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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):  January 17, 2019
 
 

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 January 17, 2019, American Express Company (the “Company”) issued a press release regarding its financial results for the fourth quarter and full year 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 fourth quarter and full year of 2018. Such additional financial information is attached to this report as Exhibit 99.2. 
 
 
Exhibit
Description
 
99.1
 
99.2
 
 
 
 
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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: January 17, 2019
 
 
 
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Section 2: EX-99.1 (EXHIBIT 99.1 OF AMERICAN EXPRESS COMPANY)

EXHIBIT 99.1
 
 
 
News Release
News Release
News Release
 News Release

 
 
 
 
FOR IMMEDIATE RELEASE
 

Media Contacts:
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 FOURTH QUARTER EARNINGS PER SHARE OF $2.32
AND FULL YEAR EPS OF $7.91

STRONG 2018 REVENUE GROWTH REFLECTS HIGHER CARD MEMBER SPENDING, LOANS AND CARD FEES

(Millions, except percentages and per share amounts)

                         
   
Quarters Ended
December 31,
       
Years Ended
December 31,
     
   
2018
   
2017
   
Percentage
Inc/(Dec)
   
2018
   
2017
   
Percentage
Inc/(Dec)
 
Total Revenues Net of Interest Expense
 
$
10,474
   
$
9,707
     
8
   
$
40,338
   
$
36,878
     
9
 
Net Income (Loss)
 
$
2,010
   
$
(1,206
)
   
#
   
$
6,921
   
$
2,748
     
#
 
Earnings (Loss) Per Common Share – Diluted:
                                               
    Net Income (Loss) Attributable to Common Shareholders1
 
$
2.32
   
$
(1.42
)
   
#
   
$
7.91
   
$
2.99
     
#
 
Average Diluted Common Shares Outstanding
   
852
     
865
     
(2
)
   
859
     
886
     
(3
)
# - Denotes a variance of 100 percent or more.
                                               

 
New York – January 17, 2019 - American Express Company (NYSE: AXP) today reported fourth-quarter net income of $2.0 billion, or $2.32 per share, compared with a net loss of $1.2 billion, or $1.42 per share, a year ago.
 
 
__________
 
1
 
Represents net income less (i) earnings allocated to participating share awards of $16 million and $2 million for the three months ended December 31, 2018 and 2017, respectively, and $54 million and $21 million for the years ended December 31, 2018 and 2017, respectively, and (ii) dividends on preferred shares of $19 million and $20 million for the three months ended December 31, 2018 and 2017 respectively, and $80 million and $81 million for the years ended December 31, 2018 and 2017, respectively.
 
 
 
 
-1-


The current period included $496 million, or $0.58 per share, of certain discrete tax benefits.  The year-ago period included a charge of $2.6 billion, or ($2.99) per share, related to the Tax Cuts and Jobs Act (the "Tax Act").

Fourth-quarter consolidated total revenues net of interest expense were a record $10.5 billion, up 8 percent from $9.7 billion a year ago. Excluding the impact of foreign exchange rates, adjusted revenues net of interest expense grew 10 percent.2  The rise reflected higher Card Member spending, loan volumes and card fees.

Consolidated provisions for losses were $954 million, up 14 percent from $834 million a year ago. The increase reflected growth in the loan portfolio and higher lending write-off rates.

Consolidated expenses were $7.7 billion, up 9 percent from $7.1 billion a year ago. The rise primarily reflected higher rewards and other customer engagement costs, which were partially offset by lower operating expenses.3

The consolidated effective tax rate was (9.8) percent, down substantially from a year ago.   The $496 million tax benefit mentioned above reflected changes in the tax method of accounting for certain expenses; the resolution of certain prior years' tax audits; and an adjustment to the company's 2017 provisional tax charge related to the Tax Act.  The effective tax rate for the quarter excluding these items was 17.3 percent.4

For the full year, the company reported net income of $6.9 billion, compared with net income of $2.7 billion a year ago. Earnings per share were $7.91, compared with $2.99 a year ago.

Revenues net of interest expense for the full year were a record $40.3 billion, up 9 percent (10 percent FX adjusted2) from $36.9 billion a year ago.

Consolidated expenses for the full year increased 8 percent to $28.9 billion from $26.7 billion a year ago.
 
