term debt to affiliates | 8,006 | 8,379 | |
Principal payments of long-term debt to affiliates | [1] | (11,235) | (5,318) |
Net cash (used in) provided by financing activities | (5,300) | 531 | |
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash | (10) | 2 | |
Net decrease in cash, cash equivalents and restricted cash | (6) | (35) | |
Cash, cash equivalents and restricted cash at beginning of period | 149 | 195 | |
Cash, cash equivalents and restricted cash at end of period | $ 143 | $ 160 | |
[1] | During the quarter, TRS removed U.S Consumer and Small Business Card Member receivables from the American Express Issuance Trust II (the Charge Trust) and substantially replaced them with U.S Corporate Card Member receivables. To effect this change, on January 7, 2020, Credco sold $5.2 billion of U.S. Corporate Card Member receivables to TRS. Settlement of this transaction was undertaken through borrowings from American Express Company. |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | ||||
Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | ||
Cash and cash equivalents per Consolidated Balance Sheets | $ 35 | $ 33 | $ 65 | $ 102 | |
Restricted cash included in Other assets per Consolidated Balance Sheets | [1] | 108 | 116 | 95 | 93 |
Total Cash, cash equivalents and restricted cash | 143 | 149 | $ 160 | $ 195 | |
Non-cash Investing activity | |||||
Sale of U.S Corporate Card Member receivables to TRS | [2] | 5,196 | |||
Lending to American Express Company | [2] | (119) | |||
Non-cash Financing activity | |||||
Long-term debt to affiliates | 981 | $ 9,292 | |||
Settlement of Borrowings with American Express Company [Member] | |||||
Non-cash Financing activity | |||||
Long-term debt to affiliates | [2] | $ (5,077) | |||
[1] | Represents cash deposited with Amex Bank of Canada relating to the purchase of Card Member receivables and the collateralized loan arrangement for transfer of Card Member loans. | ||||
[2] | During the quarter, TRS removed U.S Consumer and Small Business Card Member receivables from the American Express Issuance Trust II (the Charge Trust) and substantially replaced them with U.S Corporate Card Member receivables. To effect this change, on January 7, 2020, Credco sold $5.2 billion of U.S. Corporate Card Member receivables to TRS. Settlement of this transaction was undertaken through borrowings from American Express Company. |
Consolidated Statements of Shar
Consolidated Statements of Shareholder's Equity - USD ($) $ in Millions | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Loss [Member] | Retained Earnings [Member] | |
Beginning Balance at Dec. 31, 2018 | $ 2,196 | $ 0 | $ 161 | $ (1,060) | $ 3,095 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 103 | 103 | ||||
Other comprehensive income (loss) | 7 | 7 | 0 | |||
Ending Balance at Mar. 31, 2019 | 2,306 | 0 | 161 | (1,053) | 3,198 | |
Beginning Balance at Dec. 31, 2019 | 2,587 | 0 | 161 | (1,087) | 3,513 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Adoption of new accounting guidance, before tax | Accounting Standards Update 2016-13 [Member] | 140 | |||||
Adoption of new accounting guidance, tax | Accounting Standards Update 2016-13 [Member] | 21 | |||||
Beginning Balance at Dec. 31, 2019 | 2,587 | 0 | 161 | (1,087) | 3,513 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 22 | 22 | ||||
Other comprehensive income (loss) | (137) | (137) | 0 | |||
Ending Balance at Mar. 31, 2020 | 2,591 | $ 0 | $ 161 | $ (1,224) | 3,654 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Cumulative effect of change in accounting principle - Reserve for Credit Losses | Accounting Standards Update 2016-13 [Member] | [1] | $ 119 | $ 119 | |||
[1] | Represents $140 million, net of tax of $21 million, relating to the impact as of January 1, 2020, of adopting the new accounting guidance for the recognition of credit losses on certain financial instruments. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The Company American Express Credit Corporation (Credco) is a wholly owned subsidiary of American Express Travel Related Services Company, Inc. (TRS), which is a wholly owned subsidiary of American Express Company (American Express). Credco is engaged in the business of financing certain non-interest-earning Card Member receivables arising from the use of the American Express charge cards issued in the United States and in certain countries outside the United States. Credco also finances certain interest-earning revolving loans generated by Card Member spending on American Express credit cards issued in non-U.S. markets. Credco executes material transactions with its affiliates. The agreements between Credco and its affiliates provide that the parties intend that the transactions thereunder be conducted on an arm’s-length basis; however, there can be no assurance that the terms of these arrangements are the same as would be negotiated between independent, unrelated parties. Credco is required to maintain its fixed charge coverage ratio at a minimum of 1.25, which is achieved by charging appropriate discount rates on the purchase of receivables Credco makes from, and the interest rates on the loans Credco provides to, TRS and other American Express subsidiaries. Each monthly period, the discount and interest rates are determined to generate income for Credco that is sufficient to maintain its minimum fixed charge coverage ratio, whilst maintaining the intention for these transactions to occur on an arm’s-length basis. Should it be required, American Express would provide Credco with financial support with respect to maintenance of its minimum fixed charge coverage ratio. The revenue earned by Credco from purchasing Card Member receivables and Card Member loans at a discount is reported as Discount revenue earned from purchased Card Member receivables and Card Member loans on the Consolidated Statements of Income. The accompanying Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements included in Credco’s Annual Report on Form 10-K for the year ended December 31, 2019. If not materially different, certain note disclosures included therein have been omitted from these Consolidated Financial Statements. The interim Consolidated Financial Statements included in this report have not been audited. In the opinion of management, all adjustments, which consist of normal recurring adjustments necessary for a fair statement of the interim Consolidated Financial Statements, have been made. Results of operations reported for interim periods are not necessarily indicative of results for the entire year. The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These accounting estimates reflect the best judgment of management, but actual results could differ. Recently Issued and Adopted Accounting Standards In March 2020, the Financial Accounting Standards Board issued new accounting guidance related to the effects of reference rate reform on financial reporting. The guidance, effective for reporting periods through December 31, 2022, provides accounting relief for contract modifications that replace an interest rate impacted by reference rate reform (e.g., LIBOR) with a new alternative reference rate. The guidance is applicable to receivables, loans, debt, derivatives and hedge accounting elections and other contractual arrangements. Credco adopted the guidance as of March 31, 2020, with no material impact on Credco’s financial position, results of operations and cash flows. There were no significant changes to its accounting policies, business processes or internal controls as a result of adopting the new guidance. Effective January 1, 2020, Credco adopted the new credit reserving methodology, applicable to certain financial instruments, known as the Current Expected Credit Loss (CECL) methodology under a modified retrospective transition. The CECL methodology requires measurement of expected credit losses for the estimated life of the financial instrument, not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information. Upon implementation, Card Member receivable reserves decreased by $147 million and Card Member loan reserves increased by $7 million, along with the associated current and deferred tax impact of $21 million, and cumulative effect adjustment to the opening balance of retained earnings, net of tax, of $119 million. There were no material changes to Credco’s business processes or internal controls