REG-American Exp.Co American Express Reports Fourth Quarter EPS of $0.89 or $1.23 When Adjusted for Impairment and Restructuring Charges1 <Origin Href="QuoteRef">AXP.N</Origin> - Part 3
01/04/2016 13:17
- Part 3: For the preceding part double click ID:nBw3nh8C4b
Global Network & Merchant Services (Preliminary)
Selected Income Statement Data
(Millions, except percentages)
Quarters Ended % Change Years Ended % Change
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, 2015 vs. Dec 31, Dec 31, 2015 vs.
2015 2015 2015 2015 2014 Dec 31, 2014 2015 2014 Dec 31, 2014
Revenues
Non-interest revenues $ 1,338 $ 1,302 $ 1,326 $ 1,270 $ 1,399 (4 ) $ 5,236 $ 5,426 (4 )
Interest income 29 26 23 20 17 71 98 52 88
Interest expense (51 ) (42 ) (47 ) (54 ) (61 ) (16 ) (194 ) (269 ) (28 )
Net interest income 80 68 70 74 78 3 292 321 (9 )
Total revenues net of interest expense 1,418 1,370 1,396 1,344 1,477 (4 ) 5,528 5,747 (4 )
Provisions for losses 16 14 13 11 35 (54 ) 54 93 (42 )
Total revenues net of interest expense after provisions for losses 1,402 1,356 1,383 1,333 1,442 (3 ) 5,474 5,654 (3 )
Expenses
Marketing, promotion, rewards, Card Member services and other 215 172 164 147 185 16 698 819 (15 )
Salaries and employee benefits and other operating expenses 528 461 524 488 587 (10 ) 2,001 2,215 (10 )
Total 743 633 688 635 772 (4 ) 2,699 3,034 (11 )
Pretax segment income 659 723 695 698 670 (2 ) 2,775 2,620 6
Income tax provision 242 261 247 254 253 (4 ) 1,004 960 5
Segment income $ 417 $ 462 $ 448 $ 444 $ 417 - $ 1,771 $ 1,660 7
Effective tax rate 36.7 % 36.1 % 35.5 % 36.4 % 37.8 % 36.2 % 36.6 %
Selected Statistical Information
(Billions, except percentages and where indicated)
Global Card billed business (S) $ 273.2 $ 258.9 $ 262.0 $ 245.6 $ 268.5 2 $ 1,039.7 $ 1,022.8 2
Global Network & Merchant Services:
Total segment assets (P) $ 23.6 $ 23.7 $ 17.6 $ 17.8 $ 18.1 30 $ 23.6 $ 18.1 30
Segment capital (Q) $ 2.4 $ 2.5 $ 2.2 $ 2.2 $ 2.0 22 $ 2.4 $ 2.0 22
Return on average segment capital (R) 78.4 % 81.4 % 83.5 % 82.1 % 84.0 % 78.4 % 84.0 %
Return on average tangible segment capital (R) 86.2 % 89.5 % 92.0 % 90.6 % 92.9 % 86.2 % 92.9 %
Global Network Services:
