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Section 1: 8-K (FORM 8-K OF AMERICAN EXPRESS COMPANY)


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  October 18, 2018
 
 

AMERICAN EXPRESS COMPANY
(Exact name of registrant as specified in its charter)
 
 
 
New York
 
1-7657
 
13-4922250
(State or other jurisdiction
of incorporation or organization)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 

 


 
200 Vesey Street
New York, New York
 
10285
(Address of principal executive offices)
 
(Zip Code)
 


 
 
Registrant's telephone number, including area code: (212) 640-2000
 

Not Applicable
(Former name or former address, if changed since last report)
 
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
      
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
      
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
     
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 

 
 
 

 
 
Item 2.02 Results of Operations and Financial Condition and Item 7.01 Regulation FD Disclosure

The following information is furnished under Item 2.02 – Results of Operations and Financial Condition and Item 7.01 – Regulation FD Disclosure:
 
On October 18, 2018, American Express Company (the “Company”) issued a press release regarding its financial results for the third quarter of 2018. A copy of such press release is attached to this report as Exhibit 99.1. The Company also made available additional information relating to the financial results for the third quarter of 2018. Such additional financial information is attached to this report as Exhibit 99.2. 
 
 
Exhibit
Description
 
99.1
 
99.2
 
 
 
 
 
-2-

SIGNATURE
 
 
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 

 
AMERICAN EXPRESS COMPANY
 
(REGISTRANT)
 
 
 
 
By:
/s/ Tangela S. Richter
 
 
Name:  Tangela S. Richter
 
 
Title:    Corporate Secretary
 

Date: October 18, 2018
 
 
 
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Section 2: EX-99.1 (EXHIBIT 99.1)

EXHIBIT 99.1
 
 
 
News Release
News Release
News Release
 News Release

 
 
 
FOR IMMEDIATE RELEASE
 
 
 
Media Contact:
Marina H. Norville, marina.h.norville@aexp.com, +1.212.640.2832
Amelia T. Woltering, amelia.t.woltering@aexp.com, +1.212.640.7034

Investors/Analysts Contacts:
Edmund Reese, edmund.reese@aexp.com, +1.212.640.5574
Shreya Patel, shreya.patel@aexp.com, +1.212.640.5574

AMERICAN EXPRESS REPORTS THIRD-QUARTER EPS OF $1.88

REVENUES RISE 9%, DRIVEN BY GROWTH IN CARD MEMBER SPENDING, LOANS, AND FEE INCOME

COMPANY RAISES FULL-YEAR 2018 EPS GUIDANCE

(Millions, except percentages and per share amounts)

                         
   
Quarters Ended
September 30,
       
Nine Months Ended
September 30,
     
   
2018
   
2017
   
Percentage
Inc/(Dec)
   
2018
   
2017
   
Percentage
Inc/(Dec)
 
Total Revenues Net of Interest Expense
 
$
10,144
   
$
9,290
     
9
   
$
29,864
   
$
27,171
     
10
 
Net Income
 
$
1,654
   
$
1,359
     
22
   
$
4,911
   
$
3,954
     
24
 
Earnings Per Common Share – Diluted:
                                               
    Net Income Attributable to Common Shareholders1
 
$
1.88
   
$
1.51
     
25
   
$
5.59
   
$
4.33
     
29
 
Average Diluted Common Shares Outstanding
   
860
     
881
     
(2
)
   
861
     
892
     
(3
)
                                                 

New York – October 18, 2018 - American Express Company (NYSE: AXP) today reported third-quarter net income of $1.7 billion, up 22 percent from $1.4 billion a year ago. Diluted earnings per share was $1.88, up 25 percent from $1.51 per share a year ago.

Third-quarter consolidated total revenues net of interest expense were a record $10.1 billion, up 9 percent from $9.3 billion a year ago. Excluding the impact of foreign exchange rates, adjusted revenues net of interest expense grew 10 percent.2 The increase reflected higher spending by consumer, small business, and corporate Card Members, as well as higher loan volumes and fee income.
 
 
__________

 
1
 
Represents net income less (i) earnings allocated to participating share awards of $13 million and $11 million for the three months ended September 30, 2018 and 2017, respectively, and $38 million and $32 million for the nine months ended September 30, 2018 and 2017, respectively, and (ii) dividends on preferred shares of $20 million and $21 million for the three months ended September 30, 2018 and 2017, respectively, and $61 million for both the nine months ended September 30, 2018 and 2017.
 
2
 
As reported in this release, FX-adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translations into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the three months ended September 30, 2018 apply to the period(s) against which such results are being compared). Management believes the presentation of information on an FX-adjusted basis is helpful to investors by making it easier to compare the company's performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates.
 
 
 
-1-


Consolidated provisions for losses were $817 million, up 6 percent from $770 million a year ago. The increase reflected growth in the loan portfolio and a higher lending write-off rate, moderated by stable delinquency rates.