 
__________
 
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 (e.g., assumes the foreign exchange rates used to determine results for the three months ended December 31, 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.
 
3
 
Operating expenses represent salaries and employee benefits, professional services, occupancy and equipment, and other expenses.
 
4
  The effective tax rate excluding certain discrete tax benefits recognized in the fourth quarter of 2018 is a non-GAAP measure. Management believes the effective tax rate excluding these items is useful in evaluating the company's tax rate for the quarter relative to the full year. See Appendix I for a reconciliation to the effective tax rate on a GAAP basis.
 
 
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"We continue to see very good returns on the investments we've been making to gain share and add scale," said Stephen J. Squeri, chairman and chief executive officer.  "Our growth throughout 2018 was broad-based and well-balanced across geographies and business lines.  Card Member spending rose an fx-adjusted 8 percent, lapping a strong year-ago quarter.  This was the sixth consecutive quarter with revenue growth of at least 8 percent, and it was driven again by higher Card Member spending, loans and card fees.

"The total revenue we generated in 2018 was well above our initial expectations and gave us the flexibility to make additional investments in the business each quarter.  We added 12 million new cards during the year, continued to enhance the range of benefits we offer, and continued to significantly expand the number of merchants in our network.  Robust top line growth, consistently good credit quality and the leverage we get from disciplined control of operating expenses delivered strong earnings per share each quarter.

"We remain focused on four strategic priorities:
 
§
Expand leadership in the premium consumer space
§
Build on our strong position in commercial payments
§
Strengthen our global integrated network to provide unique value and
§
Make American Express an essential part our customers' digital lives.
 
We've made great progress on each of them and feel very good about the competitive advantages that come from our business model.

"Our focus is on continuing to make the investments that can drive higher revenue growth, which is the foundation for consistent, double-digit EPS growth.  While there are mixed signals in the political and economic environment, based on what we see in the business we are starting 2019 from a position of strength.  We expect full year 2019 revenue growth to be between 8 and 10 percent and EPS to be between $7.85 and $8.35, subject to contingencies."

Global Consumer Services Group reported fourth-quarter net income of $702 million, up 13 percent from $624 million a year ago.

Total revenues net of interest expense were $5.6 billion, up 11 percent from $5.1 billion a year ago. The rise primarily reflected higher loans, Card Member spending, and card fees.

Provisions for losses totaled $726 million, up 13 percent from $641 million a year ago. The rise primarily reflected growth in the loan portfolio and an increase in the lending write-off rate.
 
 
-3-


Total expenses were $4.2 billion, up 17 percent from $3.6 billion a year ago. The rise primarily reflected higher rewards and other customer engagement costs and increased operating expenses.

The effective tax rate was 3 percent, down from 27 percent a year ago, reflecting the resolution of certain prior years' tax items and the reduction in the U.S. federal statutory tax rate.

Global Commercial Services reported fourth-quarter net income of $624 million, up 15 percent from $542 million a year ago.

Total revenues net of interest expense were $3.3 billion, up 8 percent from $3.1 billion a year ago. The increase primarily reflected higher Card Member spending.

Provisions for losses totaled $223 million, up 19 percent from $187 million a year ago, reflecting higher provision across both the charge and lending portfolios, in part driven by growth in receivable and loan balances.

Total expenses were $2.4 billion, up 12 percent from $2.1 billion a year ago. The rise primarily reflected higher rewards and other customer engagement costs and increased operating expenses.

The effective tax rate was 11 percent, down from 29 percent a year ago, reflecting the reduction in the U.S. federal statutory tax rate and the resolution of certain prior years' tax items.

Global Merchant and Network Services reported fourth-quarter net income of $501 million, up 9 percent from $459 million a year ago.

Total revenues net of interest expense were $1.6 billion, unchanged from a year ago. The current quarter reflected higher Card Member spending, offset by a decrease in the average discount rate and lower revenues from network partners.

Total expenses were $1.0 billion, up 5 percent from $949 million a year ago.

The effective tax rate was 20 percent, down from 31 percent a year ago, reflecting the reduction in the U.S. federal statutory tax rate, and the resolution of certain prior years' tax items.

Corporate and Other reported fourth-quarter net income of $183 million, compared with a net loss of $2.8 billion a year ago.  The current period included a portion of the above-mentioned discrete tax items while the year ago period reflected the impact of the Tax Act.
 
