American Express 2009 Annual Report Download - page 34

2009 FINANCIAL REVIEW
AMERICAN EXPRESS COMPANY
(c) Total cards-in-force represents the number of cards that are
issued and outstanding. Proprietary basic consumer
cards-in-force includes basic cards issued to the primary account
owner and does not include additional supplemental cards issued
on that account. Proprietary basic small business and corporate
cards-in-force include basic and supplemental cards issued to
employee cardmembers. Non-proprietary basic cards-in-force
includes all cards that are issued and outstanding under network
partnership agreements.
(d) This calculation is designed to approximate merchant pricing. It
represents the percentage of billed business (both proprietary and
GNS) retained by the Company from merchants it acquires, prior
to payments to third parties unrelated to merchant acceptance.
(e) Average basic cardmember spending and average fee per card are
computed from proprietary card activities only. Average fee per
card is computed based on net card fees, including the
amortization of deferred direct acquisition costs, plus card fees
included in interest and fees on loans (including related
amortization of deferred direct acquisition costs), divided by
average worldwide proprietary cards-in-force. The card fees
related to cardmember loans included in interest and fees on
loans were $186 million, $146 million and $130 million for the
years ended December 31, 2009, 2008 and 2007, respectively. The
adjusted average fee per card is computed in the same manner,
but excludes amortization of deferred direct acquisition costs (a
portion of which is charge card related and included in net card
fees and a portion of which is lending related and included in
interest and fees on loans). The amount of amortization excluded
was $243 million, $320 million and $288 million for the years
ended December 31, 2009, 2008 and 2007, respectively. The
Company presents adjusted average fee per card because
management believes that this metric presents a useful indicator
of card fee pricing across a range of its proprietary card products.
AMERICAN EXPRESS COMPANY
SELECTED STATISTICAL INFORMATION(a)
As of or for the Years Ended December 31,
(Billions, except percentages
and where indicated) 2009 2008 2007
Worldwide cardmember receivables:
Total receivables $ 33.7 $ 33.0 $ 40.1
Loss reserves (millions):
Beginning balance $ 810 $ 1,149 $ 981
Provision 857 1,363 1,140
Net write-offs(b) (1,131) (1,552) (907)
Other 10 (150) (65)
Ending balance $ 546 $ 810 $ 1,149
% of receivables 1.6% 2.5% 2.9%
Net write-off rate — USCS(b) 3.8% 3.6% N/A
30 days past due as a % of total — USCS 1.8% 3.7% N/A
Net loss ratio as a % of charge
volume — ICS 0.36% 0.24% 0.26%
90 days past billing as a % of total — ICS(c) 2.1% 3.1% 1.8%
Net loss ratio as a % of charge
volume — GCS 0.19% 0.13% 0.10%
90 days past billing as a % of total — GCS(c) 1.4% 2.7% 2.1%
Worldwide cardmember
lending — owned basis(d):
Total loans $ 32.8 $ 42.2 $ 54.4
30 days past due as a % of total 3.6% 4.4% 2.8%
Loss reserves (millions):
Beginning balance $ 2,570 $ 1,831 $ 1,171
Provision 4,209 4,106 2,615
Net write-offs — principal (2,949) (2,643) (1,636)
Write-offs — interest and fees (448) (580) (354)
Other(e) (114) (144) 35
Ending balance $ 3,268 $ 2,570 $ 1,831
Ending Reserves — principal $ 3,172 $ 2,379 $ 1,691
Ending Reserves — interest and fees $96$ 191 $ 140
% of loans 10.0% 6.1% 3.4%
% of past due 279% 137% 119%
Average loans $ 34.8 $ 47.6 $ 47.1
Net write-off rate 8.5% 5.5% 3.5%
Net interest income divided by
average loans(f)(h) 9.0% 7.7% 7.3%
Net interest yield on cardmember loans(f) 9.7% 8.8% 8.9%
Worldwide cardmember
lending — managed basis(g):
Total loans $ 61.8 $ 72.0 $ 77.1
30 days past due as a % of total 3.6% 4.6% 2.8%
Net write-offs — principal (millions) $ 5,366 $ 4,065 $ 2,280
Average loans $ 63.8 $ 75.0 $ 68.2
Net write-off rate 8.4% 5.4% 3.3%
Net interest yield on cardmember loans(f) 10.2% 9.2% 9.0%
32