American Express 2013 Annual Report Download - page 21

AMERICAN EXPRESS COMPANY
2013 FINANCIAL REVIEW
AMERICAN EXPRESS COMPANY CONSOLIDATED RESULTS OF OPERATIONS
Refer to the “Glossary of Selected Terminology” for the definitions of certain key terms and related information appearing within this section.
TABLE 1: SUMMARY OF THE COMPANY’S FINANCIAL PERFORMANCE
Years Ended December 31,
(Millions, except percentages and per share amounts) 2013 2012 2011
Change
2013 vs. 2012
Change
2012 vs. 2011
Total revenues net of interest expense $ 32,974 $ 31,555 $ 29,962 $ 1,419 4% $ 1,593 5%
Provisions for losses 2,110 1,990 1,112 120 6 878 79
Expenses 22,976 23,114 21,894 (138) (1) 1,220 6
Income from continuing operations 5,359 4,482 4,899 877 20 (417) (9)
Net income 5,359 4,482 4,935 877 20 (453) (9)
Earnings per common share from continuing operations – diluted(a) 4.88 3.89 4.09 0.99 25 (0.20) (5)
Earnings per common share – diluted(a) $ 4.88 $ 3.89 $ 4.12 $ 0.99 25% $ (0.23) (6)%
Return on average equity(b) 27.8% 23.1% 27.7%
Return on average tangible common equity(c) 34.9% 29.2% 35.8%
(a) Earnings per common share from continuing operations — diluted and Earnings per common share — diluted were both reduced by the impact of earnings allocated
to participating share awards and other items of $47 million, $49 million and $58 million for the years ended December 31, 2013, 2012 and 2011, respectively.
(b) ROE is computed by dividing (i) one-year period net income ($5.4 billion, $4.5 billion and $4.9 billion for 2013, 2012 and 2011, respectively) by (ii) one-year average
total shareholders’ equity ($19.3 billion, $19.4 billion and $17.8 billion for 2013, 2012 and 2011, respectively).
(c) Return on average tangible common equity, a non-GAAP measure, is computed in the same manner as ROE except the computation of average tangible common
equity, a non-GAAP measure, excludes from average total shareholders’ equity, average goodwill and other intangibles of $4.1 billion, $4.2 billion and $4.2 billion as of
December 31, 2013, 2012 and 2011, respectively. The Company believes return on average tangible common equity is a useful measure of the profitabilityofits
business.
TABLE 2: TOTAL REVENUES NET OF INTEREST EXPENSE SUMMARY
Years Ended December 31,
(Millions, except percentages, per share amounts and ratio data) 2013 2012 2011
Change
2013 vs. 2012
Change
2012 vs. 2011
Discount revenue $ 18,695 $ 17,739 $ 16,734 $ 956 5% $ 1,005 6%
Net card fees 2,631 2,506 2,448 125 5 58 2
Travel commissions and fees 1,913 1,940 1,971 (27) (1) (31) (2)
Other commissions and fees 2,414 2,317 2,269 97 4 48 2
Other 2,274 2,425 2,164 (151) (6) 261 12
Total non-interest revenues 27,927 26,927 25,586 1,000 4 1,341 5
Total interest income 7,005 6,854 6,696 151 2 158 2
Total interest expense 1,958 2,226 2,320 (268) (12) (94) (4)
Net interest income 5,047 4,628 4,376 419 9 252 6
Total revenues net of interest expense $ 32,974 $ 31,555 $ 29,962 $ 1,419 4% $ 1,593 5%
TOTAL REVENUES NET OF INTEREST EXPENSE
Discount revenue increased $956 million or 5 percent in 2013 as
compared to 2012, and $1,005 million or 6 percent in 2012 as
compared to 2011. The 2013 increase reflects a 7 percent increase in
worldwide billed business, which was partially offset by faster growth
in GNS billings than overall Company billings, higher contra-revenue
items, including cash rebate rewards, and a slight decline in the
average discount rate. U.S. billed business and billed business outside
the U.S. increased 8 percent and 6 percent, respectively, in 2013 as
compared to the prior year, reflecting increases in average spending
per proprietary basic card and basic cards-in-force. Excluding the
impact of changes in foreign exchange rates billed business outside the
U.S. increased 10 percent. See Tables 5 and 6 for more detail on billed
business performance. The 2012 increase in discount revenue as
compared to 2011 reflects an 8 percent increase in worldwide billed
business volumes, partially offset by a slight decline in the average
discount rate and higher contra-revenue items, including cash rebate
rewards and corporate client incentives. The average discount rate was
2.51 percent and 2.52 percent for 2013 and 2012, respectively. Over
time, changes in the mix of spending by location and industry,
volume-related pricing discounts, strategic investments, certain
pricing initiatives and other factors will likely result in further erosion
of the average discount rate.
Net card fees increased $125 million or 5 percent in 2013 as
compared to 2012, and $58 million or 2 percent in 2012 as compared
to 2011. The 2013 increase reflects higher average proprietary cards-
in-force and higher average card fees in ICS and USCS. Excluding the
impact of changes in foreign exchange rates, net card fees increased 8
percent in 2013 compared to 2012.2The increase in 2012 as compared
to 2011 reflects higher average proprietary cards-in-force.
2The foreign currency adjusted information, a non-GAAP measure,
assumes a constant exchange rate between the periods being
compared for purposes of currency translation into U.S. dollars (i.e.,
assumes the foreign exchange rates used to determine results for the
current year apply to the corresponding year period against which
such results are being compared). The Company believes the
presentation of information on a foreign currency adjusted basis is
helpful to investors by making it easier to compare the Company’s
performance in one period to that of another period without the
variability caused by fluctuations in currency exchange rates.
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