Consolidated expenses were $7.2 billion, up 8 percent from $6.7 billion a year ago. The rise primarily reflected higher rewards and other customer engagement costs. Operating expenses declined 1 percent from the year-ago period, which included charges related to the company's U.S. Loyalty Coalition and Prepaid businesses.3

The consolidated effective tax rate was 22 percent, down from 26 percent a year ago. For consolidated results and all segments, the current quarter reflected the reduction in the U.S. federal statutory tax rate as a result of the 2017 Tax Cuts and Jobs Act (the "Tax Act").  The company continues to analyze the Tax Act provisional charge recorded in the fourth quarter of 2017 along with potential recognition of certain unrecognized tax benefits and other discrete tax items. Certain events that impact the timing and amounts of these tax matters have not yet occurred or are out of the company's control and therefore are excluded from the company's full-year 2018 adjusted EPS outlook referenced below and a reconciliation to 2018 EPS outlook on a GAAP basis is unavailable.4

"We delivered strong results this quarter driven by higher Card Member spending, fee income and loans," said Stephen J. Squeri, chairman and chief executive officer.  "Our progress reflects the four strategic imperatives that we're focused on:

§
Expand leadership in the premium consumer space
§
Build on our strong position in commercial payments
§
Strengthen our global integrated network to provide unique value
§
Make American Express an essential part of our customers' digital lives."

"Revenues rose 9 percent (10 percent FX-adjusted2), reflecting very good performance across our businesses, customer segments and geographies.  Card Member spending was up 8 percent (10 percent FX-adjusted).  Credit indicators remained strong. Operating expenses were well controlled.

"We continued to expand our merchant network, acquired 3.0 million new cards and strengthened our relationships with existing customers.

"This marks our sixth consecutive quarter of strong adjusted revenue growth and our investments in new benefits, services and digital capabilities continued to generate momentum as we enter the latter part of 2018.

"Given that momentum, we now expect full-year 2018 revenues to be up 9 to 10 percent and adjusted EPS to be $7.30 to $7.40, up from the $6.90 to $7.30 range we set at the start of the year."4
 
__________
 
3
 
Operating expenses represent salaries and employee benefits, professional services, occupancy and equipment, and other expenses.
 
4
 
The company's adjusted EPS outlook, a non-GAAP measure, excludes discrete tax benefits that may be recognized in the fourth quarter of 2018. Management believes the presentation of an adjusted EPS outlook is useful in evaluating the ongoing operating performance of the company.

 
-2-


Global Consumer Services Group reported third-quarter net income of $779 million, up 15 percent from $680 million a year ago.

Total revenues net of interest expense were $5.4 billion, up 11 percent from $4.9 billion a year ago. The rise primarily reflected higher loans, Card Member spending, and fee income.

Provisions for losses totaled $609 million, up 7 percent from $568 million a year ago. The rise primarily reflected growth in the loan portfolio and an increase in the lending write-off rate, moderated by stable delinquency rates.

Total expenses were $3.8 billion, up 13 percent from $3.4 billion a year ago. The rise primarily reflected higher rewards and other customer engagement costs.

The effective tax rate was 20 percent, down from 26 percent a year ago.

Global Commercial Services reported third-quarter net income of $606 million, up 20 percent from $505 million a year ago.

Total revenues net of interest expense were $3.2 billion, up 9 percent from $2.9 billion a year ago. The increase primarily reflected higher Card Member spending.

Provisions for losses totaled $201 million, up 3 percent from $195 million a year ago.

Total expenses were $2.2 billion, up 10 percent from $2.0 billion a year ago. The rise primarily reflected higher rewards and other customer engagement costs.

The effective tax rate was 22 percent, down from 31 percent a year ago.

Global Merchant and Network Services reported third-quarter net income of $580 million, up 38 percent from $420 million a year ago.

Total revenues net of interest expense were $1.6 billion, up 2 percent from $1.5 billion a year ago. The increase primarily reflected higher Card Member spending, partially offset by a decrease in the average discount rate, and lower revenues from network partners.

Total expenses were $807 million, down 17 percent from $977 million a year ago. The year-ago quarter included the previously-mentioned U.S. Loyalty Coalition and Prepaid charges.

The effective tax rate was 24 percent, down from 25 percent a year ago.

Corporate and Other reported third-quarter net loss of $311 million compared with net loss of $246 million a year ago.
 
 
 
-3-


# # #

About American Express
American Express is a globally integrated payments company, providing customers with access to products, insights and experiences that enrich lives and build business success.  Learn more at americanexpress.com and connect with us on facebook.com/americanexpress, instagram.com/americanexpress, linkedin.com/company/american-express, twitter.com/americanexpress, and youtube.com/americanexpress.
Key links to products, services and corporate responsibility information: charge and credit cards, business credit cards, travel services, gift cards, prepaid cards, merchant services, Accertify, InAuth, corporate card, business travel, and corporate responsibility.
This earnings release should be read in conjunction with the company's statistical tables for the third-quarter 2018, available on the American Express website at http://ir.americanexpress.com and in a Form 8-K filed today with the Securities and Exchange Commission.

An investor conference call will be held at 5:00 p.m. (ET) today to discuss third-quarter earnings results. Live audio and presentation slides for the investor conference call will be available to the general public on the above-mentioned American Express Investor Relations website. A replay of the conference call will be available later today at the same website address.

The third quarter earnings press release, slides, and statistical tables, as well as additional shareholder engagement materials are also available on the American Express website at http://ir.americanexpress.com.