 
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# # #

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 fourth-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 fourth-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.

American Express Company plans to host its annual Investor Day on Wednesday, March 13, 2019 at 9 a.m. (ET). At the meeting, senior executives will discuss key business trends, initiatives and long-term strategies.

 
 
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 American Express Company's current expectations regarding business and financial performance, including management's outlook for 2019, 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
 
 
-5-

 
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 2019 earnings per common share outlook, which will depend in part on revenue growth, credit performance and the effective tax rate remaining consistent with current expectations, the company's ability to control operating expense growth and generate operating leverage, and the company's ability to continue executing its share repurchase program; any of which could be impacted by, among other things, the factors identified in the subsequent paragraphs; issues impacting brand perceptions and the company's reputation; 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, increases in Card Member reimbursements, restructurings, impairments and changes in reserves; the amount the company spends on customer engagement and the company's inability 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 new or renegotiated cobrand agreements than expected, which could be affected by volumes and customer engagement; and 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;
·
the ability of the company to achieve its 2019 revenue growth outlook, 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, growth in Card Member loans and the yield on Card Member loans not remaining consistent with current expectations, 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 inability 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 new and existing 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;
-6-

·
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 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 cost of Card Member services growing inconsistently from expectations, which will depend in part on the company's inability to cost effectively enhance card products and services to make them attractive to Card Members; the degree of interest of Card Members in the value propositions offered by the company; increasing competition, which could result in needing to offer additional benefits and services; and the pace and cost of the expansion of the company's global lounge collection;
·
the actual amount to be spent on customer engagement, which will be based in part on the factors identified in the preceding paragraph; management's assessment of competitive opportunities; overall business performance and changes in macroeconomic conditions; Card Member behavior as it relates to their spending patterns, including the level of spend in bonus categories, and the redemption of rewards; costs related to reward point redemptions, advertising and Card Member acquisition; 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;
-7-

·
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; 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 tax rate not remaining consistent 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;
·
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;
·
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;
-8-

·
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 provide innovative ways for Card Members to pay online and make P2P transfers, 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, Brexit, 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 American Express 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, June 30 and September 30, 2018 and the company's other reports filed with the Securities and Exchange Commission.
 
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American Express Company
 
(Preliminary)
 
Appendix I
     
Reconciliations of Adjustments
     
 
     
 
     
       
   
Q4'18
 
Effective Tax Rate Excluding Discrete Tax Items
     
Effective tax rate
   
(9.8
%)
Discrete tax impacts (X)
   
27.1
%
Effective tax rate excluding discrete tax items
   
17.3
%

             (X)  Reflects changes in the tax method of accounting for certain expenses; the resolution of certain prior years' tax audits, and an adjustment to the Company's 2017 provisional tax charge related to the Tax Act.


 
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Section 3: EX-99.2 (EXHIBIT 99.2 OF AMERICAN EXPRESS COMPANY)

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

 
 
Q4'18
   
Q3'18
   
Q2'18
   
Q1'18
   
Q4'17
   
YOY % change
   
YTD'18
   
YTD'17
   
YOY % change
 
Non-interest revenues
                                                     
Discount revenue
 
$
6,457
   
$
6,181
   
$
6,194
   
$
5,889
   
$
6,060
     
7
   
$
24,721
   
$
22,890
     
8
 
Net card fees
   
897
     
870
     
844
     
830
     
785
     
14
     
3,441
     
3,090
     
11
 
Other fees and commissions
   
788
     
798
     
786
     
781
     
778
     
1
     
3,153
     
2,990
     
5
 
Other
   
300
     
334
     
349
     
377
     
345
     
(13
)
   
