American Express 2010 Annual Report Download - page 58

SELECTED STATISTICAL INFORMATION
As of or for the Years Ended December 31,
(Billions, except percentages
and where indicated) 2010 2009 2008
Card billed business $ 107.9 $ 94.9 $ 106.1
Total cards-in-force (millions) 15.0 15.0 16.3
Basic cards-in-force (millions) 10.4 10.5 11.4
Average basic cardmember
spending (dollars)*$ 10,366 $ 8,758 $ 9,292
International Consumer Travel:
Travel sales (millions) $ 1,126 $ 985 $ 1,267
Travel commissions and fees/sales 8.0% 8.6% 8.1%
Total segment assets $ 25.3 $ 23.0
(f)
$ 20.7
(f)
Segment capital (millions) $ 2,199 $ 2,262 $ 2,240
Return on average segment capital
(a)
26.5% 15.1% 14.7%
Return on average tangible segment
capital
(a)
36.7% 20.1% 19.6%
Cardmember receivables:
Total receivables $ 6.7 $ 5.9 $ 5.6
90 days past billing as a % of total
(b)
1.0% 2.1% 3.1%
Net loss ratio (as a % of charge
volume)
(b)(c)
0.24% 0.36% 0.24%
Cardmember loans:
Total loans $ 9.3 $ 9.2 $ 9.5
30 days past due loans as a % of total 2.3% 3.3% 3.6%
Average loans $ 8.6 $ 8.9 $ 10.9
Net write-off rate 4.6% 6.8% 4.8%
Net interest income divided by average
loans
(d)(e)
11.2% 12.2% 8.7%
Net interest yield on cardmember loans
(d)
11.1% 12.2% 9.4%
* Proprietary cards only.
(a) Return on average segment capital is calculated by dividing (i) one-year period
segment income ($566 million, $332 million and $321 million for
December 31, 2010, 2009 and 2008, respectively) by (ii) one-year average
segment capital ($2.1 billion, $2.2 billion and $2.2 billion for December 31,
2010, 2009 and 2008, 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
from average segment capital average goodwill and other intangibles of
$592 million, $551 million and $544 million as of December 31, 2010, 2009
and 2008, respectively. Management believes that return on average tangible
segment capital is a useful measure of the profitability of its business.
(b) Effective January 1, 2010, the Company revised the time period in which past
due cardmember receivables in ICS are written off to when they are 180 days
past due or earlier, consistent with applicable bank regulatory guidance and
the write-off methodology adopted for USCS in the fourth quarter of 2008.
Previously, receivables were written off when they were 360 days past billing
or earlier. Therefore, the net write-offs for the first quarter of 2010 include
net write-offs of approximately $60 million for ICS resulting from this write-
off methodology change, which increased the net loss ratio and decreased the
90 days past billing metric for this segment, but did not have a substantial
impact on provisions for losses.
(c) Refer to “Consolidated Results of Operations — Selected Statistical
Information”, footnote (c) on page 32.
(d) Refer to “Consolidated Results of Operations — Selected Statistical
Information”, footnote (f) on page 32.
(e) Refer to “Consolidated Results of Operations — Selected Statistical
Information”, footnote (g) on page 32.
(f) Refer to “U.S. Card Services — Selected Statistical Information”, footnote (f)
on page 52.
CALCULATION OF NET INTEREST YIELD ON
CARDMEMBER LOANS
(a)
Years Ended December 31,
(Millions, except percentage and where indicated) 2010 2009
Net interest income $ 965 $ 1,082
Average loans (billions) $ 8.6 $ 8.9
Adjusted net interest income $ 946 $ 1,087
Adjusted average loans ( billions) $ 8.5 $ 8.9
Net interest income divided by average loans
(b)
11.2% 12.2%
Net interest yield on cardmember loans 11.1% 12.2%
(a) Refer to “Consolidated Results of Operations — Calculation of Net Interest
Yield on Cardmember Loans”, footnote (a) on page 33.
(b) Refer to “Consolidated Results of Operations — Selected Statistical
Information”, footnote (g) on page 32.
RESULTS OF OPERATIONS FOR THE THREE YEARS
ENDED DECEMBER 31, 2010
ICS reported segment income of $566 million for 2010, a
$234 million or 70 percent increase from $332 million in
2009, which increased $11 million or 3 percent from 2008.
The increase in segment income for 2010 is primarily due to
an increase in total revenues net of interest expense and a
decrease in provisions for losses, partially offset by an
increase in expenses. A significant portion of ICS segment
income in 2009 and 2008 is attributable to the Company’s
internal tax allocation process. See further discussion in the
Income Taxes section below.
Total Revenues Net of Interest Expense
In 2010, ICS total revenues net of interest expense increased
$121 million or 3 percent to $4.7 billion compared to 2009 due to
higher discount revenue, net card fees and other, partially offset
by lower interest income.
Discount revenue, net card fees, and other increased
$238 million or 7 percent to $3.7 billion in 2010 compared to
2009, driven primarily by the higher level of cardmember
spending and greater foreign-exchange conversion revenues.
The 14 percent increase in billed business in 2010 reflected
an 18 percent increase in average spending per proprietary basic
cards-in-force, partially offset by a 1 percent decrease in basic
cards-in-force. Assuming no changes in foreign currency
exchange rates from 2009 to 2010, billed business and
average spending per proprietary basic cards-in-force
increased 9 percent and 14 percent, respectively; volumes
increased across the major geographic regions, including an
increase of 13 percent in Latin America, 10 percent in Asia
Pacific, and 8 percent in both Canada and Europe
2
.
2
Refer to footnote 1 on page 33 under Consolidated Results of Operations for
the Three Years Ended December 31, 2010 relating to changes in foreign
exchange rates.
56
AMERICAN EXPRESS COMPANY
2010 FINANCIAL REVIEW