# # #

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties.  The forward-looking statements, which address the Company's expected business and financial performance and which include management's outlook for 2018, among other matters, contain words such as "believe," "expect," "anticipate," "intend," "plan," "aim," "will," "may," "should," "could," "would," "likely" and similar expressions.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made.  The Company undertakes no obligation to update or revise any forward-looking statements.  Factors that could cause actual results to differ materially from these forward-looking statements, include, but are not limited to, the following:

·
the Company's ability to achieve its 2018 adjusted earnings per common share outlook, which will depend in part on the following: revenues growing consistently with current expectations, which could be impacted by, among other things, the factors identified in the subsequent bullet; issues impacting brand perceptions and the Company's reputation; credit performance remaining consistent with current expectations; the impact of any future contingencies, including, but not limited to, litigation-related settlements, judgments or expenses, the imposition of fines or civil money penalties, an increase in Card Member reimbursements, restructurings, impairments and changes in reserves; the Company's ability to control operating expense growth; the amount the Company spends on customer engagement and the Company's ability to drive growth from such investments; changes in interest rates beyond current expectations (including the impact of hedge ineffectiveness and deposit rate increases); a greater impact from certain cobrand agreements than expected, which could be affected by volumes and customer engagement; the impact of regulation and litigation, which could affect the profitability of the Company's business activities, limit the Company's ability to pursue business opportunities, require changes to business practices or alter the Company's relationships with partners, merchants and Card Members; and the Company's tax rate remaining in line with current expectations, which could be impacted by, among other things, the Company's geographic mix of income, further changes in tax laws and regulation, unfavorable tax audits and other unanticipated tax items;
 

 
-4-

·
the ability of the Company to grow revenues net of interest expense consistent with its expectations, which could be impacted by, among other things, weakening economic conditions in the United States or internationally, a decline in consumer confidence impacting the willingness and ability of Card Members to sustain and grow spending and revolve balances, continued growth of Card Member loans, a greater decline of the average discount rate than expected, the strengthening of the U.S. dollar beyond expectations, the willingness of Card Members to pay higher card fees, lower spending on new cards acquired than estimated, and the Company's ability to address competitive pressures and implement its strategies and business initiatives, including within the premium consumer segment, commercial payments, the global network and digital environment;

·
changes in the substantial and increasing worldwide competition in the payments industry, including competitive pressure that may impact the prices charged to merchants that accept American Express cards, competition for cobrand relationships, competition from new and non-traditional competitors and the success of marketing, promotion and rewards programs;

·
a decline of the average discount rate by a greater amount than anticipated, including as a result of changes in the mix of spending by location and industry, merchant negotiations (including merchant incentives, concessions and volume-related pricing discounts), pricing initiatives, competition, pricing regulation (including regulation of competitors' interchange rates in the European Union and elsewhere) and other factors;

·
the Company's delinquency and write-off rates and growth of provisions for losses being higher or lower than current expectations, which will depend in part on changes in the level of loan and receivable balances and delinquencies generally as well as in areas impacted by recent hurricanes and other natural disasters, the mix of balances, including a greater-than-expected shift in mix toward non-cobrand lending products, newer vintages and balance transfers, loans and receivables related to new Card Members and other borrowers performing as expected, credit performance of new and enhanced lending products, unemployment rates, the volume of bankruptcies, collections capabilities and recoveries of previously written-off loans and receivables;

·
the Company's ability to continue to grow loans, which may be affected by increasing competition, brand perceptions and reputation, the Company's ability to manage risk, the behavior of Card Members and their actual spending and borrowing patterns, and the Company's ability to issue new and enhanced card products, offer attractive non-card lending products, capture a greater share of existing Card Members' spending and borrowings, reduce Card Member attrition and attract new customers;

·
the Company's net interest yield on average Card Member loans not remaining consistent with current expectations, which will be influenced by, among other things, the difference between the prime rate and the Company's cost of funds, changes in consumer behavior that affect loan balances, such as paydown rates, the Company's Card Member acquisition strategy, changes in the level of loans at promotional rates, pricing changes, product mix and credit actions, including line size and other adjustments to credit availability, which could be impacted by, among other things, changes in benchmark interest rates, competitive pressure and regulatory constraints;

·
the Company's rewards expense and cost of Card Member services growing inconsistently from expectations, which will depend in part on Card Member behavior as it relates to their spending patterns, including the level of spend in bonus categories, and the redemption of rewards and offers, as well as the degree of interest of Card Members in the value proposition offered by the Company; increasing competition, which could result in greater rewards offerings; the Company's ability to enhance card products and services to make them attractive to Card Members; the pace and cost of the expansion of the Company's global lounge collection; and the amount the Company spends on the promotion of enhanced services and rewards categories and the success of such promotion;
 

 
-5-

·
the actual amount to be spent on marketing and business development, which will be based in part on management's assessment of competitive opportunities; overall business performance and changes in macroeconomic conditions; the actual amount of advertising and Card Member acquisition costs; the Company's ability to continue to shift Card Member acquisition to digital channels; contractual obligations with business partners and other fixed costs and prior commitments; management's ability to identify attractive investment opportunities and make such investments, which could be impacted by business, regulatory or legal complexities; and the Company's ability to realize efficiencies, optimize investment spending and control expenses to fund such spending;

·
the ability of the Company to control operating expense growth, which could be impacted by the need to increase significant categories of operating expenses, such as consulting or professional fees, including as a result of increased litigation, compliance or regulatory-related costs or fraud costs; continuing to implement and achieve benefits from reengineering plans, which could be impacted by factors such as an inability to mitigate the operational and other risks posed by potential staff reductions; higher than expected employee levels; an inability to innovate efficient channels of customer interactions, such as chat supported by artificial intelligence, or customer acquisition; the impact of changes in foreign currency exchange rates on costs; the payment of civil money penalties, disgorgement, restitution, non-income tax assessments and litigation-related settlements; impairments of goodwill or other assets; management's decision to increase or decrease spending in such areas as technology, business and product development and sales forces; greater-than-expected inflation; and the level of M&A activity and related expenses;