as a result of adopting the new guidance. Refer to Note 3 for additional information on how management estimates reserves for credit losses in accordance with CECL methodology. Other Information Effective February 1, 2020, TRS removed U.S. Consumer and Small Business Card Member receivables from the Charge Trust and substantially replaced them with U.S. Corporate Card Member receivables. To effect this change, on January 7, 2020, Credco sold $5.2 billion of U.S. Corporate Card Member receivables to TRS. On February 1, 2020, TRS transferred $5.2 billion of U.S. Corporate Card Member receivables to the Charge Trust and removed U.S. Consumer and Small Business Card Member receivables from the Charge Trust. Since Credco maintains participation interests in the Charge Trust, these transactions resulted in Credco (i) no longer having a $7.2 billion interest in U.S. Consumer and Small Business Card Member receivables and (ii) having an interest in the U.S. Corporate Card Member receivables in the Charge Trust. Settlement of these transactions was undertaken through borrowings from American Express Company and thus Long-term debt to affiliates has also decreased by $7.2 billion . On April 20, 2020, TRS added approximately $1.7 billion of U.S. Corporate Card Member receivables to the Charge Trust in order to increase the assets of the Trust. |
Card Member Receivables and Car
Card Member Receivables and Card Member Loans | 3 Months Ended |
Mar. 31, 2020 | |
Accounts Receivable And Loans Tables [Abstract] | |
Card Member Receivables and Card Member Loans | Card Member Receivables and Card Member Loans American Express’ charge and lending payment card products result in the generation of Card Member receivables and Card Member loans. Reserves for reporting periods beginning after January 1, 2020 are presented using the CECL methodology, while comparative information continues to be reported in accordance with the incurred loss methodology in effect for prior periods. Card Member receivables as of March 31, 2020 and December 31, 2019 consisted of: (Millions) 2020 2019 Global Consumer Services Group (a)(c) $ 2,060 $ 9,847 Global Commercial Services (b)(c) 7,346 15,710 Card Member receivables (d) 9,406 25,557 Less: Reserve for credit losses 69 162 Card Member receivables, net (e) $ 9,337 $ 25,395 (a) Comprised of International Consumer Services as of March 31, 2020 and U.S. and International Consumer Services as of December 31, 2019. (b) Comprised of Corporate and Small Business Services. Card Member receivables as of March 31, 2020 do not include Card Member receivables funded through a secured loan to TRS. Refer to Note 1 for additional information. (c) On February 1, 2020, $7.2 billion of U.S. Consumer and Small Business Card Member receivables were transferred out of the Charge Trust resulting in a reduction of the same amount in Credco’s participation interest in such receivables. Refer to Note 1 for additional information. (d) Net of deferred discount revenue totaling $24 million and $75 million as of March 31, 2020 and December 31, 2019, respectively. (e) Card Member receivables modified in a troubled debt restructuring (TDR) program were immaterial. Card Member loans as of March 31, 2020 and December 31, 2019 consisted of: (Millions) 2020 2019 Global Consumer Services Group (a) $ 606 $ 697 Less: Reserve for credit losses 18 10 Card Member loans, net (b) $ 588 $ 687 (a) Comprised of International Consumer Services. (b) Card Member loans modified in a TDR program were immaterial. Card Member Receivables and Card Member Loans Aging Generally, a Card Member account is considered past due if payment is not received within 30 days after the billing statement date. The following table presents the aging of Card Member receivables and Card Member loans as of March 31, 2020 and December 31, 2019: 2020 (Millions) Current 30-59 60-89 90+ Total Card Member Receivables: Global Consumer Services Group $ 2,026 $ 12 $ 7 $ 15 $ 2,060 Global Commercial Services Global Small Business Services 947 6 3 7 963 Global Corporate Payments (a) (b) (b) (b) 106 6,383 Card Member Loans: Global Consumer Services Group $ 597 $ 3 $ 2 $ 4 $ 606 2019 (Millions) Current 30-59 60-89 90+ Total Card Member Receivables: Global Consumer Services Group $ 9,766 $ 29 $ 16 $ 36 $ 9,847 Global Commercial Services Global Small Business Services 1,996 10 5 9 2,020 Global Corporate Payments (a) (b) (b) (b) 105 13,690 Card Member Loans: Global Consumer Services Group $ 689 $ 3 $ 2 $ 3 $ 697 (a) Global Corporate Payments (GCP) reflects global, large and middle market corporate accounts. 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 collection procedures are initiated 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. See also (b). (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. Credit Quality Indicators for Card Member Receivables and Card Member Loans The following tables present the key credit quality indicators as of or for the three months ended March 31: 2020 2019 Net Write-Off Rate (a) 30+ Days Past Due as a % of Total Net Write-Off Rate (a) 30+ Days Past Due as a % of Total Card Member Receivables: Global Consumer Services Group 1.11 % 1.65 % 1.20 % 0.70 % Global Small Business Services 1.60 % 1.66 % 1.47 % 1.00 % Global Corporate Payments 0.97 % (b) (c) (b) Card Member Loans: Global Consumer Services Group 1.78 % 1.49 % 1.25 % 0.78 % (a) Represents the amount of Card Member receivables or Card Member loans owned by Credco that are written off, net of recoveries, expressed as a percentage of the average Card Member receivables or Card Member loans balances in each of the periods indicated. (b) For GCP Card Member receivables, delinquency data is tracked based on days past billing status rather than days past due. Delinquency data for periods other than 90+ days past billing is not available due to system constraints. 90+ Days Past Billing as a % of total is 1.66% and 0.63% for the three months ended March 31, 2020 and 2019, respectively. (c) Net loss ratio was the credit quality indicator for GCP Card Member receivables for prior periods, and represents the amount of Card Member receivables owned by Credco that are written off, net of recoveries, expressed as a percentage of the volume of Card Member receivables purchased by Credco. The net loss ratio for the three months ended March 31, 2019 was 0.06%. Refer to Note 3 for additional indicators, including external environmental qualitative factors, management considers in its evaluation process for reserves for credit losses. |
Reserves for Credit Losses
Reserves for Credit Losses | 3 Months Ended |
Mar. 31, 2020 | |
Reserves for Credit Losses [Abstract] | |
Reserve for Credit Losses | Reserves for Credit Losses Reserves for credit losses represent management’s best estimate of the expected credit losses in its outstanding portfolio of Card Member receivables and Card Member loans, as of the balance sheet date. The CECL methodology, which became effective January 1, 2020, requires management to estimate lifetime expected credit losses by incorporating historical loss experience, as well as current and future economic conditions over a reasonable and supportable period (R&S Period) beyond the balance sheet date. Management makes various judgments combined with historical loss experience to calculate a reserve rate that is applied to the outstanding loan or receivable balance to produce a reserve for expected credit losses. American Express has in place an enterprise-wide credit risk management process and manages the overall credit risk exposure associated with the Card Member receivables and loans, including those purchased by Credco. American Express uses a combination of statistically-based models that incorporate current and future economic conditions throughout the R&S Period. The process of estimating expected credit losses is based on several key parameters: Probability of Default (PD), Exposure at Default (EAD), and future recoveries for each month of the R&S Period. Beyond the R&S Period, American Express estimates expected credit losses using its historical loss rates. • PD models are used to estimate the likelihood an account will be written-off. • EAD models are used to estimate the balance of an account at the time of write-off. This includes balances less expected repayments based on historical payment and revolve behavior, which vary by customer. Due