American Express 2005 Annual Report Download - page 51

Selected Statistical Information
Years Ended December 31,
(Billions, except percentages
and where indicated) 2005 2004 2003
Card billed business $ 292.8 $ 251.7 $ 214.7
Total cards-in-force
(millions) 37.5 35.0 32.7
Basic cards-in-force
(millions) 27.7 25.7 24.0
Average basic cardmember
spending (dollars) $ 10,996 $ 10,118 $ 9,054
U.S. Consumer Travel
Travel sales $ 1.9 $ 1.5 $ 1.2
Travel commissions
and fees/sales 8.7% 8.9% 8.6%
Worldwide Travelers Cheque
and prepaid products:
Sales $ 19.7 $ 19.9 $ 19.2
Average outstanding $ 7.1 $ 7.0 $ 6.6
Average investments $ 7.8 $ 7.5 $ 7.1
Investment yield(a) 5.1% 5.4% 5.4%
Tax equivalent
yield — managed(a) 7.9% 8.4% 8.4%
Total segment assets $ 70.3 $ 58.3 $ 53.0
Segment capital $ 5.1 $ 4.5 $ 3.7
Return on segment capital 39.3% 38.2% 39.1%
Cardmember receivables:
Total receivables $ 19.2 $ 17.4 $ 16.1
90 days past due as
a % of total 1.8% 2.0% 2.2%
Net loss ratio as a %
of charge volume 0.30% 0.30% 0.34%
Cardmember lending —
owned basis:
Total loans $ 24.8 $ 19.6 $ 17.7
30 days past due loans
asa%oftotal 2.3% 2.4% 2.6%
Average loans $ 21.0 $ 17.9 $ 16.4
Net write-off rate 3.9% 3.9% 5.0%
Net finance charge
revenue/average loans 8.5% 7.7% 7.8%
Cardmember lending —
managed basis:
Total loans $ 46.0 $ 39.9 $ 37.0
30 days past due loans
asa%oftotal 2.3% 2.5% 2.7%
Average loans $ 41.5 $ 37.3 $ 35.2
Net write-off rate 4.1% 4.3% 5.2%
Net finance charge
revenue/average loans 9.0% 8.6% 8.9%
(a)Investment yield represents earnings on certain tax-exempt securities.
The tax equivalent yield — managed represents earnings on such tax-
exempt securities as if it had been earned on a taxable basis and assumes
an income tax rate of 35 percent.
Results of Operations for the Three Years Ended
December 31, 2005
The following discussion of U.S. Card Services’ segment
results of operations is presented on a managed basis.
U.S. Card Services reported segment income of $1.8 bil-
lion in 2005, a 21 percent increase from $1.5 billion in
2004, which increased 9 percent from 2003.
Revenues
In 2005, U.S. Card Services’ revenues increased 13 per-
cent to $13.1 billion primarily due to higher discount
revenue, net card fees and other, and increased card-
member lending net finance charge revenue. Discount
revenue, net card fees and other of $9.3 billion in 2005,
rose 12 percent from 2004, largely due to increases in
billed business volumes. The 16 percent increase in
billed business in 2005 reflected a 9 percent increase in
spending per proprietary basic card and a 7 percent
growth in cards-in-force. Within the U.S. consumer
business, billed business grew 15 percent and small busi-
ness volumes rose 20 percent in 2005. Cardmember
lending net finance charge revenue of $3.7 billion in
2005 rose 17 percent compared to 2004, primarily due
to 11 percent growth in average lending balances and a
higher portfolio yield. Revenues of $11.5 billion in 2004
were 8 percent higher than 2003 as a result of increased
discount revenues, net card fees and other, and card-
member lending net finance charge revenue.
Expenses
During 2005, U.S. Card Services’ expenses increased
12 percent to $10.3 billion, primarily due to higher mar-
keting, promotion, rewards and cardmember services
expenses, greater human resources expenses and other
operating expenses and higher provisions for losses.
Expenses in 2005 included $10 million in aggregate
reengineering charges principally relating to the restruc-
turing of travel operations. These charges represent
employee severance obligations and are included in
human resources expense. Expenses in 2004 of $9.2 bil-
lion were 8 percent higher than 2003 primarily due to
higher marketing, promotion, rewards and cardmember
services, greater human resources expenses and other
operating expenses, partially offset by reduced provi-
sions for losses and interest costs.
Financial Review
AXP / AR.2005
[49 ]