1,360
     
1,457
     
(7
)
Total non-interest revenues
   
8,442
     
8,183
     
8,173
     
7,877
     
7,968
     
6
     
32,675
     
30,427
     
7
 
Interest income
                                                                       
Interest on loans
   
2,674
     
2,554
     
2,387
     
2,326
     
2,205
     
21
     
9,941
     
8,148
     
22
 
Interest and dividends on investment securities
   
35
     
35
     
27
     
21
     
21
     
67
     
118
     
89
     
33
 
Deposits with banks and other
   
157
     
149
     
126
     
115
     
93
     
69
     
547
     
326
     
68
 
Total interest income
   
2,866
     
2,738
     
2,540
     
2,462
     
2,319
     
24
     
10,606
     
8,563
     
24
 
Interest expense
                                                                       
Deposits
   
377
     
340
     
300
     
270
     
241
     
56
     
1,287
     
779
     
65
 
Long-term debt and other
   
457
     
437
     
411
     
351
     
339
     
35
     
1,656
     
1,333
     
24
 
Total interest expense
   
834
     
777
     
711
     
621
     
580
     
44
     
2,943
     
2,112
     
39
 
Net interest income
   
2,032
     
1,961
     
1,829
     
1,841
     
1,739
     
17
     
7,663
     
6,451
     
19
 
Total revenues net of interest expense
   
10,474
     
10,144
     
10,002
     
9,718
     
9,707
     
8
     
40,338
     
36,878
     
9
 
Provisions for losses
                                                                       
Charge card
   
236
     
214
     
245
     
242
     
205
     
15
     
937
     
795
     
18
 
Card Member loans
   
679
     
560
     
528
     
499
     
596
     
14
     
2,266
     
1,868
     
21
 
Other
   
39
     
43
     
33
     
34
     
33
     
18
     
149
     
97
     
54
 
Total provisions for losses
   
954
     
817
     
806
     
775
     
834
     
14
     
3,352
     
2,760
     
21
 
Total revenues net of interest expense after provisions for losses
   
9,520
     
9,327
     
9,196
     
8,943
     
8,873
     
7
     
36,986
     
34,118
     
8
 
   
Expenses
                                                                       
Marketing and business development (A)
   
1,820
     
1,642
     
1,663
     
1,345
     
1,535
     
19
     
6,470
     
5,722
     
13
 
Card Member rewards
   
2,516
     
2,400
     
2,433
     
2,347
     
2,262
     
11
     
9,696
     
8,687
     
12
 
Card Member services
   
495
     
457
     
416
     
409
     
383
     
29
     
1,777
     
1,392
     
28
 
Salaries and employee benefits
   
1,294
     
1,350
     
1,280
     
1,326
     
1,436
     
(10
)
   
5,250
     
5,258
     
-
 
Professional services
   
671
     
489
     
508
     
457
     
534
     
26
     
2,125
     
2,040
     
4
 
Occupancy and equipment
   
540
     
489
     
484
     
520
     
493
     
10
     
2,033
     
2,018
     
1
 
Other, net (A)
   
353
     
382
     
321
     
457
     
432
     
(18
)
   
1,513
     
1,576
     
(4
)
Total expenses
   
7,689
     
7,209
     
7,105
     
6,861
     
7,075
     
9
     
28,864
     
26,693
     
8
 
Pretax income
   
1,831
     
2,118
     
2,091
     
2,082
     
1,798
     
2
     
8,122
     
7,425
     
9
 
Income tax provision (benefit)
   
(179
)
   
464
     
468
     
448
     
3,004
     
#
     
1,201
     
4,677
     
(74
)
Net income (loss)
 
$
2,010
   
$
1,654
   
$
1,623
   
$
1,634
   
$
(1,206
)
   
#
   
$
6,921
   
$
2,748
     
#
 
Net income (loss) attributable to common shareholders (B)
 
$
1,975
   
$
1,621
   
$
1,591
   
$
1,600
   
$
(1,228
)
   
#
   
$
6,787
   
$
2,646
     
#
 
Effective tax rate
   
(9.8
%)
   
21.9
%
   
22.4
%
   
21.5
%
   
167.1
%
           
14.8
%
   
63.0
%
       
 
                                                                       
Earnings Per Common Share
                                                                       
Basic
                                                                       
Net income (loss) attributable to common shareholders
 
$
2.33
   
$
1.89
   
$
1.85
   
$
1.86
   
$
(1.42
)
   
#
   
$
7.93
   
$
3.00
     
#
 
Average common shares outstanding
   
850
     
858
     
860
     
859
     
865
     
(2
)
   
856
     
883
     
(3
)
Diluted
                                                                       
Net income (loss) attributable to common shareholders
 
$
2.32
   
$
1.88
   
$
1.84
   
$
1.86
   
$
(1.42
)
   
