American Express 2010 Annual Report Download - page 60

SELECTED STATISTICAL INFORMATION
As of or for the Years Ended December 31,
(Billions, except percentages
and where indicated) 2010 2009 2008
Card billed business $ 132.8 $ 111.2 $ 129.2
Total cards-in-force (millions) 7.1 7.1 7.1
Basic cards-in-force (millions) 7.1 7.1 7.1
Average basic cardmember
spending (dollars)*$ 18,927 $ 15,544 $ 18,527
Global Corporate Travel:
Travel sales $ 17.5 $ 14.6 $ 21.0
Travel commissions and fees/sales 8.2% 8.8% 7.8%
Total segment assets $ 18.9 $ 16.1
(d)
$ 25.2
(d)
Segment capital (millions) $ 3,650 $ 3,719 $ 3,611
Return on average segment capital
(a)
13.2% 9.7% 14.1%
Return on average tangible segment
capital
(a)
28.6% 20.8% 30.5%
Cardmember receivables:
Total receivables $ 11.3 $ 9.8 $ 9.4
90 days past billing as a % of total
(b)
0.8% 1.4% 2.7%
Net loss ratio (as a % of charge
volume)
(b)(c)
0.11% 0.19% 0.13%
* Proprietary cards only.
(a) Return on average segment capital is calculated by dividing (i) one-year
period segment income ($474 million, $350 million and $454 million for
2010, 2009 and 2008, respectively) by (ii) one-year average segment capital
($3.6 billion, $3.6 billion and $3.2 billion for 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 $1.9 billion,
$1.9 billion and $1.7 billion at December 31, 2010, 2009 and 2008,
respectively. The Company believes the 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 Global Commercial Services 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 U.S. Card
Services 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
$48 million for Global Commercial Services 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. The metrics for prior periods have not been
revised for this change as it was deemed immaterial.
(c) Refer to “Consolidated Results of Operations — Selected Statistical
Information”, footnote(c) on page 32.
(d) Refer to “U.S. Card Services — Selected Statistical Information”, footnote
(f) on page 52.
RESULTS OF OPERATIONS FOR THE THREE YEARS
ENDED DECEMBER 31, 2010
GCS reported segment income of $474 million for 2010, a
$124 million or 35 percent increase from $350 million in
2009, which decreased $104 million or 23 percent from 2008.
Total Revenues Net of Interest Expense
In 2010, GCS total revenues net of interest expense increased
$419 million or 11 percent to $4.4 billion due to increased
discount revenue, net card fees, and other and higher interest
income, partially offset by higher interest expense.
Discount revenue, net card fees, and other revenues increased
$464 million or 11 percent to $4.6 billion in 2010 primarily
driven by higher cardmember spending and greater travel
commissions and fees. The 19 percent increase in billed
business in 2010 was driven by the 22 percent increase in
average spending per proprietary basic cards-in-force.
Adjusting for the impact of foreign exchange translation,
billed business and average spending per proprietary basic
cards-in-force grew 19 percent and 21 percent, respectively
3
,
volume increased 19 percent within the United States, compared
to an increase of 18 percent outside the United States
3
.
Interest income increased $2 million or 40 percent to
$7 million in 2010 compared to 2009.
Interest expense increased $47 million or 26 percent to
$227 million in 2010 compared to 2009 driven by increased
funding requirements due to a higher average receivable balance
and a higher cost of funds.
Total revenues net of interest expense of $4.0 billion in 2009
decreased $634 million or 14 percent compared to 2008 due to
decreased discount revenue, net card fees, and other and lower
interest income, partially offset by lower interest expense.
Provisions for Losses
Provisions for losses decreased $19 million or 11 percent to
$158 million in 2010 compared to 2009, driven by improved
credit performance within the underlying portfolio. The charge
card net loss ratio (as a percentage of charge volume) was
0.11 percent in 2010 versus 0.19 percent last year. Provisions
for losses decreased $54 million or 23 percent to $177 million in
2009 compared to 2008, reflecting improved credit trends as
2009 progressed.
58
AMERICAN EXPRESS COMPANY
2010 FINANCIAL REVIEW
3
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.