Card billed business $ 43.9 $ 41.1 $ 41.9 $ 39.1 $ 42.5 3 $ 166.0 $ 160.7 3
Total cards-in-force (millions) 47.4 46.3 45.6 44.5 44.0 8 47.4 44.0 8
# - Denotes a variance of more than 100 percent.
American Express Company (Preliminary)
Components of Return on Average Equity (ROE), Return on Average Common Equity (ROCE), and Return on Average Tangible Common Equity (ROTCE)
Appendix I
(Millions, except percentages)
For the Twelve Months Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2015 2015 2015 2015 2014
ROE
Net income $ 5,163 $ 5,711 $ 5,922 $ 5,978 $ 5,885
Average shareholders' equity $ 21,494 $ 21,349 $ 21,050 $ 20,606 $ 20,254
Return on average equity (T) 24.0 % 26.8 % 28.1 % 29.0 % 29.1 %
Reconciliation of ROCE and ROTCE
Net income $ 5,163 $ 5,711 $ 5,922 $ 5,978 $ 5,885
Preferred shares dividends and related accretion 62 42 20 - -
Earnings allocated to participating share awards and other 38 43 44 45 46
Net income attributable to common shareholders $ 5,063 $ 5,626 $ 5,858 $ 5,933 $ 5,839
Average shareholders' equity $ 21,494 $ 21,349 $ 21,050 $ 20,606 $ 20,254
Average preferred shares 1,390 1,081 716 350 114
Average common shareholders' equity $ 20,104 $ 20,268 $ 20,334 $ 20,256 $ 20,140
Average goodwill and other intangibles 3,782 3,796 3,802 3,845 3,888
Average tangible common shareholders' equity $ 16,322 $ 16,472 $ 16,532 $ 16,411 $ 16,252
Return on average common equity (T) 25.2 % 27.8 % 28.8 % 29.3 % 29.0 %
Return on average tangible common equity (U) 31.0 % 34.2 % 35.4 % 36.2 % 35.9 %
American Express Company (Preliminary)
Components of Return on Average Segment Capital (ROSC) and Return on Average Tangible Segment Capital (ROTSC)
Appendix II
(Millions, except percentages)
For the Twelve Months Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2015 2015 2015 2015 2014
U.S. Card Services
Segment income $ 3,413 $ 3,279 $ 3,374 $ 3,258 $ 3,200
Average segment capital $ 10,519 $ 10,437 $ 10,352 $ 10,148 $ 9,843
Average goodwill and other intangibles 395 377 358 339 319
Average tangible segment capital $ 10,124 $ 10,060 $ 9,994 $ 9,809 $ 9,524
Return on average segment capital (V) 32.4 % 31.4 % 32.6 % 32.1 % 32.5 %
Return on average tangible segment capital (V) 33.7 % 32.6 % 33.8 % 33.2 % 33.6 %
International Card Services
Segment income $ 421 $ 381 $ 434 $ 386 $ 411
Average segment capital $ 3,181 $ 3,195 $ 3,133 $ 3,043 $ 3,020
Average goodwill and other intangibles 1,209 1,236 1,273 1,311 1,350
Average tangible segment capital $ 1,972 $ 1,959 $ 1,860 $ 1,732 $ 1,670
Return on average segment capital (V) 13.2 % 11.9 % 13.9 % 12.7 % 13.6 %
Return on average tangible segment capital (V) 21.3 % 19.4 % 23.3 % 22.3 % 24.6 %
Global Commercial Services
Segment income $ 666 $ 1,128 $ 1,181 $ 1,539 $ 1,543
Average segment capital $ 3,835 $ 3,861 $ 3,897 $ 3,859 $ 3,771
Average goodwill and other intangibles 1,672 1,666 1,661 1,678 1,696
Average tangible segment capital $ 2,163 $ 2,195 $ 2,236 $ 2,181 $ 2,075
Return on average segment capital (V) 17.4 % 29.2 % 30.3 % 39.9 % 40.9 %
Return on average tangible segment capital (V) 30.8 % 51.4 % 52.8 % 70.6 % 74.4 %
Global Network & Merchant Services
Segment income $ 1,771 $ 1,771 $ 1,736 $ 1,661 $ 1,660
Average segment capital $ 2,260 $ 2,177 $ 2,080 $ 2,024 $ 1,976
Average goodwill and other intangibles 206 199 194 190 189