to the nature of revolving loan portfolios, the EAD models are complex and involve assumptions regarding the relationship between future spend and payment behaviors. • Future recoveries are the amounts received from Card Members after default occurs, typically as a result of collection efforts. Future recoveries are estimated taking into consideration the time of default, time elapsed since default and macroeconomic conditions. These three parameters calculate the quantitative future expected credit losses. American Express also considers the likelihood a previously written off account will be recovered. This calculation is dependent on how long ago the account was written off and future economic conditions, which estimate the likelihood and magnitude of recovery. American Express models are developed using historical loss experience covering the economic cycle and consider the impact of account characteristics on expected losses. Future economic conditions include multiple macroeconomic scenarios provided to us by an independent third party and reviewed by management. These macroeconomic scenarios contain certain geographic based variables that are influential to its modelling process, including unemployment rates and real gross domestic product. The process of estimating credit reserves incorporates the above factors over the R&S Period explicitly considering macroeconomic forward-looking information. Additionally, management considers whether to adjust the quantitative reserves to address possible limitations within the models or factors not included within the models, such as external factors, portfolio trends or management risk actions. Lifetime losses for most Card Member receivables and Card Member loans are evaluated collectively based on similar risk characteristics, including past spend and remittance behaviors, credit bureau scores where available, delinquency status, tenure of balance outstanding, amongst others. Credco reports losses on accrued interest within provision for credit losses, rather than reversing interest income. Card Member receivables and Card Member loans balances are written off when management considers amounts to be uncollectible, which is generally determined by the number of days past due and is typically no later than 180 days past due for pay in full or revolving loans. Card Member receivables and Card Member loans in bankruptcy or owed by deceased individuals are generally written off upon notification. Results for reporting periods beginning after January 1, 2020 are presented using the CECL methodology while comparative information continues to be reported in accordance with the incurred loss methodology in effect for prior periods. Changes in Card Member Receivables Reserve for Credit Losses The following table presents changes in the Card Member receivables reserve for credit losses for the three months ended March 31: (Millions) 2020 2019 Balance, January 1 (a) $ 15 $ 167 Provisions 100 60 Net write-offs (b) (50) (61) Other adjustments (c) 4 9 Balance, March 31 $ 69 $ 175 (a) Includes a decrease of $147 million related to the adoption of the CECL methodology. (b) Net of recoveries of $24 million and $31 million for the three months ended March 31, 2020 and 2019, respectively. (c) For March 31, 2020, primarily includes reserve adjustments related to the removal of U.S. Consumer and Small Business Card Member receivables of $7.2 billion from the Charge Trust and for March 31, 2019, primarily includes reserve balances related to new groups of, and participation interests in, Card Member receivables purchased from affiliates, totaling $1.6 billion. Card Member receivables reserve for credit losses increased for the three months ended March 31, 2020, primarily driven by a significant reserve build, which reflects the deterioration of the estimated global macroeconomic outlook including unemployment and GDP as a result of COVID-19 impacts. Changes in Card Member Loans Reserve for Credit Losses The following table presents changes in the Card Member loans reserve for credit losses for the three months ended March 31: (Millions) 2020 2019 Balance, January 1 (a) $ 17 $ 5 Provisions 3 3 Net write-offs (b) (2) (2) Balance, March 31 $ 18 $ 6 (a) Includes an increase of $7 million related to the adoption of the CECL methodology. (b) Net of recoveries o f $0.5 million and $0.3 million for the three months ended March 31, 2020 and 2019, respectively. |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging Activities | Derivatives and Hedging Activities Credco uses derivative financial instruments to manage exposures to various market risks. These instruments derive their value from an underlying variable or multiple variables, including interest rates and foreign exchange rates, and are carried at fair value on the Consolidated Balance Sheets. These instruments enable end users to increase, reduce or alter exposure to various market risks and, for that reason, are an integral component of Credco’s market risk management. Credco does not transact in derivatives for trading purposes. In relation to Credco’s credit risk, certain of Credco’s bilateral derivative agreements include provisions that allow Credco or the counterparty to terminate the agreement and settle the fair value of existing positions in the event of a downgrade of one’s party credit rating below investment grade. As of March 31, 2020, these derivatives were not in a net liability position. Based on Credco’s assessment of the credit risk of its derivative counterparties and its own credit risk as of March 31, 2020 and December 31, 2019, no credit risk adjustment to the derivative portfolio was required. A majority of Credco’s derivative assets and liabilities as of March 31, 2020 and December 31, 2019 are subject to master netting agreements with its derivative counterparties. Credco has no derivative amounts subject to enforceable master netting arrangements that are not offset on the Consolidated Balance Sheets. The following table summarizes the total fair value, excluding interest accruals, of derivative assets and liabilities as of March 31, 2020 and December 31, 2019: Other Assets Other Liabilities Fair Value Fair Value (Millions) 2020 2019 2020 2019 Derivatives designated as hedging instruments: Fair value hedges - Interest rate contracts (a)(b) $ — $ — $ — $ — Net investment hedges - Foreign exchange contracts 319 12 8 44 Total derivatives designated as hedging instruments 319 12 8 44 Derivatives not designated as hedging instruments: Foreign exchange contracts 647 31 60 182 Total derivatives, gross 966 43 68 226 Derivative asset and derivative liability netting (c) (63) (27) (63) (27) Total derivatives, net $ 903 $ 16 $ 5 $ 199 (a) For Credco’s centrally cleared derivatives, variation margin payments are legally characterized as settlement payments as opposed to collateral. (b) Credco posted $35 million and $20 million as of March 31, 2020 and December 31, 2019, respectively, as initial margin on its centrally cleared interest rate swaps; such amounts are recorded within Other assets on Credco’s Consolidated Balance Sheets and are not netted against the derivative balances. (c) Represents the amount of netting of derivative assets and derivative liabilities executed with the same counterparties under an enforceable master netting arrangement. Fair Value Hedges Interest Rate Contracts Credco is exposed to interest rate risk associated with its fixed-rate debt obligations. At the time of issuance, certain fixed-rate long-term debt obligations are designated in fair value hedging relationships, using interest rate swaps, to economically convert the fixed interest rate to a floating interest rate. Credco has $6.8 billion and $8.8 billion of its fixed-rate debt obligations designated in fair value hedging relationships as of March 31, 2020 and December 31, 2019, respectively. The following table presents the gains and losses recognized in Interest expense on the Consolidated Statements of Income associated with the fair value hedges of Credco’s fixed-rate long-term debt for the three months ended March 31: Gains (losses) Three Months Ended (Millions) 2020 2019 Fixed-rate long-term debt $ (66) $ (67) Derivatives designated as hedging instruments 79 65 Total $ 13 $ (2) The carrying values of the hedged liabilities, recorded within Long-term debt on the Consolidated Balance Sheets, were $6.8 