#
   
$
7.91
   
$
2.99
     
#
 
Average common shares outstanding
   
852
     
860
     
862
     
861
     
865
     
(2
)
   
859
     
886
     
(3
)
Cash dividends declared per common share
 
$
0.39
   
$
0.39
   
$
0.35
   
$
0.35
   
$
0.35
     
11
   
$
1.48
   
$
1.34
     
10
 

# - Denotes a variance of 100 percent or more.
 
 
 
 
 
 
 



 
See Appendix IV for footnote references

 
-1-




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

 
 
Q4'18
   
Q3'18
   
Q2'18
   
Q1'18
   
Q4'17
   
YOY % change
 
Assets
                                   
Cash & cash equivalents
 
$
27
   
$
30
   
$
30
   
$
31
   
$
33
     
(18
)
Card Member receivables, less reserves
   
55
     
55
     
54
     
54
     
54
     
2
 
Card Member Loans, less reserves
   
80
     
76
     
74
     
71
     
72
     
11
 
Investment securities
   
5
     
6
     
5
     
3
     
3
     
67
 
Other (C)
   
22
     
22
     
22
     
21
     
19
     
16
 
Total assets
 
$
189
   
$
189
   
$
185
   
$
180
   
$
181
     
4
 
   
Liabilities and Shareholders' Equity
                                               
Customer deposits
 
$
70
   
$
69
   
$
67
   
$
67
   
$
64
     
9
 
Short-term borrowings
   
3
     
2
     
2
     
2
     
3
     
-
 
Long-term debt
   
58
     
55
     
56
     
52
     
56
     
4
 
Other (C)
   
36
     
42
     
39
     
39
     
40
     
(10
)
Total liabilities
   
167
     
168
     
164
     
160
     
163
     
2
 
   
Shareholders' Equity
   
22
     
21
     
21
     
20
     
18
     
22
 
Total liabilities and shareholders' equity
 
$
189
   
$
189
   
$
185
   
$
180
   
$
181
     
4
 
   
Return on average equity (D)
   
33.5
%
   
18.1
%
   
16.7
%
   
15.2
%
   
13.2
%
       
Return on average common equity (D)
   
35.6
%
   
19.0
%
   
17.5
%
   
15.9
%
   
13.7
%
       
Book value per common share (dollars)
 
$
24.45
   
$
23.27
   
$
22.42
   
$
20.96
   
$
19.42
     
26
 




 
See Appendix IV for footnote references

 
-2-




American Express Company
(Preliminary)
Consolidated Capital

 
 
Q4'18
   
Q3'18
   
Q2'18
   
Q1'18
   
Q4'17
 
Shares Outstanding (in millions)
   
Beginning of period
   
854
     
861
     
860
     
859
     
871
 
Repurchase of common shares
   
(8
)
   
(7
)
   
-
     
-
     
(14
)
Net impact of employee benefit plans and others
   
1
     
-
     
1
     
1
     
2
 
End of period
   
847
     
854
     
861
     
860
     
859
 
   
Risk-Based Capital Ratios - Basel III ($ in billions) (E)
   
Common Equity Tier 1/Risk Weighted Assets (RWA)
   
11.0
%
   
10.8
%
   
10.1
%
   
9.4
%
   
9.0
%
Tier 1
   
12.0
%
   
11.8
%
   
11.1
%
   
10.5
%
   
10.1
%
Total
   
13.6
%
   
13.4
%
   
12.8
%
   
12.2
%
   
11.8
%
   
Common Equity Tier 1
 
$
17.5
   
$
16.6
   
$
15.2
   
$
13.9
   
$
13.2
 
Tier 1 Capital
 
$
19.1
   
$
18.2
   
$
16.8
   
$
15.5
   
$
14.7
 
Tier 2 Capital
 
$
2.6
   
$
2.5
   
$
2.5
   
$
2.4
   
$
2.4
 
Total Capital
 
$
21.7
   
$
20.7
   
$
19.3
   
$
17.9
   
$
17.1
 
RWA
 
$
158.8
   
$
154.7
   
$
150.9
   
$
147.4
   
$
145.9
 
Tier 1 Leverage
   
10.4
%
   
10.1
%
   
9.7
%
   
8.8
%
   
8.6
%
Supplementary Leverage Ratio (SLR) (F)
   