Average tangible segment capital $ 2,054 $ 1,978 $ 1,886 $ 1,834 $ 1,787
Return on average segment capital (V) 78.4 % 81.4 % 83.5 % 82.1 % 84.0 %
Return on average tangible segment capital (V) 86.2 % 89.5 % 92.0 % 90.6 % 92.9 %
American Express Company (Preliminary)
Net Interest Yield on Card Member Loans
Appendix III
(Millions, except percentages and where indicated)
Quarters Ended Years Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31,
2015 2015 2015 2015 2014 2015 2014
Consolidated:
Net interest income $ 1,547 $ 1,505 $ 1,423 $ 1,447 $ 1,424 $ 5,922 $ 5,472
Exclude:
Interest expense not attributable to the Company's Card Member loan portfolio $ 229 $ 234 $ 249 $ 249 $ 250 $ 961 $ 1,019
Interest income not attributable to the Company's Card Member loan portfolio $ (99 ) $ (96 ) $ (97 ) $ (95 ) $ (92 ) $ (387 ) $ (359 )
Adjusted net interest income (W) $ 1,677 $ 1,643 $ 1,575 $ 1,601 $ 1,582 $ 6,496 $ 6,132
Average loans (billions) $ 70.9 $ 69.0 $ 68.0 $ 67.6 $ 67.7 $ 69.0 $ 66.0
Exclude:
Certain non-traditional Card Member loans and other fees (billions) $ (0.2 ) $ (0.2 ) $ (0.2 ) $ (0.2 ) $ (0.2 ) $ (0.2 ) $ (0.2 )
Adjusted average loans (billions) (X) $ 70.7 $ 68.8 $ 67.8 $ 67.4 $ 67.5 $ 68.8 $ 65.8
Net interest income divided by average loans* (Y) 8.7 % 8.7 % 8.4 % 8.6 % 8.4 % 8.6 % 8.3 %
Net interest yield on Card Member loans* (Z) 9.4 % 9.5 % 9.3 % 9.6 % 9.3 % 9.4 % 9.3 %
USCS:
Net interest income $ 1,455 $ 1,427 $ 1,354 $ 1,377 $ 1,341 $ 5,613 $ 5,182
Exclude:
Interest expense not attributable to the Company's Card Member loan portfolio $ 43 $ 42 $ 41 $ 38 $ 39 $ 164 $ 157
Interest income not attributable to the Company's Card Member loan portfolio $ (5 ) $ (4 ) $ (4 ) $ (3 ) $ (3 ) $ (16 ) $ (11 )
Adjusted net interest income (W) $ 1,493 $ 1,465 $ 1,391 $ 1,412 $ 1,377 $ 5,761 $ 5,328
Average loans (billions) $ 63.8 $ 62.1 $ 60.9 $ 60.4 $ 59.7 $ 61.9 $ 57.8
Exclude:
Certain non-traditional Card Member loans and other fees (billions) $ - $ - $ - $ - $ - $ - $ -
Adjusted average loans (billions) (X) $ 63.8 $ 62.1 $ 60.9 $ 60.4 $ 59.7 $ 61.9 $ 57.8
Net interest income divided by average loans* (Y) 9.1 % 9.2 % 8.9 % 9.1 % 9.0 % 9.1 % 9.0 %
Net interest yield on Card Member loans* (Z) 9.3 % 9.4 % 9.2 % 9.5 % 9.1 % 9.3 % 9.2 %
ICS:
Net interest income $ 174 $ 167 $ 176 $ 180 $ 189 $ 697 $ 755
Exclude:
Interest expense not attributable to the Company's Card Member loan portfolio $ 16 $ 18 $ 16 $ 18 $ 26 $ 68 $ 89
Interest income not attributable to the Company's Card Member loan portfolio $ (9 ) $ (7 ) $ (8 ) $ (8 ) $ (9 ) $ (32 ) $ (40 )
Adjusted net interest income (W) $ 181 $ 178 $ 184 $ 190 $ 206 $ 733 $ 804
Average loans (billions) $ 7.0 $ 6.9 $ 7.0 $ 7.2 $ 7.9 $ 7.0 $ 8.2
Exclude:
Certain non-traditional Card Member loans and other fees (billions) $ (0.1 ) $ (0.1 ) $ (0.1 ) $ (0.1 ) $ (0.2 ) $ (0.1 ) $ (0.2 )
Adjusted average loans (billions) (X) $ 6.9 $ 6.8 $ 6.9 $ 7.1 $ 7.7 $ 6.9 $ 8.0
Net interest income divided by average loans* (Y) 9.9 % 9.7 % 10.1 % 10.0 % 9.6 % 10.0 % 9.2 %
Net interest yield on Card Member loans* (Z) 10.6 % 10.5 % 10.7 % 10.9 % 10.5 % 10.6 % 10.0 %
* Annualized
American Express Company (Preliminary)
Reconciliations of Adjustments
Appendix IV
(Millions, except percentages)
Quarters Ended % Change Years Ended % Change
Dec 31, Dec 31, Dec 31, 2015 vs. Dec 31, Dec 31, 2015 vs.
