American Express 2005 Annual Report Download - page 53

Selected Statistical Information
Years Ended December 31,
(Billions, except percentages
and where indicated) 2005 2004 2003
Card billed business $ 168.5 $ 148.6 $ 125.5
Total cards-in-force
(millions) 22.7 21.6 21.3
Basic cards-in-force
(millions) 18.0 17.2 17.2
Average basic cardmember
spending (dollars) $ 9,641 $ 8,610 $ 7,458
Global Corporate &
International Consumer
Travel
Travel sales $ 18.8 $ 18.4 $ 14.8
Travel commissions and
fees/sales 8.6% 9.0% 9.5%
International banking
Total loans $ 7.1 $ 6.9 $ 6.5
Private banking
holdings $ 20.3 $ 18.6 $ 16.2
Total segment assets $ 51.7 $ 47.9 $ 42.3
Segment capital $ 4.1 $ 3.8 $ 3.4
Return on segment capital 24.1% 22.0% 22.6%
Cardmember receivables:
Total receivables $ 14.5 $ 13.7 $ 12.3
90 days past due as a %
of total 1.3% 1.5% 1.4%
Net loss ratio asa%of
charge volume 0.21% 0.19% 0.19%
Cardmember lending:
Total loans $ 8.3 $ 7.3 $ 7.3
30 days past due loans
asa%oftotal 2.8% 2.3% 2.3%
Average loans $ 7.4 $ 6.7 $ 6.0
Net write-off rate 4.7% 5.2% 5.6%
Net finance charge
revenue/average loans 9.3% 9.6% 10.2%
Results of Operations for the Three Years Ended
December 31, 2005
The following discussion of International Card & Global
Commercial Services’ results of operations is presented
on a managed basis.
International Card & Global Commercial Services
reported segment income of $934 million for 2005, a
19 percent increase from $781 million in 2004, which
increased 9 percent from 2003.
Revenues
In 2005, International Card & Global Commercial
Services’ discount revenue, net card fees and other rev-
enues increased 7 percent to $8.5 billion driven prima-
rily by increases in both spending and cards-in-force, as
well as greater volume-related foreign exchange conver-
sion fees and higher card-related assessments, which
were partially offset by lower travel revenues. The
13 percent increase in billed business in 2005 reflects
a 12 percent increase in spending per proprietary basic
card as a result of increases in international consumer,
small business and global corporate spending and a
5 percent growth in cards-in-force. Cardmember lend-
ing net finance charge revenue of $684 million in 2005
rose 7 percent as compared to 2004, primarily due to
11 percent growth in the average lending balances,
partially offset by a higher cost of funds. Revenues of
$8.6 billion in 2004 were 14 percent higher than 2003
as a result of increased discount revenue, net card fees
and other revenues.
Expenses
During 2005, International Card & Global Commercial
Services’ expenses increased 7 percent to $8.0 billion
primarily due to increased provisions for losses and ben-
efits, higher marketing and promotion expenses, greater
reward costs and other operating expenses. Expenses in
2005 included $168 million in aggregate reengineering
charges principally relating to the restructuring of activi-
ties in the Corporate Travel business and international
operations. These restructuring charges include $88
million of employee severance obligations included in
human resources expense and $12 million of other exit
costs, primarily relating to the termination of certain real
estate property leases. Expenses in 2004 of $7.5 billion
were 15 percent higher than 2003 primarily due to
increased human resources and other operating
expenses, higher marketing and promotion expenses
and greater reward costs.
Marketing, promotion, rewards and cardmember
services expenses increased 12 percent in 2005 to
$1.3 billion reflecting greater rewards costs and
higher marketing and promotion expenses due to the
Company’s ongoing business-building initiatives. Total
provisions for losses and benefits increased 38 percent
in 2005 compared to 2004 primarily due to strong
volume increases within both charge and lending
activities and higher provision rates. Human resources
and other operating expenses increased 2 percent
to $5.7 billion in 2005 from 2004 reflecting higher
reengineering expenses, which were partially offset by
lower human resources costs and other reengineering-
related savings.
Financial Review
AXP / AR.2005
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