8.9
%
   
8.6
%
   
8.3
%
   
7.6
%
   
7.4
%
Average Total Assets to calculate the Tier 1 Leverage Ratio (G)
 
$
183.2
   
$
179.8
   
$
172.5
   
$
175.0
   
$
171.2
 
Total Leverage Exposure to calculate SLR
 
$
214.4
   
$
210.7
   
$
202.4
   
$
204.4
   
$
198.8
 


 
See Appendix IV for footnote references

 
-3-




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

 
 
Q4'18
   
Q3'18
   
Q2'18
   
Q1'18
   
Q4'17
   
YOY % change
   
YTD'18
   
YTD'17
   
YOY % change
 
Billed business (H)
                                                     
U.S.
 
$
205.1
   
$
194.6
   
$
195.4
   
$
182.5
   
$
188.9
     
9
   
$
777.6
   
$
708.3
     
10
 
Outside the U.S.
   
103.9
     
100.1
     
101.1
     
101.3
     
102.5
     
1
     
406.4
     
376.9
     
8
 
Total
 
$
309.0
   
$
294.7
   
$
296.5
   
$
283.8
   
$
291.4
     
6
   
$
1,184.0
   
$
1,085.2
     
9
 
Proprietary
 
$
264.4
   
$
250.2
   
$
251.1
   
$
236.9
   
$
242.6
     
9
   
$
1,002.6
   
$
900.6
     
11
 
Global Network Services (GNS)
   
44.6
     
44.5
     
45.4
     
46.9
     
48.8
     
(9
)
   
181.4
     
184.6
     
(2
)
Total
 
$
309.0
   
$
294.7
   
$
296.5
   
$
283.8
   
$
291.4
     
6
   
$
1,184.0
   
$
1,085.2
     
9
 
Cards-in-force (millions) (I)
                                                                       
U.S.
   
53.7
     
53.0
     
51.9
     
51.3
     
50.0
     
7
     
53.7
     
50.0
     
7
 
Outside the U.S.
   
60.3
     
62.1
     
62.4
     
62.9
     
62.8
     
(4
)
   
60.3
     
62.8
     
(4
)
Total
   
114.0
     
115.1
     
114.3
     
114.2
     
112.8
     
1
     
114.0
     
112.8
     
1
 
Proprietary
   
69.1
     
68.5
     
67.4
     
66.4
     
64.6
     
7
     
69.1
     
64.6
     
7
 
GNS
   
44.9
     
46.6
     
46.9
     
47.8
     
48.2
     
(7
)
   
44.9
     
48.2
     
(7
)
Total
   
114.0
     
115.1
     
114.3
     
114.2
     
112.8
     
1
     
114.0
     
112.8
     
1
 
Basic cards-in-force (millions) (I)
                                                                       
U.S.
   
42.3
     
41.7
     
40.9
     
40.4
     
39.4
     
7
     
42.3
     
39.4
     
7
 
Outside the U.S.
   
50.3
     
51.8
     
52.0
     
52.4
     
52.2
     
(4
)
   
50.3
     
52.2
     
(4
)
Total
   
92.6
     
93.5
     
92.9
     
92.8
     
91.6
     
1
     
92.6
     
91.6
     
1
 
Average proprietary basic Card Member spending (dollars)
                                                                       
U.S.
 
$
5,369
   
$
5,169
   
$
5,275
   
$
5,015
   
$
5,300
     
1
   
$
20,840
   
$
20,317
     
3
 
Outside the U.S.
 
$
4,103
   
$
3,864
   
$
3,909
   
$
3,869
   
$
3,918
     
5
   
$
15,756
   
$
14,277
     
10
 
Average
 
$
4,997
   
$
4,784
   
$
4,871
   
$
4,677
   
$
4,890
     
2
   
$
19,340
   
$
18,519
     
4
 
Card Member loans
                                                                       
U.S.
 
$
72.0
   
$
68.1
   
$
66.3
   
$
63.9
   
$
64.5
     
12
   
$
72.0
   
$
64.5
     
12
 
Outside the U.S.
   
