American Express 2012 Annual Report Download - page 111

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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents certain selected financial information as of or for the years ended December 31, 2012, 2011 and 2010.
(Millions, except where indicated) USCS ICS GCS GNMS
Corporate &
Other(a) Consolidated
2012
Non-interest revenues $ 11,469 $ 4,561 $ 4,995 $ 5,005 $ 924 $ 26,954
Interest income 5,342 1,147 11 23 331 6,854
Interest expense 765 402 257 (243) 1,045 2,226
Total revenues net of interest expense 16,046 5,306 4,749 5,271 210 31,582
Total provision 1,429 330 136 74 21 1,990
Pretax income (loss) from continuing operations 4,069 659 960 2,219 (1,456) 6,451
Income tax provision (benefit) 1,477 25 316 776 (625) 1,969
Income (loss) from continuing operations $ 2,592 $ 634 $ 644 $ 1,443 $ (831) $ 4,482
Total equity (billions) $8.7$2.9$3.6$2.0$1.7$18.9
2011
Non-interest revenues $ 10,804 $ 4,470 $ 4,880 $ 4,713 $ 719 $ 25,586
Interest income 5,074 1,195 9 5 413 6,696
Interest expense 807 426 264 (224) 1,047 2,320
Total revenues net of interest expense 15,071 5,239 4,625 4,942 85 29,962
Total provision 687 268 76 75 6 1,112
Pretax income (loss) from continuing operations 4,129 762 1,075 1,979 (989) 6,956
Income tax provision (benefit) 1,449 39 337 686 (454) 2,057
Income (loss) from continuing operations $ 2,680 $ 723 $ 738 $ 1,293 $ (535) $ 4,899
Total equity (billions) $ 8.8 $ 2.8 $ 3.6 $ 2.0 $ 1.6 $ 18.8
2010
Non-interest revenues $ 9,997 $ 3,784 $ 4,347 $ 4,101 $ 703 $ 22,932
Interest income 5,277 1,287 7 4 498 7,073
Interest expense 812 428 227 (200) 1,156 2,423
Total revenues net of interest expense 14,462 4,643 4,127 4,305 45 27,582
Total provision 1,591 392 157 61 6 2,207
Pretax income (loss) from continuing operations 3,504 589 723 1,589 (441) 5,964
Income tax provision (benefit) 1,279 52 273 564 (261) 1,907
Income (loss) from continuing operations $ 2,225 $ 537 $ 450 $ 1,025 $ (180) $ 4,057
Total equity (billions) $ 7.4 $ 2.2 $ 3.7 $ 1.9 $ 1.0 $ 16.2
(a) Corporate & Other includes adjustments and eliminations for intersegment activity.
Total Revenues Net of Interest Expense
The Company allocates discount revenue and certain other
revenues among segments using a transfer pricing methodology.
Segments earn discount revenue based on the volume of
merchant business generated by cardmembers. Within the USCS,
ICS and GCS segments, discount revenue reflects the issuer
component of the overall discount rate; within the GNMS
segment, discount revenue reflects the network and merchant
component of the overall discount rate. Total interest income
and net card fees are directly attributable to the segment in
which they are reported.
Provisions for Losses
The provisions for losses are directly attributable to the segment
in which they are reported.
Expenses
Marketing, promotion, rewards and cardmember services
expenses are reflected in each segment based on actual expenses
incurred, with the exception of brand advertising, which is
reflected in the GNMS segment. Rewards and cardmember
services expenses are reflected in each segment based on actual
expenses incurred within each segment. Salaries and employee
benefits and other operating expenses reflect expenses such as
professional services, occupancy and equipment and
communications incurred directly within each segment. In
addition, expenses related to the Company’s support services,
such as technology costs, are allocated to each segment based on
support service activities directly attributable to the segment.
Other overhead expenses, such as staff group support
functions, are allocated from Corporate & Other to the other
segments based on each segment’s relative level of pretax
income. Financing requirements are managed on a consolidated
basis. Funding costs are allocated based on segment
funding requirements.
Capital
Each business segment is allocated capital based on established
business model operating requirements, risk measures and
regulatory capital requirements. Business model operating
requirements include capital needed to support operations and
specific balance sheet items. The risk measures include
considerations for credit, market and operational risk.
Income Taxes
An income tax provision (benefit) is allocated to each business
segment based on the effective tax rates applicable to various
businesses that make up the segment.
109