·
the Company's deposit rates increasing faster or slower than current expectations and changes affecting the Company's ability to grow Personal Savings deposits consistent with expectations, including as a result of market demand, changes in benchmark interest rates or regulatory restrictions on the Company's ability to obtain deposit funding or offer competitive interest rates, which could affect the Company's net interest yield and ability to fund its businesses;

·
changes affecting the Company's plans regarding the return of capital to shareholders through dividends and share repurchases, which will depend on factors such as the Company's capital levels and capital ratios; changes in the stress testing and capital planning process and the continued non-objection by the Company's primary regulators to its capital plans; the amount of capital required to support asset growth; the amount the Company spends on acquisitions of companies; the Company's results of operations and financial condition; and the economic environment and market conditions in any given period;

·
the Company's ability to strengthen its leadership in the premium segment, which will be impacted in part by competition, brand perceptions (including perceptions related to merchant coverage) and reputation and the ability of the Company to develop and market value propositions that appeal to Card Members and new customers and offer attractive services and rewards programs, which will depend in part on ongoing investments, new product innovation and development, Card Member acquisition efforts and enrollment processes, including through digital channels, and infrastructure to support new products, services and benefits;

·
the ability of the Company to extend its leadership in commercial payments, which will depend in part on competition, the willingness and ability of companies to use credit and charge cards for procurement and other business expenditures as well as use other payment products for financing needs, perceived or actual difficulties and costs related to setting up card-based B2B payment platforms, the ability of the Company to offer attractive value propositions to potential customers, the Company's ability to enhance and expand its payment and lending solutions and the Company's ability to grow internationally, including through digital acquisitions and customer engagement capabilities;
 

 
-6-

·
the ability of the Company to innovate and strengthen its global network, which will depend in part on the ability of the Company to update its systems and platforms, the amount the Company invests in the network and its ability to make funds available for such investments, and technological developments, including capabilities that allow greater digital connections;

·
the ability of the Company to play a more essential role in the digital lives of its customers, which will depend on the Company's success in evolving its products and processes for the digital environment, introducing new features in the Amex app and offering attractive value propositions to Card Members to incentivize the use of and enhance satisfaction with the Company's digital channels and the Company's products as a means of payment through online and mobile channels, building partnerships and executing programs with other companies, developing digital capabilities and artificial intelligence to address travel and lifestyle needs and successfully integrating platforms we may acquire, all of which will be impacted by investment levels, new product innovation and development and infrastructure to support new products, services and benefits;

·
the possibility that the Company will not execute on its plans to expand the merchant base, which will depend in part on the success of the Company, OptBlue merchant acquirers  and GNS partners in signing merchants to accept American Express, which could be impacted by the value propositions offered to merchants, OptBlue merchant acquirers and GNS partners, as well as the awareness and willingness of Card Members to use American Express cards at small merchants and of those merchants to accept American Express cards;

·
the ability of the Company to realize the benefits from its strategic partnership with PayPal and improve the digital payments experience for American Express Card Members paying with PayPal, which is dependent on the ability of the companies to collaborate and develop capabilities, features and functionalities, successfully integrate them in their platforms and technologies and launch the solutions in accordance with agreed upon conditions;

·
a failure in or breach of the Company's operational or security systems, processes or infrastructure, or those of third parties, including as a result of cyber attacks, which could compromise the confidentiality, integrity, privacy and/or security of data, disrupt its operations, reduce the use and acceptance of American Express cards and lead to regulatory scrutiny, litigation, remediation and response costs, and reputational harm;

·
legal and regulatory developments, which could require the Company to make fundamental changes to many of its business practices, including our ability to continue certain GNS and other partnerships; exert further pressure on the average discount rate and GNS volumes; result in increased costs related to regulatory oversight, litigation-related settlements, judgments or expenses, restitution to Card Members or the imposition of fines or civil money penalties; materially affect capital or liquidity requirements, results of operations, or ability to pay dividends or repurchase stock; or result in harm to the American Express brand; and

·
factors beyond the Company's control such as changes in global economic and business conditions, consumer and business spending generally, the availability and cost of capital, unemployment rates, geopolitical conditions, trade policies, foreign currency rates and interest rates, as well as fire, power loss, disruptions in telecommunications, severe weather conditions, natural disasters, health pandemics or terrorism, any of which could significantly affect demand for and spending on American Express cards, delinquency rates, loan and receivable balances and other aspects of the Company and its results of operations or disrupt the Company's global network systems and ability to process transactions.

