American Express 2009 Annual Report Download - page 53

2009 FINANCIAL REVIEW
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
Card billed business $ 339.4 $ 382.0 $ 375.2
Total cards-in-force (millions) 39.5 44.2 43.3
Basic cards-in-force (millions) 29.5 32.9 32.3
Average basic cardmember spending
(dollars) $10,957 $11,594 $12,011
U.S. Consumer Travel:
Travel sales (millions) $ 2,561 $ 3,113 $ 2,975
Travel commissions and fees/sales 8.4% 8.2% 8.0%
Total segment assets $ 57.9 $ 77.8 $ 82.3
Segment capital (millions)(b) $ 6,510 $ 4,788 $ 4,454
Return on average segment capital(c) 4.5% 18.0% 40.2%
Return on average tangible segment
capital(c) 4.8% 19.0% 41.8%
Cardmember receivables:
Total receivables $ 17.8 $ 17.8 $ 21.4
30 days past due as a % of total 1.8% 3.7% N/A
Average receivables $ 16.1 $ 19.2 $ 19.7
Net write-off rate(d) 3.8% 3.6% N/A
Cardmember loans — owned
basis(e):
Total loans $ 23.5 $ 32.7 $ 43.3
30 days past due loans as a % of
total 3.7% 4.7% 2.8%
Average loans $ 25.9 $ 36.7 $ 37.1
Net write-off rate 9.1% 5.8% 3.1%
Net interest income divided by
average loans(f)(h) 9.1% 7.0% 6.7%
Net interest yield on cardmember
loans(f) 9.0% 8.5% 8.9%
Cardmember loans — managed
basis(g):
Total loans $ 52.6 $ 62.4 $ 65.9
30 days past due loans as a % of
total 3.7% 4.7% 2.8%
Average loans $ 54.9 $ 64.0 $ 58.2
Net write-off rate 8.7% 5.5% 3.1%
Net interest yield on cardmember
loans(f)(g) 9.9% 9.1% 9.1%
(a) See Glossary of Selected Terminology for the definitions of certain
key terms and related information.
(b) Segment capital at the end of each respective period represents
capital allocated to a segment based upon specific business
operational needs, risk measures, and regulatory capital
requirements.
(c) Return on average segment capital is calculated by dividing
(i) segment income ($249 million, $852 million and $1.8 billion
for 2009, 2008 and 2007, respectively) by (ii) average segment
capital ($5.6 billion, $4.7 billion and $4.5 billion for 2009, 2008
and 2007, respectively). Return on average tangible segment
capital is computed in the same manner as return on average
segment capital except the computation of average tangible
segment capital excludes average goodwill and other intangibles
of $432 million, $243 million and $170 million at December 31,
2009, 2008 and 2007, respectively. The Company believes the
return on average tangible segment capital is a useful measure of
the profitability of its business.
(d) In the fourth quarter of 2008, the Company revised the time
period in which past due cardmember receivables in USCS are
written off to 180 days past due, consistent with applicable bank
regulatory guidance. Previously, receivables were written off when
360 days past billing. The net write-offs for 2008 include
approximately $341 million resulting from this write-off
methodology change, which is not reflected in the table above. If
the $341 million had been included in USCS write-offs, the net
write-off rate would have been 5.4 percent for 2008.
(e) “Owned,” a GAAP basis measurement, reflects only cardmember
loans included on the Company’s Consolidated Balance Sheets.
(f) See below for calculations of net interest yield on cardmember
loans and the ratio of net interest income divided by average loans
presented on an owned basis. The Company believes net interest
yield on cardmember loans (on both an owned and managed
basis) is useful to investors because it provides a measure of
profitability of the Company’s cardmember loans portfolio.
(g) Includes on-balance sheet cardmember loans and off-balance
sheet securitized cardmember loans. The difference between the
“owned basis” (GAAP) information and “managed basis”
information is attributable to the effects of securitization
activities. Refer to the information set forth under USCS Selected
Financial Information for further discussion of the managed basis
presentation.
(h) This calculation includes elements of total interest income and
total interest expense that are not attributable to the cardmember
loan portfolio, and thus is not representative of net interest yield
on cardmember loans. The calculation includes interest income
and interest expense attributable to investment securities and
other interest-bearing deposits as well as to cardmember loans,
and interest expense attributable to other activities, including
cardmember receivables.
CALCULATION OF NET INTEREST YIELD ON
CARDMEMBER LOANS(a)
Years Ended December 31,
(Millions, except percentages
and where indicated) 2009 2008
Owned Basis:
Net interest income $2,366 $2,570
Average loans (billions)$ 25.9 $ 36.7
Adjusted net interest income $2,326 $3,127
Adjusted average loans (billions)$ 26.0 $ 36.8
Net interest income divided by average loans 9.1% 7.0%
Net interest yield on cardmember loans 9.0% 8.5%
(a) See Glossary of Selected Terminology for the definitions of certain
key terms and related information.
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