billion and $8.7 billion as of March 31, 2020 and December 31, 2019, respectively, including the cumulative amount of fair value hedging adjustments of $64 million and $(2) million for the respective periods. Credco recognized net increases of $2 million and $32 million in Interest expense on long-term debt for the three months ended March 31, 2020 and 2019, respectively, primarily related to the net settlements (interest accruals) on Credco’s interest rate derivatives designated as fair value hedges. Net Investment Hedges Credco had notional amounts of approximately $2.9 billion and $3.0 billion of foreign currency derivatives designated as net investment hedges as of March 31, 2020 and December 31, 2019, respectively. The gain or loss on net investment hedges, net of taxes, recorded in AOCI as part of the cumulative translation adjustment, was a gain of $346 million and a loss of $57 million for the three months ended March 31, 2020 and 2019, respectively. Derivatives Not Designated as Hedges The changes in the fair value of derivatives that are not designated as hedges are intended to offset the related foreign exchange gains or losses of the underlying foreign currency exposures. The changes in the fair value of the derivatives and the related underlying foreign currency exposures resulted in net gains of $11 million and $23 million for the three months ended March 31, 2020 and 2019, respectively, that are recognized in Other, net expenses on the Consolidated Statements of Income. |
Fair Values
Fair Values | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Values | Fair Values Financial Assets and Financial Liabilities Carried at Fair Value The following table summarizes Credco’s financial assets and financial liabilities measured at fair value on a recurring basis, categorized by GAAP’s fair value hierarchy as Level 2, as of March 31, 2020 and December 31, 2019: (Millions) 2020 2019 Assets: Derivatives, gross (a) $ 966 $ 43 Total Assets 966 43 Liabilities: Derivatives, gross (a) 68 226 Total Liabilities $ 68 $ 226 (a) Refer to Note 4 for the fair values of derivative assets and liabilities, on a further disaggregated basis. Financial Assets and Financial Liabilities Carried at Other Than Fair Value The following table summarizes the estimated fair values of Credco’s financial assets and financial liabilities that are measured at amortized cost, and not required to be carried at fair value on a recurring basis, as of March 31, 2020 and December 31, 2019. The fair values of these financial instruments are estimates based upon the market conditions and perceived risks as of March 31, 2020 and December 31, 2019, and require management’s judgment. These figures may not be indicative of future fair values, nor can the fair value of Credco be estimated by aggregating the amounts presented. Carrying Corresponding Fair Value Amount 2020 (Billions) 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) $ — $ — $ — $ — $ — Other financial assets (b) 11.6 11.5 0.1 11.4 — Financial assets carried at other than fair value Card Member loans, less reserves for credit losses 0.6 0.6 — — 0.6 Loans to affiliates and other 14.0 13.9 — 8.1 5.8 Financial Liabilities: Financial liabilities for which carrying values equal or approximate fair value 11.7 11.7 — 11.7 — Financial liabilities carried at other than fair value Long-term debt 11.1 11.2 — 11.2 — Long-term debt to affiliates $ 1.0 $ 0.9 $ — $ 0.9 $ — Carrying Corresponding Fair Value Amount 2019 (Billions) 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) $ — $ — $ — $ — $ — Other financial assets (b) 26.3 26.3 0.1 26.2 — Financial assets carried at other than fair value Card Member loans, less reserves for credit losses 0.7 0.7 — — 0.7 Loans to affiliates and other 10.3 10.4 — 2.8 7.6 Financial Liabilities: Financial liabilities for which carrying values equal or approximate fair value 11.2 11.2 — 11.2 — Financial liabilities carried at other than fair value Long-term debt 13.5 13.7 — 13.7 — Long-term debt to affiliates $ 9.3 $ 9.4 $ — $ 9.4 $ — (a) Amounts reflect interest-bearing deposits. (b) Level 1 amounts reflect interest-bearing restricted cash and Level 2 amounts primarily reflect Card Member receivables. Nonrecurring Fair Value Measurements During the three months ended March 31, 2020 and the year ended December 31, 2019, Credco did not have any assets that were measured at fair value due to impairment on a nonrecurring basis. |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Income | 3 Months Ended |
Mar. 31, 2020 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Changes In Accumulated Other Comprehensive Income | Changes In Accumulated Other Comprehensive Income AOCI is comprised of items that have not been recognized in earnings but may be recognized in earnings in the future when certain events occur. Changes in Foreign Currency Translation Adjustments for the three months ended March 31, 2020 and 2019 were as follows: 2020 (Millions), net of tax Foreign Currency Balances as of December 31, 2019 $ (1,087) Net translation losses of investments in foreign operations (483) Net gains related to hedges of investments in foreign operations 346 Net change in accumulated other comprehensive loss (137) Balances as of March 31, 2020 $ (1,224) 2019 (Millions), net of tax Foreign Currency Balances as of December 31, 2018 $ (1,060) Net translation gains of investments in foreign operations 64 Net losses related to hedges of investments in foreign operations (57) Net change in accumulated other comprehensive loss 7 Balances as of March 31, 2019 $ (1,053) The following table shows the tax impact for the three months ended March 31 for the changes in Foreign Currency Translation Adjustments presented above: Tax expense (benefit) Three Months Ended (Millions) 2020 2019 Net translation on investments in foreign operations $ 20 $ 3 Net hedges of investments in foreign operations 109 (18) Total tax impact $ 129 $ (15) No amounts were reclassified out of AOCI into the Consolidated Statements of Income associated with the sale or liquidation of a business for the three months ended March 31, 2020 and 2019. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The results of operations of Credco are included in the consolidated U.S. federal income tax returns of American Express. Under an agreement with American Express, the provision for income taxes is recognized on a separate company basis. If benefits for net operating losses, future tax deductions and foreign tax credits cannot be recognized on a separate company basis, such benefits are then recognized based upon a share, derived by formula, of those deductions and credits that are recognizable on an American Express consolidated reporting basis. The effective tax rate was 47.6 percent and 13.4 percent for the three months ended March 31, 2020 and 2019, respectively. The tax rate for the three months ended March 31, 2020 includes an $18 million discrete tax charge related to the attribution of taxable income to jurisdictions outside the U.S. that increased the reported effective tax rate by 43.4 percent. The tax rate in each of the periods reflects the geographic mix of expenses in the United States that generate a tax benefit at the U.S. statutory rate and foreign earnings taxed at lower rates, and the favorable impact of the tax benefit related to Credco’s ongoing funding activities outside the United States. Credco’s provision for income taxes for interim financial periods is not based on an estimated annual effective rate due to volatility in certain components of revenues and expenses that prevents Credco from projecting a reliable estimate of full year pretax income. A discrete calculation of the provision for income taxes is recorded for each interim period. Credco is under continuous examination by the Internal Revenue Service (IRS) and tax authorities in other countries and states in which it has significant business operations. The tax years under examination and open for examination vary by jurisdiction. Tax years from 2016 onwards are open for examination by the IRS. Credco believes it is reasonably possible that its unrecognized tax benefits could decrease by an immaterial amount within the next 12 months, principally as a result of potential resolutions of prior years’ tax items with various taxing authorities. The prior years’ tax items include unrecognized tax benefits relating to the attribution of taxable income to a particular jurisdiction or jurisdictions. The resolution of such items would not have a material impact on Credco’s effective tax rate. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Summary Of Significant Accounting Policies [Line Items] | |