2015 2014 Dec 31, 2014 2015 2014 Dec 31, 2014
AXP Net Income and Diluted Earnings Per Share:
Net income $ 899 $ 1,447 (38 ) $ 5,163 $ 5,885 (12 )
EG Charge (after-tax) (AA) 335 - 335 -
Adjusted net income $ 1,234 $ 1,447 (15 ) $ 5,498 $ 5,885 (7 )
Adjusted net income attributable to common shareholders (C) $ 1,208 $ 1,436 (16 ) $ 5,398 $ 5,839 (8 )
Diluted net income attributable to common shareholders $ 0.89 $ 1.39 (36 ) $ 5.05 $ 5.56 (9 )
Adjusted diluted net income attributable to common shareholders $ 1.23 $ 1.39 (12 ) $ 5.38 $ 5.56 (3 )
Revenues Net of Interest Expense:
AXP
Reported total revenues net of interest expense $ 8,391 $ 9,081 (8 ) $ 32,818 $ 34,188 (4 )
Global Business Travel Revenues, Net of Interest - (741 )
Q4'14 Gain on Sale of Concur Investment - (719 ) - (719 )
Adjusted total revenues net of interest expense $ 8,391 $ 8,362 - $ 32,818 $ 32,728 0
FX-adjusted adjusted total revenues net of interest expense (AB) $ 8,391 $ 8,100 4 $ 32,818 $ 31,539 4
GCS
Reported total revenues net of interest expense $ 817 $ 1,585 (48 ) $ 3,342 $ 4,948 (32 )
Global Business Travel Revenues, Net of Interest - (741 )
Q4'14 Gain on Sale of Concur Investment - (719 ) - (719 )
Adjusted total revenues net of interest expense $ 817 $ 866 (6 ) $ 3,342 $ 3,488 (4 )
ROE:
Net income $ 5,163
EG Charge (after-tax) (AA) $ 335
Adjusted net income $ 5,498
Average shareholders' equity $ 21,494
Return on average equity (T) 24.0 %
Adjusted return on average equity 25.6 %
Appendix V (Preliminary)
All Information in the preceding tables is presented on a basis prepared in accordance with U.S. generally accepted accounting principles (GAAP), unless otherwise indicated.
(A) In Q1`15, the Company changed the classification related to certain payments to co-brand partners reducing both marketing and promotion and discount revenue. The misclassification in prior periods has been conformed to the current period presentation. The discount rate for prior periods has also been revised accordingly, resulting in a reduction of between zero and one basis point in any period from what was originally reported.
(B) Beginning in Q3`15, Travel Commissions & Fees and Other Commissions & Fees are consolidated into Other Fees & Commissions.
(C) Represents net income, less (i) earnings allocated to participating share awards of $6 million for the quarter ended December 31, 2015, $10 million for the quarter ended September 30, 2015, $11 million for the quarter ended June 30, 2015, $11 million for the quarter ended March 31, 2015 and $11 million for the quarter ended December 31, 2014; and (ii) dividends on preferred shares of $20 million for the quarter ended December 31, 2015, $22 million for the quarter ended September 30, 2015, $20 million for the quarter ended June 30, 2015 and nil for all other comparative periods.
