American Express 2011 Annual Report Download - page 24

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AMERICAN EXPRESS COMPANY
2011 FINANCIAL REVIEW
Total Revenues Net of Interest Expense
Consolidated total revenues net of interest expense for 2011 of
$30.0 billion were up $2.4 billion or 9 percent from 2010. The
increase in total revenues net of interest expense primarily
reflects higher discount revenues, increased other commissions
and fees, greater travel commissions and fees, higher net card
fees, and higher other revenues, partially offset by lower net
interest income. Consolidated total revenues net of interest
expense for 2010 of $27.6 billion were up $3.2 billion or 13
percent from 2009, largely as a result of new GAAP governing
consolidations and VIEs, which caused the reporting of write-
offs related to securitized loans to move from net securitization
income in 2009 to provisions for cardmember loan losses in
2010; in addition, total revenues net of interest expense also
reflects higher discount revenues, increased other commissions
and fees, greater travel commissions and fees, and higher net
interest income, partially offset by lower other revenue and
reduced net card fees.
Discount revenue for 2011 increased $1.9 billion or 12 percent
as compared to 2010 to $16.7 billion as a result of a 15 percent
increase in worldwide billed business, partially offset by a slightly
lower discount rate. The lower revenue growth versus total billed
business growth reflects the relatively faster growth in billed
business related to GNS, where discount revenue is shared with
card-issuing partners, and higher contra-revenue items,
including cash rewards, corporate incentive payments and
partner payments. The 15 percent increase in worldwide billed
business in 2011 reflected an increase in proprietary billed
business of 13 percent. The average discount rate was 2.54
percent and 2.55 percent for 2011 and 2010, respectively. Over
time, repricing initiatives, changes in the mix of spending by
location and industry, volume-related pricing discounts and
investments in growth businesses will likely result in some
erosion of the average discount rate.
U.S. billed business and billed business outside the United
States were up 13 percent and 19 percent, respectively, in 2011,
reflecting increases in average spending per proprietary basic
card and basic cards-in-force.
The table below summarizes selected statistics for billed business and average spend:
2011 2010
Percentage Increase
(Decrease)
Percentage Increase
(Decrease) Assuming
No Changes in
Foreign Exchange
Rates(a)
Percentage Increase
(Decrease)
Percentage Increase
(Decrease) Assuming
No Changes in
Foreign Exchange
Rates(a)
Worldwide(b)
Billed business 15% 13% 15% 14%
Proprietary billed business 13 12 13 13
GNS billed business(c) 27 22 28 24
Average spending per proprietary basic card 12 11 18 17
Basic cards-in-force 74
United States(b)
Billed business 13 13
Average spending per proprietary basic card 11 18
Basic cards-in-force 4(1)
Proprietary consumer card billed business(d) 11 12
Proprietary small business billed business(d) 14 11
Proprietary Corporate Services billed business(e) 14 19
Outside the United States(b)
Billed business 19 13 19 15
Average spending per proprietary basic card 16 10 20 16
Basic cards-in-force 11 9
Proprietary consumer and small business billed business(f) 15 9 14 9
Proprietary Corporate Services billed business(e) 19 13 20 18
(a) Refer to footnote 1 on page 21 relating to changes in foreign exchange rates.
(b) Captions in the table above not designated as “proprietary” or “GNS” include both proprietary and GNS data.
(c) Included in the Global Network & Merchant Services (GNMS) segment.
(d) Included in the USCS segment.
(e) Included in the Global Commercial Services (GCS) segment.
(f) Included in the International Card Services (ICS) segment.
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