A further description of these uncertainties and other risks can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2017, the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 2018 and the Company's other reports filed with the Securities and Exchange Commission.
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Section 3: EX-99.2 (EXHIBIT 99.2)

   EXHIBIT 99.2
   
American Express Company
 (Preliminary)
Consolidated Statements of Income
 
(Millions, except percentages and per share amounts)
 

 
 
Q3'18
   
Q2'18
   
Q1'18
   
Q4'17
   
Q3'17
   
YOY % change
   
YTD'18
   
YTD'17
   
YOY % change
 
Non-interest revenues
                                                     
Discount revenue
 
$
6,181
   
$
6,194
   
$
5,889
   
$
6,060
   
$
5,700
     
8
   
$
18,264
   
$
16,830
     
9
 
Net card fees
   
870
     
844
     
830
     
785
     
786
     
11
     
2,544
     
2,305
     
10
 
Other fees and commissions
   
798
     
786
     
781
     
778
     
755
     
6
     
2,365
     
2,212
     
7
 
Other
   
334
     
349
     
377
     
345
     
372
     
(10
)
   
1,060
     
1,112
     
(5
)
Total non-interest revenues
   
8,183
     
8,173
     
7,877
     
7,968
     
7,613
     
7
     
24,233
     
22,459
     
8
 
Interest income
                                                                       
Interest on loans
   
2,554
     
2,387
     
2,326
     
2,205
     
2,131
     
20
     
7,267
     
5,943
     
22
 
Interest and dividends on investment securities
   
35
     
27
     
21
     
21
     
22
     
59
     
83
     
68
     
22
 
Deposits with banks and other
   
149
     
126
     
115
     
93
     
92
     
62
     
390
     
233
     
67
 
Total interest income
   
2,738
     
2,540
     
2,462
     
2,319
     
2,245
     
22
     
7,740
     
6,244
     
24
 
Interest expense
                                                                       
Deposits
   
340
     
300
     
270
     
241
     
213
     
60
     
910
     
538
     
69
 
Long-term debt and other
   
437
     
411
     
351
     
339
     
355
     
23
     
1,199
     
994
     
21
 
Total interest expense
   
777
     
711
     
621
     
580
     
568
     
37
     
2,109
     
1,532
     
38
 
Net interest income
   
1,961
     
1,829
     
1,841
     
1,739
     
1,677
     
17
     
5,631
     
4,712
     
20
 
Total revenues net of interest expense
   
10,144
     
10,002
     
9,718
     
9,707
     
9,290
     
9
     
29,864
     
27,171
     
10
 
Provisions for losses
                                                                       
Charge card
   
214
     
245
     
242
     
205
     
214
     
-
     
701
     
590
     
19
 
Card Member loans
   
560
     
528
     
499
     
596
     
531
     
5
     
1,587
     
1,272
     
25
 
Other
   
43
     
33
     
34
     
33
     
25
     
72
     
110
     
64
     
72
 
Total provisions for losses
   
817
     
806
     
775
     
834
     
770
     
6
     
2,398
     
1,926
     
25
 
Total revenues net of interest expense after provisions for losses
   
9,327
     
9,196
     
8,943
     
8,873
     
8,520
     
9
     
27,466
     
25,245
     
9
 
   
Expenses
                                                                       
Marketing and business development (A)
   
1,642
     
1,663
     
1,345
     
1,535
     
1,446
     
14
     
4,650
     
4,187
     
11
 
Card Member rewards
   
2,400
     
2,433
     
2,347
     
2,262
     
2,168
     
11
     
7,180
     
6,425
     
12
 
Card Member services
   
457
     
416
     
409
     
383
     
351
     
30
     
1,282
     
1,009
     
27
 
Salaries and employee benefits
   
1,350
     
1,280
     
1,326
     
1,436
     
1,265
     
7
     
3,956
     
3,822
     
4
 
Professional services
   
489
     
508
     
457
     
534
     
494
     
(1
)
   
1,454
     
1,506
     
(3
)
Occupancy and equipment
   
489
     
484
     
520
     
493
     
567
     
(14
)
   
1,493
     
1,525
     
(2
)
Other, net (A)
   
382
     
321
     
457
     
432
     
398
     
(4
)
   
1,160
     
1,144
     
1
 
Total expenses
   
7,209
     
7,105
     
6,861
     
7,075
     
6,689
     
8
     
21,175
     
19,618
     
8
 
Pretax income
   
2,118
     
2,091
     
2,082
     
1,798
     
1,831
     
16
     
6,291
     
5,627
     
12
 
Income tax provision
   
464
     
468
     
448
     
3,004
     
472
     
(2
)
   
1,380
     
1,673
     
(18
)
Net income (loss)
 
$
1,654
   
$
1,623
   
$
1,634
   
$
(1,206
)
 
$
1,359
     
22
   
$
4,911
   
$
3,954
     
24
 
Net income (loss) attributable to common shareholders (B)
 
$
1,621
   
$
1,591
   
$
1,600
   
$
(1,228
)
 
$
1,327
     
22
   
$
4,812
   
$
3,861
     
25
 
Effective tax rate
   
21.9
%
   
22.4
%
   
21.5
%
   
167.1
%
   
25.8
%
           
21.9
%
   
29.7
%
       
 
                                                                       
Earnings Per Common Share
                                                                       
Basic
                                                                       
Net income (loss) attributable to common shareholders
 
$
1.89
   
$
1.85
   
$
1.86
   
$
(1.42
)
 
$
1.51
     
25
   
$
5.60
   
$
4.34
     
29
 
Average common shares outstanding
   
858
     
860
     
859
     
865
     
878
     
(2
)
   
859
     
889
     
(3
)
Diluted
                                                                       
Net income (loss) attributable to common shareholders
 
$
1.88
   
$
1.84
   
$
1.86
   
$
(1.42
)
 