(D) Refer to Appendix I for components of return on average equity, return on average common equity and return on average tangible common equity, a non-GAAP measure.
(E) Beginning Q3`15, the calculation of Book value per common share was revised to exclude shareholders` equity from preferred share issuances. Applicable prior periods have been revised to conform to the current period presentation.
(F) Card billed business includes activities (including cash advances) related to proprietary cards, cards issued under network partnership agreements (non-proprietary billed business), and certain insurance fees charged on proprietary cards. In-store spend activity within retail co-brand portfolios in Global Network Services, from which the Company earns no revenue, is not included in non-proprietary billed business. Card billed business is reflected in the United States or outside the United States based on where the issuer is located.
(G) Total cards-in-force represents the number of cards that are issued and outstanding. Proprietary basic consumer cards-in-force includes basic cards issued to the primary account owner and does not include additional supplemental cards issued on that account. Proprietary basic small business and corporate cards-in-force include basic and supplemental cards issued to employee Card Members. Non-proprietary cards-in-force includes all cards that are issued and outstanding under network partnership agreements, except for retail co-brand Card Member accounts that have no out-of-store spend activity during the prior 12 month
period.
(H) This calculation is designed to reflect pricing at merchants accepting general purpose American Express cards. It represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires, prior to payments to third parties unrelated to merchant acceptance.
(I) Average basic Card Member spending and average fee per card are computed from proprietary card activities only. Average fee per card is computed based on net card fees, including the amortization of deferred direct acquisition costs divided by average worldwide proprietary cards-in-force. The adjusted average fee per card, which is a non-GAAP measure, is computed in the same manner, but excludes amortization of deferred direct acquisition costs. The amount of amortization excluded for these periods was $66 million for the quarter ended December 31, 2015, $72 million for the quarter ended September 30, 2015, $62 million
for the quarter ended June 30, 2015, $83 million for the quarter ended March 31, 2015, and $79 million for the quarter ended December 31, 2014. The Company presents adjusted average fee per card because the Company believes this metric presents a useful indicator of card fee pricing across a range of its proprietary card products.
(J) Effective December 1, 2015, the Company reclassified the Card Member loans and receivables related to its co-brand partnerships with Costco in the U.S. and JetBlue, to reflect them as held for sale on the Consolidated Balance Sheet. The loans were reclassified at their net carrying amount, inclusive of the related reserves for losses. Accordingly, related credit metrics are presented excluding the held for sale loans and receivables.
(K) Provisions for principal (resulting from authorized transactions) and fee reserve components.
(L) Consists of principal (resulting from authorized transactions), interest and/or fees, less recoveries.
(M) Q4'15 includes $1 million for the Reserves transferred to held for sale. Beginning in Q1'14, reserves related for card-related fraud losses are reflected in Other liabilities. All periods include foreign currency translation adjustments and other items.
(N) The Company presents a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, because the Company's practice is to include uncollectible interest and/or fees as part of its total provision for losses, a net write-off rate including principal, interest and/or fees is also presented. Beginning in January 2015, timing of charge-offs for loans in certain modification programs changed from 180 days past due to 120 days past due. Excluding the impact of the change, which was fully recognized in the first quarter, the Q1'15 USCS/ICS
Charge net write-off rate - principal only was 1.9% and the USCS Lending net write-off rate - principal only was 1.4%.
(O) See Appendix III for calculations of net interest yield on Card Member loans, a non-GAAP measure, and net interest income divided by average loans, a GAAP measure, and the Company's rationale for presenting net interest yield on Card Member loans.
(P) Effective Q3'15, certain intercompany accounts were reclassified prospectively, as a result of systems enhancements.
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