American Express 2011 Annual Report Download - page 22

AMERICAN EXPRESS COMPANY
2011 FINANCIAL REVIEW
AMERICAN EXPRESS COMPANY
SELECTED STATISTICAL INFORMATION
As of or for the Years Ended December 31,
(Billions, except percentages
and where indicated) 2011 2010 2009
Worldwide cardmember receivables
Total receivables $ 40.9 $ 37.3 $ 33.7
Loss reserves (millions)
Beginning balance $ 386 $ 546 $ 810
Provision for losses on authorized
transactions(a) 603 439 773
Net write-offs (560) (598) (1,131)
Other 9(1) 94
Ending balance $ 438 $ 386 $ 546
% of receivables 1.1% 1.0% 1.6%
Net write-off rate – principal – USCS(b) 1.7% 1.6% 3.8%
Net write-off rate – principal and fees – USCS(b) 1.9% 1.8% 4.2%
30 days past due as a % of total – USCS 1.9% 1.5% 1.8%
Net loss ratio as a % of charge
volume – ICS/GCS(c)(d) 0.09% 0.16% 0.25%
90 days past billing as a % of total – ICS/GCS(c) 0.9% 0.9% 1.6%
Worldwide cardmember loans –
GAAP basis portfolio
Total loans $ 62.6 $ 60.9 $ 32.8
30 days past due as a % of total 1.5% 2.1% 3.6%
Loss reserves (millions)
Beginning balance $ 3,646 $ 3,268 $ 2,570
Adoption of GAAP consolidation standard(e) –2,531 –
Provision for losses on authorized
transactions 145 1,445 4,209
Net write-offs – principal (1,720) (3,260) (2,949)
Net write-offs – interest and fees (201) (359) (448)
Other 421 (114)
Ending balance $ 1,874 $ 3,646 $ 3,268
Ending Reserves – principal $ 1,818 $ 3,551 $ 3,172
Ending Reserves – interest and fees $56$95$96
%ofloans 3.0% 6.0% 10.0%
%ofpastdue 206% 287% 279%
Average loans $ 59.1 $ 58.4 $ 34.8
Net write-off rate – principal only(b) 2.9% 5.6% 8.5%
Net write-off rate – principal, interest and
fees(b) 3.3% 6.2% 9.8%
Net interest income divided by
average loans(f)(g) 7.9% 8.3% 9.0%
Net interest yield on cardmember loans(f) 9.1% 9.7% 10.1%
Worldwide cardmember loans –
Managed basis portfolio
Total loans $ 62.6 $ 60.9 $ 61.8
30 days past due as a % of total 1.5% 2.1% 3.6%
Net write-offs – principal (millions) $ 1,720 $ 3,260 $ 5,366
Average loans $ 59.1 $ 58.4 $ 63.8
Net write-off rate – principal only(b) 2.9% 5.6% 8.4%
Net write-off rate – principal, interest and
fees(b) 3.3% 6.2% 9.7%
Net interest yield on cardmember loans(f) 9.1% 9.7% 10.4%
(a) Represents loss provisions for cardmember receivables consisting of
principal (resulting from authorized transactions) and fee reserve
components.
(b) The Company presents a net write-off rate based on principal losses only
(i.e., excluding interest and/or fees) to be consistent with industry
convention. In addition, because the Company’s practice is to include
uncollectible interest and/or fees as part of its total provision for losses, a net
write-off rate including principal, interest and/or fees is also presented.
(c) Effective January 1, 2010, the Company revised the time period in which
past due cardmember receivables in International Card Services and 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 for U.S. Card Services. 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 International Card Services and approximately $48 million for
Global Commercial Services resulting from this write-off methodology
change, which increased the net loss ratios and decreased the 90 days past
billing metrics for these segments, but did not have a substantial impact on
provisions for losses.
(d) Beginning with the first quarter of 2010, the Company has revised the net
loss ratio to exclude net write-offs relatedtounauthorizedtransactions,
consistent with the methodology for calculation of the net write-off rate for
U.S. Card Services. The metrics for prior periods have not been revised for
this change as it was deemed immaterial.
(e) In accordance with new GAAP governing consolidations and VIEs, which
resulted in the consolidation of the American Express Credit Account
Master Trust (the Lending Trust) beginning January 1, 2010, $29.0 billion of
additional cardmember loans along with a $2.5 billion loan loss reserve were
recorded on the Company’s Consolidated Balance Sheets.
(f) See below for calculation of net interest yield on cardmember loans, a
non-GAAP measure, and net interest income divided by average loans, a
GAAP measure. The Company believes net interest yield on cardmember
loans is useful to investors because it provides a measure of profitability of
the Company’s cardmember loan portfolio.
(g) 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. 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.
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