$
1.51
     
25
   
$
5.59
   
$
4.33
     
29
 
Average common shares outstanding
   
860
     
862
     
861
     
865
     
881
     
(2
)
   
861
     
892
     
(3
)
Cash dividends declared per common share
 
$
0.39
   
$
0.35
   
$
0.35
   
$
0.35
   
$
0.35
     
11
   
$
1.09
   
$
0.99
     
10
 

 
 
See Appendix III for footnote references
 
 
 
-1-

 
 
 
 

American Express Company
(Preliminary)
Consolidated Balance Sheets and Related Statistical Information
 
(Billions, except percentages, per share amounts and where indicated)
 

 
 
Q3'18
   
Q2'18
   
Q1'18
   
Q4'17
   
Q3'17
   
YOY % change
 
Assets
                                   
Cash & cash equivalents
 
$
30
   
$
30
   
$
31
   
$
33
   
$
26
     
15
 
Card Member receivables, less reserves
   
55
     
54
     
54
     
54
     
51
     
8
 
Card Member Loans, less reserves
   
76
     
74
     
71
     
72
     
66
     
15
 
Investment securities
   
6
     
5
     
3
     
3
     
3
     
#
 
Other (C)
   
22
     
22
     
21
     
19
     
23
     
(4
)
Total assets
 
$
189
   
$
185
   
$
180
   
$
181
   
$
169
     
12
 
   
Liabilities and Shareholders' Equity
                                               
Customer deposits
 
$
69
   
$
67
   
$
67
   
$
64
   
$
61
     
13
 
Short-term borrowings
   
2
     
2
     
2
     
3
     
2
     
-
 
Long-term debt
   
55
     
56
     
52
     
56
     
49
     
12
 
Other (C)
   
42
     
39
     
39
     
40
     
36
     
17
 
Total liabilities
   
168
     
164
     
160
     
163
     
148
     
14
 
   
Shareholders' Equity
   
21
     
21
     
20
     
18
     
21
     
-
 
Total liabilities and shareholders' equity
 
$
189
   
$
185
   
$
180
   
$
181
   
$
169
     
12
 
   
Return on average equity (D)
   
18.1
%
   
16.7
%
   
15.2
%
   
13.2
%
   
22.6
%
       
Return on average common equity (D)
   
19.0
%
   
17.5
%
   
15.9
%
   
13.7
%
   
23.9
%
       
Book value per common share (dollars)
 
$
23.27
   
$
22.42
   
$
20.96
   
$
19.42
   
$
22.43
     
4
 

# - Denotes a variance of 100 percent or more.
 
 
 
 
 
 
 
 
 
 

 

 
See Appendix III for footnote references

 
-2-


 


American Express Company
(Preliminary)
Consolidated Capital

 
 
Q3'18
   
Q2'18
   
Q1'18
   
Q4'17
   
Q3'17
 
Shares Outstanding (in millions)
   
Beginning of period
   
861
     
860
     
859
     
871
     
885
 
Repurchase of common shares
   
(7
)
   
-
     
-
     
(14
)
   
(15
)
Net impact of employee benefit plans and others
   
-
     
1
     
1
     
2
     
1
 
End of period
   
854
     
861
     
860
     
859
     
871
 
   
Risk-Based Capital Ratios - Basel III ($ in billions) (E)
   
Common Equity Tier 1/Risk Weighted Assets (RWA)
    10.8
%
   
10.1
%
   
9.4
%
   
9.0
%
   
11.9
%
Tier 1
    11.8
%
   
11.1
%
   
10.5
%
   
10.1
%
   
13.0
%
Total
    13.4
%
   
12.8
%
   
12.2
%
   
11.8
%
   
14.7
%
   
Common Equity Tier 1
  $ 16.6    
$
15.2
   
$
13.9
   
$
13.2
   
$
16.4
 
Tier 1 Capital
  $ 18.2    
$
16.8
   
$
15.5
   
$
14.7
   
$
17.9
 
Tier 2 Capital
  $ 2.5    
$
2.5
   
$
2.4
   
$
2.4
   
$
2.3
 
Total Capital
  $ 20.7    
$
19.3
   
$
17.9
   
$
17.1
   
$
20.2
 
RWA
  $ 154.7    
$
150.9
   
$
147.4
   
$
145.9
   
$
138.0
 
Tier 1 Leverage
    10.5
%
   
9.7
%
   
8.8
%
   
8.6
%
   
10.9
%
Supplementary Leverage Ratio (SLR) (F)
   
8.6
%
   
8.3
%
   
7.6
%
   
7.4
%
   
9.3
%
Average Total Assets to calculate the Tier 1 Leverage Ratio (G)
  $
173.3
   
$
172.5
   
$
175.0
   
$
171.2
   
$
164.6
 
Total Leverage Exposure to calculate SLR
  $ 210.7    
$
202.4
   
$
204.4
   
$
198.8
   
$
191.7
 


See Appendix III for footnote references

 
-3-




American Express Company
 
(Preliminary)
Selected Card Related Statistical Information
 
 
(Billions, except percentages and where indicated)
 
 

 
 
Q3'18
   
Q2'18
   
Q1'18
   
Q4'17
   
Q3'17
   
YOY % change
   
YTD'18
   
YTD'17
   
YOY % change
 
Billed business (H)
                                                     
U.S.
 