Basis of Presentation | The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These accounting estimates reflect the best judgment of management, but actual results could differ. |
Recently Issued and Adopted Accounting Standards | Recently Issued and Adopted Accounting Standards In March 2020, the Financial Accounting Standards Board issued new accounting guidance related to the effects of reference rate reform on financial reporting. The guidance, effective for reporting periods through December 31, 2022, provides accounting relief for contract modifications that replace an interest rate impacted by reference rate reform (e.g., LIBOR) with a new alternative reference rate. The guidance is applicable to receivables, loans, debt, derivatives and hedge accounting elections and other contractual arrangements. Credco adopted the guidance as of March 31, 2020, with no material impact on Credco’s financial position, results of operations and cash flows. There were no significant changes to its accounting policies, business processes or internal controls as a result of adopting the new guidance. |
Derivatives | Credco uses derivative financial instruments to manage exposures to various market risks. These instruments derive their value from an underlying variable or multiple variables, including interest rates and foreign exchange rates, and are carried at fair value on the Consolidated Balance Sheets. |
Not Designated as Hedging Instrument [Member] | |
Summary Of Significant Accounting Policies [Line Items] | |
Derivatives | The changes in the fair value of derivatives that are not designated as hedges are intended to offset the related foreign exchange gains or losses of the underlying foreign currency exposures. |
Card Member Receivables and C_2
Card Member Receivables and Card Member Loans (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounts Receivable And Loans Tables [Abstract] | |
Card Member receivables segment detail | Card Member receivables as of March 31, 2020 and December 31, 2019 consisted of: (Millions) 2020 2019 Global Consumer Services Group (a)(c) $ 2,060 $ 9,847 Global Commercial Services (b)(c) 7,346 15,710 Card Member receivables (d) 9,406 25,557 Less: Reserve for credit losses 69 162 Card Member receivables, net (e) $ 9,337 $ 25,395 (a) Comprised of International Consumer Services as of March 31, 2020 and U.S. and International Consumer Services as of December 31, 2019. (b) Comprised of Corporate and Small Business Services. Card Member receivables as of March 31, 2020 do not include Card Member receivables funded through a secured loan to TRS. Refer to Note 1 for additional information. (c) On February 1, 2020, $7.2 billion of U.S. Consumer and Small Business Card Member receivables were transferred out of the Charge Trust resulting in a reduction of the same amount in Credco’s participation interest in such receivables. Refer to Note 1 for additional information. (d) Net of deferred discount revenue totaling $24 million and $75 million as of March 31, 2020 and December 31, 2019, respectively. (e) Card Member receivables modified in a troubled debt restructuring (TDR) program were immaterial. |
Card Member loans detail | Card Member loans as of March 31, 2020 and December 31, 2019 consisted of: (Millions) 2020 2019 Global Consumer Services Group (a) $ 606 $ 697 Less: Reserve for credit losses 18 10 Card Member loans, net (b) $ 588 $ 687 (a) Comprised of International Consumer Services. |
Aging of Card Member receivables and loans | The following table presents the aging of Card Member receivables and Card Member loans as of March 31, 2020 and December 31, 2019: 2020 (Millions) Current 30-59 60-89 90+ Total Card Member Receivables: Global Consumer Services Group $ 2,026 $ 12 $ 7 $ 15 $ 2,060 Global Commercial Services Global Small Business Services 947 6 3 7 963 Global Corporate Payments (a) (b) (b) (b) 106 6,383 Card Member Loans: Global Consumer Services Group $ 597 $ 3 $ 2 $ 4 $ 606 2019 (Millions) Current 30-59 60-89 90+ Total Card Member Receivables: Global Consumer Services Group $ 9,766 $ 29 $ 16 $ 36 $ 9,847 Global Commercial Services Global Small Business Services 1,996 10 5 9 2,020 Global Corporate Payments (a) (b) (b) (b) 105 13,690 Card Member Loans: Global Consumer Services Group $ 689 $ 3 $ 2 $ 3 $ 697 (a) Global Corporate Payments (GCP) reflects global, large and middle market corporate accounts. 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 collection procedures are initiated 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. See also (b). (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. |
Credit quality indicators for loans and receivables | The following tables present the key credit quality indicators as of or for the three months ended March 31: 2020 2019 Net Write-Off Rate (a) 30+ Days Past Due as a % of Total Net Write-Off Rate (a) 30+ Days Past Due as a % of Total Card Member Receivables: Global Consumer Services Group 1.11 % 1.65 % 1.20 % 0.70 % Global Small Business Services 1.60 % 1.66 % 1.47 % 1.00 % Global Corporate Payments 0.97 % (b) (c) (b) Card Member Loans: Global Consumer Services Group 1.78 % 1.49 % 1.25 % 0.78 % (a) Represents the amount of Card Member receivables or Card Member loans owned by Credco that are written off, net of recoveries, expressed as a percentage of the average Card Member receivables or Card Member loans balances in each of the periods indicated. (b) For GCP Card Member receivables, delinquency data is tracked based on days past billing status rather than days past due. Delinquency data for periods other than 90+ days past billing is not available due to system constraints. 90+ Days Past Billing as a % of total is 1.66% and 0.63% for the three months ended March 31, 2020 and 2019, respectively. |
Reserves for Credit Losses (Tab
Reserves for Credit Losses (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Reserves for Credit Losses [Abstract] | |
Changes in Card Member Receivable Reserve for Credit Losses | The following table presents changes in the Card Member receivables reserve for credit losses for the three months ended March 31: (Millions) 2020 2019 Balance, January 1 (a) $ 15 $ 167 Provisions 100 60 Net write-offs (b) (50) (61) Other adjustments (c) 4 9 Balance, March 31 $ 69 $ 175 (a) Includes a decrease of $147 million related to the adoption of the CECL methodology. (b) Net of recoveries of $24 million and $31 million for the three months ended March 31, 2020 and 2019, respectively. |
Changes in the Card Member Loans Reserve for Credit Losses | The following table presents changes in the Card Member loans reserve for credit losses for the three months ended March 31: (Millions) 2020 2019 Balance, January 1 (a) $ 17 $ 5 Provisions 3 3 Net write-offs (b) (2) (2) Balance, March 31 $ 18 $ 6 (a) Includes an increase of $7 million related to the adoption of the CECL methodology. (b) Net of recoveries o f $0.5 million and $0.3 million for the three months ended March 31, 2020 and 2019, respectively. |
Derivatives and Hedging Activ_2
Derivatives and Hedging Activities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of derivative instruments in statement of financial position, fair value | The following table summarizes the total fair value, excluding interest accruals, of derivative assets and liabilities as of March 31, 2020 and December 31, 2019: Other Assets Other Liabilities Fair Value Fair Value (Millions) 2020 2019 2020 2019 Derivatives designated as hedging instruments: Fair value hedges - Interest rate contracts (a)(b) $ — $ — $ — $ — Net investment hedges - Foreign exchange contracts 319 12 8 44 Total derivatives designated as hedging instruments 319 12 8 44 Derivatives not designated as hedging instruments: Foreign exchange contracts 647 31 60 182 Total derivatives, gross 966 43 68 226 Derivative asset and derivative liability netting (c) (63) (27) (63) (27) Total derivatives, net $ 903 $ 16 $ 5 $ 199 (a) For Credco’s centrally cleared derivatives, variation margin payments are legally characterized as settlement payments as opposed to collateral. (b) Credco posted $35 million and $20 million as of March 31, 2020 and December 31, 2019, respectively, as initial margin on its centrally cleared interest rate swaps; such amounts are recorded within Other assets on Credco’s Consolidated Balance Sheets and are not netted against the derivative balances. (c) Represents the amount of netting of derivative assets and derivative liabilities executed with the same counterparties under an enforceable master netting arrangement. |