9.9
     
9.5
     
9.1
     
8.9
     
8.9
     
11
     
9.9
     
8.9
     
11
 
Total
 
$
81.9
   
$
77.6
   
$
75.4
   
$
72.8
   
$
73.4
     
12
   
$
81.9
   
$
73.4
     
12
 
 
                                                                       
Average discount rate (J)
   
2.36
%
   
2.38
%
   
2.37
%
   
2.37
%
   
2.37
%
           
2.37
%
   
2.40
%
       
Average fee per card (dollars) (K)
 
$
52
   
$
51
   
$
51
   
$
51
   
$
49
     
6
   
$
51
   
$
49
     
4
 


 
See Appendix IV for footnote references

 
-4-




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

 
 
Q4'18
   
Q3'18
   
Q2'18
   
Q1'18
   
Q4'17
   
YOY % change
   
YTD'18
   
YTD'17
   
YOY % change
 
Worldwide Card Member loans
                                                     
Total loans
 
$
81.9
   
$
77.6
   
$
75.4
   
$
72.8
   
$
73.4
     
12
   
$
81.9
   
$
73.4
     
12
 
Loss reserves (millions)
                                                                       
Beginning balance
 
$
1,937
   
$
1,840
   
$
1,786
   
$
1,706
   
$
1,502
     
29
   
$
1,706
   
$
1,223
     
39
 
Provisions - principal, interest and fees
   
679
     
560
     
528
     
499
     
596
     
14
     
2,266
     
1,868
     
21
 
Net write-offs - principal less recoveries
   
(399
)
   
(393
)
   
(389
)
   
(358
)
   
(325
)
   
23
     
(1,539
)
   
(1,181
)
   
30
 
Net write-offs - interest and fees less recoveries
   
(79
)
   
(77
)
   
(77
)
   
(71
)
   
(64
)
   
23
     
(304
)
   
(227
)
   
34
 
Other (L)
   
(4
)
   
7
     
(8
)
   
10
     
(3
)
   
33
     
5
     
23
     
(78
)
Ending balance
 
$
2,134
   
$
1,937
   
$
1,840
   
$
1,786
   
$
1,706
     
25
   
$
2,134
   
$
1,706
     
25
 
Ending reserves - principal
 
$
2,028
   
$
1,834
   
$
1,737
   
$
1,691
   
$
1,622
     
25
   
$
2,028
   
$
1,622
     
25
 
Ending reserves - interest and fees
 
$
106
   
$
103
   
$
103
   
$
95
   
$
84
     
26
   
$
106
   
$
84
     
26
 
% of loans
   
2.6
%
   
2.5
%
   
2.4
%
   
2.5
%
   
2.3
%
           
2.6
%
   
2.3
%
       
% of past due
   
182
%
   
185
%
   
188
%
   
174
%
   
177
%
           
182
%
   
177
%
       
Average loans
 
$
79.4
   
$
76.4
   
$
74.1
   
$
72.7
   
$
70.1
     
13
   
$
75.8
   
$
66.7
     
14
 
Net write-off rate (principal only) (M)
   
2.0
%
   
2.1
%
   
2.1
%
   
2.0
%
   
1.8
%
           
2.0
%
   
1.8
%
       
Net write-off rate (principal, interest and fees) (M)
   
2.4
%
   
2.5
%
   
2.5
%
   
2.4
%
   
2.2
%
           
2.4
%
   
2.1
%
       
30+ days past due as a % of total
   
1.4
%
   
1.3
%
   
1.3
%
   
1.4
%
   
1.3
%
           
1.4
%
   
1.3
%
       
   
Net interest income divided by average Card Member loans (N)
   
10.2
%
   
10.3
%
   
9.9
%
   
10.1
%
   
9.9
%
           
10.1
%
   
9.7
%
       
Net interest yield on average Card Member loans (N)
   
10.7
%
   
10.8
%
   
10.6
%
   
10.8
%
   
10.5
%
           
10.7
%
   
10.4
%
       
   
Worldwide Card Member receivables
                                                                       
Total receivables
 
$
55.9
   
$
55.5
   
$
55.0
   
$
54.2
   
$
54.0
     
4
   
$
55.9
   
$
54.0
     
4
 
Loss reserves (millions)
                                                                       