$
194.6
   
$
195.4
   
$
182.5
   
$
188.9
   
$
176.4
     
10
   
$
572.5
   
$
519.4
     
10
 
Outside the U.S.
   
100.1
     
101.1
     
101.3
     
102.5
     
95.5
     
5
     
302.5
     
274.4
     
10
 
Total
 
$
294.7
   
$
296.5
   
$
283.8
   
$
291.4
   
$
271.9
     
8
   
$
875.0
   
$
793.8
     
10
 
Proprietary
 
$
250.2
   
$
251.1
   
$
236.9
   
$
242.6
   
$
225.3
     
11
   
$
738.2
   
$
658.0
     
12
 
Global Network Services (GNS)
   
44.5
     
45.4
     
46.9
     
48.8
     
46.6
     
(5
)
   
136.8
     
135.8
     
1
 
Total
 
$
294.7
   
$
296.5
   
$
283.8
   
$
291.4
   
$
271.9
     
8
   
$
875.0
   
$
793.8
     
10
 
Cards-in-force (millions) (I)
                                                                       
U.S.
   
53.0
     
51.9
     
51.3
     
50.0
     
49.5
     
7
     
53.0
     
49.5
     
7
 
Outside the U.S.
   
62.1
     
62.4
     
62.9
     
62.8
     
63.4
     
(2
)
   
62.1
     
63.4
     
(2
)
Total
   
115.1
     
114.3
     
114.2
     
112.8
     
112.9
     
2
     
115.1
     
112.9
     
2
 
Proprietary
   
68.5
     
67.4
     
66.4
     
64.6
     
63.9
     
7
     
68.5
     
63.9
     
7
 
GNS
   
46.6
     
46.9
     
47.8
     
48.2
     
49.0
     
(5
)
   
46.6
     
49.0
     
(5
)
Total
   
115.1
     
114.3
     
114.2
     
112.8
     
112.9
     
2
     
115.1
     
112.9
     
2
 
Basic cards-in-force (millions) (I)
                                                                       
U.S.
   
41.7
     
40.9
     
40.4
     
39.4
     
39.0
     
7
     
41.7
     
39.0
     
7
 
Outside the U.S.
   
51.8
     
52.0
     
52.4
     
52.2
     
52.7
     
(2
)
   
51.8
     
52.7
     
(2
)
Total
   
93.5
     
92.9
     
92.8
     
91.6
     
91.7
     
2
     
93.5
     
91.7
     
2
 
Average proprietary basic Card Member spending (dollars)
                                                                       
U.S.
 
$
5,169
   
$
5,275
   
$
5,015
   
$
5,300
   
$
5,018
     
3
   
$
15,462
   
$
15,009
     
3
 
Outside the U.S.
 
$
3,864
   
$
3,909
   
$
3,869
   
$
3,918
   
$
3,598
     
7
   
$
11,647
   
$
10,351
     
13
 
Average
 
$
4,784
   
$
4,871
   
$
4,677
   
$
4,890
   
$
4,596
     
4
   
$
14,336
   
$
13,620
     
5
 
Card Member loans
                                                                       
U.S.
 
$
68.1
   
$
66.3
   
$
63.9
   
$
64.5
   
$
59.9
     
14
   
$
68.1
   
$
59.9
     
14
 
Outside the U.S.
   
9.5
     
9.1
     
8.9
     
8.9
     
8.0
     
19
     
9.5
     
8.0
     
19
 
Total
 
$
77.6
   
$
75.4
   
$
72.8
   
$
73.4
   
$
67.9
     
14
   
$
77.6
   
$
67.9
     
14
 
 
                                                                       
Average discount rate (J)
   
2.38
%
   
2.37
%
   
2.37
%
   
2.37
%
   
2.40
%
           
2.37
%
   
2.42
%
       
Average fee per card (dollars) (K)
 
$
51
   
$
51
   
$
51
   
$
49
   
$
49
     
4
   
$
51
   
$
49
     
4
 


 
See Appendix III for footnote references


-4-





American Express Company
(Preliminary)
Selected Credit Related Statistical Information
 
 
 
 
 
 
 
(Billions, except percentages and where indicated)
 
 
 
 
 
 
 

 
 
Q3'18
   
Q2'18
   
Q1'18
   
Q4'17
   
Q3'17
   
YOY % change
   
YTD'18
   
YTD'17
   
YOY % change
 
Worldwide Card Member loans
                                                     
Total loans
 
$
77.6
   
$
75.4
   
$
72.8
   
$
73.4
   
$
67.9
     
14
   
$
77.6
   
$
67.9
     
14
 
Loss reserves (millions)
                                                                       
Beginning balance
 
$
1,840
   
$
1,786
   
$
1,706
   
$
1,502
   
$
1,320
     
39
   
$
1,706
   
$
1,223
     
39
 
Provisions - principal, interest and fees
   
560
     
528
     
499
     
596
     
531
     
5
     
1,587
     
1,272
     
25
 
Net write-offs - principal less recoveries
   
(393
)
   
(389
)
   
(358
)
   
(325
)
   
(299
)
   
31
     
(1,140
)
   
(856
)
   
33
 
Net write-offs - interest and fees less recoveries
   
(77
)
   
(77
)
   
(71
)
   
(64
)
   
(57
)
   
35
     
(225
)
   
(163
)
   
38
 
Other (L)
   
7
     
(8
)
   
10
     
(3
)
   