Effect of fair value hedges on results of operations | The following table presents the gains and losses recognized in Interest expense on the Consolidated Statements of Income associated with the fair value hedges of Credco’s fixed-rate long-term debt for the three months ended March 31: Gains (losses) Three Months Ended (Millions) 2020 2019 Fixed-rate long-term debt $ (66) $ (67) Derivatives designated as hedging instruments 79 65 Total $ 13 $ (2) |
Fair Values (Tables)
Fair Values (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair value assets and liabilities measured on recurring basis | The following table summarizes Credco’s financial assets and financial liabilities measured at fair value on a recurring basis, categorized by GAAP’s fair value hierarchy as Level 2, as of March 31, 2020 and December 31, 2019: (Millions) 2020 2019 Assets: Derivatives, gross (a) $ 966 $ 43 Total Assets 966 43 Liabilities: Derivatives, gross (a) 68 226 Total Liabilities $ 68 $ 226 (a) Refer to Note 4 for the fair values of derivative assets and liabilities, on a further disaggregated basis. |
Estimated fair value of financial assets and financial liabilities | The following table summarizes the estimated fair values of Credco’s financial assets and financial liabilities that are measured at amortized cost, and not required to be carried at fair value on a recurring basis, as of March 31, 2020 and December 31, 2019. The fair values of these financial instruments are estimates based upon the market conditions and perceived risks as of March 31, 2020 and December 31, 2019, and require management’s judgment. These figures may not be indicative of future fair values, nor can the fair value of Credco be estimated by aggregating the amounts presented. Carrying Corresponding Fair Value Amount 2020 (Billions) 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) $ — $ — $ — $ — $ — Other financial assets (b) 11.6 11.5 0.1 11.4 — Financial assets carried at other than fair value Card Member loans, less reserves for credit losses 0.6 0.6 — — 0.6 Loans to affiliates and other 14.0 13.9 — 8.1 5.8 Financial Liabilities: Financial liabilities for which carrying values equal or approximate fair value 11.7 11.7 — 11.7 — Financial liabilities carried at other than fair value Long-term debt 11.1 11.2 — 11.2 — Long-term debt to affiliates $ 1.0 $ 0.9 $ — $ 0.9 $ — Carrying Corresponding Fair Value Amount 2019 (Billions) 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) $ — $ — $ — $ — $ — Other financial assets (b) 26.3 26.3 0.1 26.2 — Financial assets carried at other than fair value Card Member loans, less reserves for credit losses 0.7 0.7 — — 0.7 Loans to affiliates and other 10.3 10.4 — 2.8 7.6 Financial Liabilities: Financial liabilities for which carrying values equal or approximate fair value 11.2 11.2 — 11.2 — Financial liabilities carried at other than fair value Long-term debt 13.5 13.7 — 13.7 — Long-term debt to affiliates $ 9.3 $ 9.4 $ — $ 9.4 $ — (a) Amounts reflect interest-bearing deposits. (b) Level 1 amounts reflect interest-bearing restricted cash and Level 2 amounts primarily reflect Card Member receivables. |
Changes in Accumulated Other _2
Changes in Accumulated Other Comprehensive Income (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Components of comprehensive income (loss), net of tax | Changes in Foreign Currency Translation Adjustments for the three months ended March 31, 2020 and 2019 were as follows: 2020 (Millions), net of tax Foreign Currency Balances as of December 31, 2019 $ (1,087) Net translation losses of investments in foreign operations (483) Net gains related to hedges of investments in foreign operations 346 Net change in accumulated other comprehensive loss (137) Balances as of March 31, 2020 $ (1,224) 2019 (Millions), net of tax Foreign Currency Balances as of December 31, 2018 $ (1,060) Net translation gains of investments in foreign operations 64 Net losses related to hedges of investments in foreign operations (57) Net change in accumulated other comprehensive loss 7 Balances as of March 31, 2019 $ (1,053) |
Foreign currency translation adjustments - tax effect | The following table shows the tax impact for the three months ended March 31 for the changes in Foreign Currency Translation Adjustments presented above: Tax expense (benefit) Three Months Ended (Millions) 2020 2019 Net translation on investments in foreign operations $ 20 $ 3 Net hedges of investments in foreign operations 109 (18) Total tax impact $ 129 $ (15) |
Basis of Presentation (Details
Basis of Presentation (Details Textuals) - USD ($) $ in Millions | Feb. 01, 2020 | Jan. 07, 2020 | Mar. 31, 2020 | Mar. 31, 2020 | Apr. 20, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||
Ratio of combined earnings and fixed earnings to fixed charges required to maintain availability of credit line | 1.25 | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||
Decrease in Card Member receivable reserves | $ (69) | $ (69) | $ (162) | |||||||
Increase in retained earnings | 3,654 | 3,654 | 3,513 | |||||||
Sale of Card Member receivables | [1] | 5,196 | ||||||||
Removal of Card member receivables (U.S. consumer Card Member receivables) | $ 7,200 | |||||||||
Reduction in long term debt to affiliate | 7,200 | |||||||||
Loans to affiliates and other | 4,600 | |||||||||
Subsequent Event [Member] | ||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||
Transfer of Card Member receivables | $ 1,700 | |||||||||
Accounting Standards Update 2016-13 [Member] | ||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||
Decrease in Card Member receivable reserves | (69) | (69) | (15) | $ (175) | $ (167) | |||||
Adoption of new accounting guidance, tax | $ 21 | |||||||||
Increase in retained earnings | 119 | |||||||||
Card Member Loans [Member] | Accounting Standards Update 2016-13 [Member] | ||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||
Increase in Card Member loan reserves | 7 | |||||||||
Card Member Receivables [Member] | ||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||
Decrease in Card Member receivable reserves | $ (69) | $ (69) | $ (162) | |||||||
Card Member Receivables [Member] | Global Corporate Payments [Member] | ||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||
Sale of Card Member receivables | $ 5,200 | |||||||||
Transfer of Card Member receivables | $ 5,200 | |||||||||
Card Member Receivables [Member] | Accounting Standards Update 2016-13 [Member] | ||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||
Decrease in Card Member receivable reserves | $ 147 | |||||||||
[1] | During the quarter, TRS removed U.S Consumer and Small Business Card Member receivables from the American Express Issuance Trust II (the Charge Trust) and substantially replaced them with U.S Corporate Card Member receivables. To effect this change, on January 7, 2020, Credco sold $5.2 billion of U.S. Corporate Card Member receivables to TRS. Settlement of this transaction was undertaken through borrowings from American Express Company. |
Card Member Receivables and C_3
Card Member Receivables and Card Member Loans (Details) - USD ($) $ in Millions | Feb. 01, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Accounts receivable segment information | |||
Less: Reserve for credit losses | $ 69 | $ 162 | |
Card Member receivables, net | 9,337 | 25,395 | |
Reduction of of Card member receivables (U.S. consumer Card Member receivables) | $ 7,200 | ||
Deferred discount revenue on card member receivable | 24 | 75 | |
Card Member Receivables [Member] | |||
Accounts receivable segment information | |||
Card Member receivables | 9,406 | 25,557 | |
Less: Reserve for credit losses | 69 | 162 | |
Card Member receivables, net | 9,337 | 25,395 | |
Global Consumer Services Group [Member] | Card Member Receivables [Member] | |||
Accounts receivable segment information | |||
Card Member receivables | 2,060 | 9,847 | |
Global Commercial Services [Member] | Card Member Receivables [Member] | |||