Beginning balance
 
$
544
   
$
558
   
$
565
   
$
521
   
$
512
     
6
   
$
521
   
$
467
     
12
 
Provisions - principal and fees
   
236
     
214
     
245
     
242
     
205
     
15
     
937
     
795
     
18
 
Net write-offs - principal and fees less recoveries
   
(198
)
   
(226
)
   
(236
)
   
(199
)
   
(188
)
   
5
     
(859
)
   
(736
)
   
17
 
Other (L)
   
(9
)
   
(2
)
   
(16
)
   
1
     
(8
)
   
13
     
(26
)
   
(5
)
   
#
 
Ending balance
 
$
573
   
$
544
   
$
558
   
$
565
   
$
521
     
10
   
$
573
   
$
521
     
10
 
% 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)
   
1.4
%
   
1.7
%
   
1.8
%
   
1.6
%
   
1.5
%
           
1.7
%
   
1.6
%
       
Net write-off rate, excluding GCP (principal and fees) (M)
   
1.6
%
   
1.9
%
   
2.1
%
   
1.8
%
   
1.6
%
           
1.8
%
   
1.7
%
       
30+ days past due as a % of total, excluding GCP
   
1.4
%
   
1.3
%
   
1.3
%
   
1.5
%
   
1.4
%
           
1.4
%
   
1.4
%
       
GCP Net loss ratio (as a % of charge volume) (O)
   
0.11
%
   
0.12
%
   
0.12
%
   
0.10
%
   
0.11
%
           
0.11
%
   
0.10
%
       
GCP 90+ days past billing as a % of total (O)
   
0.7
%
   
0.8
%
   
0.8
%
   
0.8
%
   
0.9
%
           
0.7
%
   
0.9
%
       

# - Denotes a variance of 100 percent or more.


 
See Appendix IV for footnote references

 
-5-




American Express Company
(Preliminary)
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)
             
Q4'18
                             
Non-interest revenues
 
$
3,826
   
$
3,087
   
$
1,530
   
$
(1
)
 
$
8,442
 
Interest income
   
2,240
     
435
     
8
     
183
     
2,866
 
Interest expense
   
441
     
234
     
(89
)
   
248
     
834
 
Total revenues net of interest expense
   
5,625
     
3,288
     
1,627
     
(66
)
   
10,474
 
Total provision
   
726
     
223
     
6
     
(1
)
   
954
 
Total revenues net of interest expense after provisions for losses
   
4,899
     
3,065
     
1,621
     
(65
)
   
9,520
 
Marketing, business development, rewards, Card Member services
   
2,922
     
1,528
     
375
     
6
     
4,831
 
Salaries and employee benefits and other operating expenses
   
1,250
     
839
     
620
     
149
     
2,858
 
Pretax income (loss)
   
727
     
698
     
626
     
(220
)
   
1,831
 
Income tax provision (benefit)
   
25
     
74
     
125
     
(403
)
   
(179
)
Net income (loss)
   
702
     
624
     
501
     
183
     
2,010
 
Q4'17
                                       
Non-interest revenues
 
$
3,535
   
$
2,866
   
$
1,554
   
$
13
   
$
7,968
 
Interest income
   
1,848
     
357
     
10
     
104
     
2,319
 
Interest expense
   
306
     
168
     
(55
)
   
161
     
580
 
Total revenues net of interest expense
   
5,077
     
3,055
     
1,619
     
(44
)
   
9,707
 
Total provision
   
641
     
187
     
4
     
2
     
834
 
Total revenues net of interest expense after provisions for losses
   
4,436
     
2,868
     
1,615
     
(46
)
   
8,873
 
Marketing, business development, rewards, Card Member services
   
2,479
     
1,362
     
332
     
7
     
4,180
 
Salaries and employee benefits and other operating expenses
   
1,100
     
743
     
617
     
435
     
2,895
 
Pretax income (loss)
   
857
     
763
     
666
     
(488
)
   
1,798
 
Income tax provision (benefit)
   
233
     
221
     
207
     
2,343
     
3,004
 
Net income (loss)
   
624
     
542
     
459
     
(2,831
)
   
(1,206
)
YOY % change
                                       
Non-interest revenues
   
8
     
8
     
(2
)
   
#
     
6
 
Interest income
   
21
     
22
     
(20
)
   
76
     
24
 
Interest expense
   
44
     
39
     
62
     
54
     
44
 
Total revenues net of interest expense