7
     
-
     
9
     
26
     
(65
)
Ending balance
 
$
1,937
   
$
1,840
   
$
1,786
   
$
1,706
   
$
1,502
     
29
   
$
1,937
   
$
1,502
     
29
 
Ending reserves - principal
 
$
1,834
   
$
1,737
   
$
1,691
   
$
1,622
   
$
1,427
     
29
   
$
1,834
   
$
1,427
     
29
 
Ending reserves - interest and fees
 
$
103
   
$
103
   
$
95
   
$
84
   
$
75
     
37
   
$
103
   
$
75
     
37
 
% of loans
   
2.5
%
   
2.4
%
   
2.5
%
   
2.3
%
   
2.2
%
           
2.5
%
   
2.2
%
       
% of past due
   
185
%
   
188
%
   
174
%
   
177
%
   
174
%
           
185
%
   
174
%
       
Average loans
 
$
76.4
   
$
74.1
   
$
72.7
   
$
70.1
   
$
67.1
     
14
   
$
74.5
   
$
65.4
     
14
 
Net write-off rate (principal only) (M)
   
2.1
%
   
2.1
%
   
2.0
%
   
1.8
%
   
1.8
%
           
2.0
%
   
1.7
%
       
Net write-off rate (principal, interest and fees) (M)
   
2.5
%
   
2.5
%
   
2.4
%
   
2.2
%
   
2.1
%
           
2.4
%
   
2.1
%
       
30+ days past due loans as a % of total
   
1.3
%
   
1.3
%
   
1.4
%
   
1.3
%
   
1.3
%
           
1.3
%
   
1.3
%
       
   
Net interest income divided by average Card Member loans (N)
   
10.3
%
   
9.9
%
   
10.1
%
   
9.9
%
   
10.0
%
           
10.1
%
   
9.6
%
       
Net interest yield on average Card Member loans (N)
   
10.8
%
   
10.6
%
   
10.8
%
   
10.5
%
   
10.7
%
           
10.7
%
   
10.4
%
       
   
Worldwide Card Member receivables
                                                                       
Total receivables
 
$
55.5
   
$
55.0
   
$
54.2
   
$
54.0
   
$
51.5
     
8
   
$
55.5
   
$
51.5
     
8
 
Loss reserves (millions)
                                                                       
Beginning balance
 
$
558
   
$
565
   
$
521
   
$
512
   
$
475
     
17
   
$
521
   
$
467
     
12
 
Provisions - principal and fees
   
214
     
245
     
242
     
205
     
214
     
-
     
701
     
590
     
19
 
Net write-offs - principal and fees less recoveries
   
(226
)
   
(236
)
   
(199
)
   
(188
)
   
(175
)
   
29
     
(661
)
   
(548
)
   
21
 
Other (L)
   
(2
)
   
(16
)
   
1
     
(8
)
   
(2
)
   
-
     
(17
)
   
3
     
#
 
Ending balance
 
$
544
   
$
558
   
$
565
   
$
521
   
$
512
     
6
   
$
544
   
$
512
     
6
 
% of receivables
   
1.0
%
   
1.0
%
   
1.0
%
   
1.0
%
   
1.0
%
           
1.0
%
   
1.0
%
       
Net write-off rate, excluding Global Corporate Payments (GCP) (principal only) (M)
   
1.7
%
   
1.8
%
   
1.6
%
   
1.5
%
   
1.5
%
           
1.7
%
   
1.6
%
       
Net write-off rate, excluding GCP (principal and fees) (M)
   
1.9
%
   
2.1
%
   
1.8
%
   
1.6
%
   
1.7
%
           
1.9
%
   
1.8
%
       
30+ days past due as a % of total, excluding GCP
   
1.3
%
   
1.3
%
   
1.5
%
   
1.4
%
   
1.3
%
           
1.3
%
   
1.3
%
       
GCP Net loss ratio (as a % of charge volume) (O)
   
0.12
%
   
0.12
%
   
0.10
%
   
0.11
%
   
0.09
%
           
0.11
%
   
0.10
%
       
GCP 90+ days past billing as a % of total (O)
   
0.8
%
   
0.8
%
   
0.8
%
   
0.9
%
   
0.9
%
           
0.8
%
   
0.9
%
       

# - Denotes a variance of 100 percent or more.



See Appendix III for footnote references

 
-5-




American Express Company
 
Selected Income Statement Information by Segment
 
(Millions)
 
 
 

 
 
Global Consumer Services Group
   
Global Commercial Services
   
Global Merchant and Network Services
   
Corporate and Other
   
Consolidated
 
 
 
(GCSG)
   
(GCS)
   
(GMNS)
             
Q3'18
                             
Non-interest revenues
 
$
3,680
   
$
2,980
   
$
1,494
   
$
29
   
$
8,183
 
Interest income
   
2,140
     
416
     
6
     
176
     
2,738
 
Interest expense
   
404
     
218
     
(78
)
   
233
     
777
 
Total revenues net of interest expense
   
5,416
     
3,178
     
1,578
     
(28
)
   
10,144
 
Total provision
   
609
     
201
     
5
     
2
     
817
 
Total revenues net of interest expense after provisions for losses
   
4,807
     
2,977
     
1,573
     
(30
)
   
9,327
 
Marketing, business development, rewards, Card Member services
   
2,711
     
1,469
     
296
     
23
     
4,499
 
Salaries and employee benefits, and other operating expenses
   
1,118