Accounts receivable segment information | |||
Card Member receivables | 7,346 | 15,710 | |
Global Corporate Payments [Member] | Card Member Receivables [Member] | |||
Accounts receivable segment information | |||
Card Member receivables | $ 6,383 | $ 13,690 |
Card Member Receivables and C_4
Card Member Receivables and Card Member Loans (Details 1) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Less: Reserve for credit losses | $ 18 | $ 10 |
Card Member Loans, net | 588 | 687 |
Global Consumer Services Group [Member] | Card Member Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Card Member loans | 606 | 697 |
Less: Reserve for credit losses | 18 | 10 |
Card Member Loans, net | $ 588 | $ 687 |
Card Member Receivables and C_5
Card Member Receivables and Card Member Loans (Details 2) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Card Member Receivables [Member] | ||
Financing receivable recorded investment aging | ||
Card Member receivables total aging | $ 9,406 | $ 25,557 |
Global Consumer Services Group [Member] | Card Member Receivables [Member] | ||
Financing receivable recorded investment aging | ||
Current | 2,026 | 9,766 |
Card Member receivables total aging | 2,060 | 9,847 |
Global Consumer Services Group [Member] | Card Member Loans [Member] | ||
Financing receivable recorded investment aging | ||
Current | 597 | 689 |
Card Member loans total aging | 606 | 697 |
Global Consumer Services Group [Member] | 30-59 Days Past Due [Member] | Card Member Receivables [Member] | ||
Financing receivable recorded investment aging | ||
Period past due | 12 | 29 |
Global Consumer Services Group [Member] | 30-59 Days Past Due [Member] | Card Member Loans [Member] | ||
Financing receivable recorded investment aging | ||
Period past due | 3 | 3 |
Global Consumer Services Group [Member] | 60-89 Days Past Due [Member] | Card Member Receivables [Member] | ||
Financing receivable recorded investment aging | ||
Period past due | 7 | 16 |
Global Consumer Services Group [Member] | 60-89 Days Past Due [Member] | Card Member Loans [Member] | ||
Financing receivable recorded investment aging | ||
Period past due | 2 | 2 |
Global Consumer Services Group [Member] | 90+ Days Past Due [Member] | Card Member Receivables [Member] | ||
Financing receivable recorded investment aging | ||
Period past due | 15 | 36 |
Global Consumer Services Group [Member] | 90+ Days Past Due [Member] | Card Member Loans [Member] | ||
Financing receivable recorded investment aging | ||
Period past due | 4 | 3 |
Global Small Business Services [Member] | Card Member Receivables [Member] | ||
Financing receivable recorded investment aging | ||
Current | 947 | 1,996 |
Card Member receivables total aging | 963 | 2,020 |
Global Small Business Services [Member] | 30-59 Days Past Due [Member] | Card Member Receivables [Member] | ||
Financing receivable recorded investment aging | ||
Period past due | 6 | 10 |
Global Small Business Services [Member] | 60-89 Days Past Due [Member] | Card Member Receivables [Member] | ||
Financing receivable recorded investment aging | ||
Period past due | 3 | 5 |
Global Small Business Services [Member] | 90+ Days Past Due [Member] | Card Member Receivables [Member] | ||
Financing receivable recorded investment aging | ||
Period past due | 7 | 9 |
Global Corporate Payments [Member] | Card Member Receivables [Member] | ||
Financing receivable recorded investment aging | ||
Card Member receivables total aging | 6,383 | 13,690 |
Global Corporate Payments [Member] | 90+ Days Past Due [Member] | Card Member Receivables [Member] | ||
Financing receivable recorded investment aging | ||
Period past due | $ 106 | $ 105 |
Card Member Receivables and C_6
Card Member Receivables and Card Member Loans (Details 3) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Global Consumer Services Group [Member] | Card Member Receivables [Member] | Net Write-Off Rate [Member] | ||
Credit Quality Indicator for Loans and Receivables | ||
Credit Quality Indicators | 1.11% | 1.20% |
Global Consumer Services Group [Member] | Card Member Receivables [Member] | 30 Days Past Due as a % of Total [Member] | ||
Credit Quality Indicator for Loans and Receivables | ||
Credit Quality Indicators | 1.65% | 0.70% |
Global Consumer Services Group [Member] | Card Member Loans [Member] | Net Write-Off Rate [Member] | ||
Credit Quality Indicator for Loans and Receivables | ||
Credit Quality Indicators | 1.78% | 1.25% |
Global Consumer Services Group [Member] | Card Member Loans [Member] | 30 Days Past Due as a % of Total [Member] | ||
Credit Quality Indicator for Loans and Receivables | ||
Credit Quality Indicators | 1.49% | 0.78% |
Global Small Business Services [Member] | Card Member Receivables [Member] | Net Write-Off Rate [Member] | ||
Credit Quality Indicator for Loans and Receivables | ||
Credit Quality Indicators | 1.60% | 1.47% |
Global Small Business Services [Member] | Card Member Receivables [Member] | 30 Days Past Due as a % of Total [Member] | ||
Credit Quality Indicator for Loans and Receivables | ||
Credit Quality Indicators | 1.66% | 1.00% |
Global Corporate Payments [Member] | Card Member Receivables [Member] | Net Write-Off Rate [Member] | ||
Credit Quality Indicator for Loans and Receivables | ||
Credit Quality Indicators | 0.97% | |
Global Corporate Payments [Member] | Card Member Receivables [Member] | Net Loss Ratio as a % of Charge Volume [Member] | ||
Credit Quality Indicator for Loans and Receivables | ||
Credit Quality Indicators | 0.06% | |
Global Corporate Payments [Member] | Card Member Receivables [Member] | 90 Days Past Billing as a % of Receivables [Member] | ||
Credit Quality Indicator for Loans and Receivables | ||
Credit Quality Indicators | 1.66% | 0.63% |
Reserves for Credit Losses (Det
Reserves for Credit Losses (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Feb. 01, 2020 | Jan. 01, 2020 | |
Card Members Receivable Reserve for Credit Losses [Roll Forward] | ||||
Balance, January 1 | $ 162 | |||
Balance, March 31 | 69 | |||
Allowance for Card Member receivables, recoveries of bad debts | 24 | $ 31 | ||
Participation interests in Card Member receivables purchased from affiliates | 1,600 | |||
Accounting Standards Update 2016-13 [Member] | ||||
Card Members Receivable Reserve for Credit Losses [Roll Forward] | ||||
Balance, January 1 | 15 | 167 | ||
Provisions | 100 | 60 | ||
Net write-offs | (50) | (61) | ||
Other adjustments | 4 | 9 | ||
Balance, March 31 | 69 | $ 175 | ||
Decrease related to adoption of the CECL methodology | $ 147 | |||
Card Member Receivables [Member] | ||||
Card Members Receivable Reserve for Credit Losses [Roll Forward] | ||||
Balance, January 1 | 162 | |||
Balance, March 31 | $ 69 | |||
Card Member Receivables [Member] | Global Consumer Services Group [Member] | ||||
Card Members Receivable Reserve for Credit Losses [Roll Forward] | ||||
Removal of Card Member receivables | $ 7,200 |
Reserves for Credit Losses (D_2
Reserves for Credit Losses (Details 2) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Jan. 01, 2020 | |
Allowance for Loan and Lease Losses [Roll Forward] | |||
Balance, January 1 | $ 10 | ||
Balance, March 31 | 18 | ||
Recoveries | 0.5 | $ 0.3 | |
Accounting Standards Update 2016-13 [Member] | |||
Allowance for Loan and Lease Losses [Roll Forward] | |||
Balance, January 1 | 17 | 5 | |
Provisions | 3 | 3 | |
Net write-offs | (2) | (2) | |
Balance, March 31 | $ 18 | $ 6 | |
Increase related to adoption of CECL methodology | $ 7 |
Derivatives and Hedging Activ_3
Derivatives and Hedging Activities (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Derivatives, Fair Value [Line Items] | ||
Total fair value of derivative assets | $ 966 | $ 43 |
Total fair value of derivative liabilities | 68 | 226 |
Other Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset and derivative liability netting, other assets | (63) | (27) |
Total derivative assets, net | 903 | 16 |
Other Assets [Member] | Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total fair value of derivative assets | 319 | 12 |
Other Assets [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total fair value of derivative assets | 0 | 0 |
Other Assets [Member] | Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total fair value of derivative assets | 319 | 12 |
Other Assets [Member] | Foreign Exchange Contract [Member] | Not Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total fair value of derivative assets | 647 | 31 |
Other Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset and derivative liability netting, other liabilities | (63) | (27) |
Total derivative liabilities, net | 5 | 199 |
Other Liabilities [Member] | Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total fair value of derivative liabilities | 8 | 44 |
Other Liabilities [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total fair value of derivative liabilities | 0 | 0 |
Other Liabilities [Member] | Foreign Exchange Contract [Member] | Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total fair value of derivative liabilities | 8 | 44 |
Other Liabilities [Member] | Foreign Exchange Contract [Member] | Not Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total fair value of derivative liabilities | $ 60 | $ 182 |
Derivatives and Hedging Activ_4
Derivatives and Hedging Activities (Details 1) - Interest Expense [Member] - Interest Rate Contracts [Member] - Fair Value Hedging [Member] - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Fixed-rate long-term debt | $ (66) | $ (67) |
Derivatives designated as hedging instruments | 79 | 65 |
Total | $ 13 | $ (2) |
Derivatives and Hedging Activ_5
Derivatives and Hedging Activities (Details Textuals) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Derivative [Line Items] | |||
Derivative asset not offset | $ 0 | $ 0 | |
Derivative liabilities not offset | 0 | 0 | |
Margin on interest rate swaps | 35,000,000 | 20,000,000 | |
Cumulative amount of fair value hedging adjustment | 64,000,000 | (2,000,000) | |
Net increase in interest expense on long term debt and other | 2,000,000 | $ 32,000,000 | |
Other Expense [Member] | |||
Derivative [Line Items] | |||
Gain (loss) in changes in fair value of derivatives not designated as hedges | 11,000,000 | 23,000,000 | |
Fair Value Hedging [Member] | |||
Derivative [Line Items] | |||
Notional amount of long-term debt | 6,800,000,000 | 8,800,000,000 | |
Net Investment Hedges [Member] | |||
Derivative [Line Items] | |||
Notional amounts of derivatives | 2,900,000,000 | 3,000,000,000 | |
Reported Value Measurement [Member] | |||
Derivative [Line Items] | |||
Notional amount of long-term debt | 6,800,000,000 | $ 8,700,000,000 | |
Foreign Currency Translation Adjustment Gains (Losses) [Member] | |||
Derivative [Line Items] | |||
Gain (loss) on net investment hedges, net of taxes | $ 346,000,000 | $ (57,000,000) |
Fair Values (Details)
Fair Values (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Assets | ||
Derivatives, gross | $ 966 | $ 43 |
Liabilities | ||
Derivatives, gross | 68 | 226 |
Level 2 [Member] | ||
Assets | ||
Derivatives, gross | 966 | 43 |
Total assets | 966 | 43 |
Liabilities | ||
Derivatives, gross | 68 | 226 |
Total liabilities | $ 68 | $ 226 |
Fair Values (Details 2)
Fair Values (Details 2) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Financial assets for which carrying values equal or approximate fair value | ||||
Cash and cash equivalents | $ 35 | $ 33 | $ 65 | $ 102 |
Financial assets carried at other than fair value | ||||
Card Member loans, less reserves for credit losses | 588 | 687 | ||
Loans to affiliates and other | 13,959 | 10,345 | ||
Financial liabilities carried at other than fair value | ||||
Long-term debt | 11,074 | 13,469 | ||
Long-term debt to affiliates | 981 | 9,292 | ||
Carrying Value [Member] | ||||
Financial assets for which carrying values equal or approximate fair value | ||||
Cash and cash equivalents | 0 | 0 | ||
Other financial assets | 11,600 | 26,300 | ||
Financial assets carried at other than fair value | ||||
Card Member loans, less reserves for credit losses | 600 | 700 | ||
Loans to affiliates and other | 14,000 | 10,300 | ||
Financial Liabilities: | ||||
Financial liabilities for which carrying values equal or approximate fair value | 11,700 | 11,200 | ||
Financial liabilities carried at other than fair value | ||||
Long-term debt | 11,100 | 13,500 | ||
Long-term debt to affiliates | 1,000 | 9,300 | ||
Estimate of Fair Value Measurement [Member] | ||||
Financial assets for which carrying values equal or approximate fair value | ||||
Cash and cash equivalents | 0 | 0 | ||
Other financial assets | 11,500 | 26,300 | ||
Financial assets carried at other than fair value | ||||
Card Member loans, less reserves for credit losses | 600 | 700 | ||
Loans to affiliates and other | 13,900 | 10,400 | ||
Financial Liabilities: | ||||
Financial liabilities for which carrying values equal or approximate fair value | 11,700 | 11,200 | ||
Financial liabilities carried at other than fair value | ||||
Long-term debt | 11,200 | 13,700 | ||
Long-term debt to affiliates | 900 | 9,400 | ||
Estimate of Fair Value Measurement [Member] | Level 1 [Member] | ||||
Financial assets for which carrying values equal or approximate fair value | ||||
Cash and cash equivalents | 0 | 0 | ||
Other financial assets | 100 | 100 | ||
Financial assets carried at other than fair value | ||||
Card Member loans, less reserves for credit losses | 0 | 0 | ||
Loans to affiliates and other | 0 | 0 | ||
Financial Liabilities: | ||||
Financial liabilities for which carrying values equal or approximate fair value | 0 | 0 | ||
Financial liabilities carried at other than fair value | ||||
Long-term debt | 0 | 0 | ||
Long-term debt to affiliates | 0 | 0 | ||
Estimate of Fair Value Measurement [Member] | Level 2 [Member] | ||||
Financial assets for which carrying values equal or approximate fair value | ||||
Cash and cash equivalents | 0 | 0 | ||
Other financial assets | 11,400 | 26,200 | ||
Financial assets carried at other than fair value | ||||
Card Member loans, less reserves for credit losses | 0 | 0 | ||
Loans to affiliates and other | 8,100 | 2,800 | ||
Financial Liabilities: | ||||
Financial liabilities for which carrying values equal or approximate fair value | 11,700 | 11,200 | ||
Financial liabilities carried at other than fair value | ||||
Long-term debt | 11,200 | 13,700 | ||
Long-term debt to affiliates | 900 | 9,400 | ||
Estimate of Fair Value Measurement [Member] | Level 3 [Member] | ||||
Financial assets for which carrying values equal or approximate fair value | ||||
Cash and cash equivalents | 0 | 0 | ||
Other financial assets | 0 | 0 | ||
Financial assets carried at other than fair value | ||||
Card Member loans, less reserves for credit losses | 600 | 700 | ||
Loans to affiliates and other | 5,800 | 7,600 | ||
Financial Liabilities: | ||||
Financial liabilities for which carrying values equal or approximate fair value | 0 | 0 | ||
Financial liabilities carried at other than fair value | ||||
Long-term debt | 0 | 0 | ||
Long-term debt to affiliates | $ 0 | $ 0 |
Fair Values (Details Textuals)
Fair Values (Details Textuals) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Fair Value, Nonrecurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value for impairment | $ 0 | $ 0 |
Changes in Accumulated Other _3
Changes in Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | $ (1,087) | |
Ending balance | (1,224) | |
Tax impact for the changes in each component of accumulated other comprehensive (loss) income | ||
Net translation on investments in foreign operations | 20 | $ 3 |
Net hedges of investments in foreign operations | 109 | (18) |
Total tax impact | 129 | (15) |
Foreign Currency Translation Adjustment Gains (Losses) [Member] | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (1,087) | (1,060) |
Net translation losses of investments in foreign operations | (483) | 64 |
Net gains (losses) related to hedges of investments in foreign operations | 346 | (57) |
Net change in accumulated other comprehensive loss | (137) | 7 |
Ending balance | $ (1,224) | $ (1,053) |
Changes in Accumulated Other _4
Changes in Accumulated Other Comprehensive Income Textuals (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Other Income and Expenses [Abstract] | ||
Amount of gain (loss) reclassified from accumulated other comprehensive income | $ 0 | $ 0 |
Income Taxes (Details Textuals)
Income Taxes (Details Textuals) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Examination [Line Items] | ||
Actual tax rates | 47.60% | 13.40% |
U.S. Tax Act discrete tax (benefit) charge | $ 18 | |
Increase in effective tax rate | 43.40% | |
Earliest Year [Member] | Internal Revenue Service (IRS) [Member] | ||
Income Tax Examination [Line Items] | ||
Open tax years by major tax jurisdiction | 2016 |