American Express 2015 Annual Report Download - page 65

CONSOLIDATED RESULTS OF OPERATIONS
As a result of the GBT JV transaction, we deconsolidated the Global Business Travel net assets, effective June 30,
2014, resulting in a lack of comparability between the periods presented.
As mentioned previously, effective December 1, 2015, we transferred the Card Member loans and receivables
related to the HFS portfolios (included in the USCS segment), to Card Member loans and receivables HFS on the
Consolidated Balance Sheets. The primary impacts beyond the HFS classification on the Consolidated Balance Sheets
are to provisions for losses and credit metrics, which no longer reflect amounts related to these loans and receivables,
as credit costs are reported in Other expenses through a valuation allowance adjustment. Other, non-credit related
metrics (i.e., billed business, cards-in-force, net interest yield), continue to reflect amounts related to the HFS
portfolios. Refer to Note 2 to the “Consolidated Financial Statements” for additional information.
The relative strengthening of the U.S. dollar over the periods of comparison has had an impact on our results of
operations. Where meaningful in describing our performance, foreign currency-adjusted amounts, which exclude the
impact of changes in the foreign exchange (FX) rates, have been provided.
TABLE 1: SUMMARY OF FINANCIAL PERFORMANCE
Years Ended December 31,
(Millions, except percentages and per share amounts) 2015 2014 2013 Change 2015 vs. 2014 Change 2014 vs. 2013
Total revenues net of interest expense ........... $ 32,818 $34,188 $32,870 $(1,370) (4)% $1,318 4%
Provisions for losses ........................... 1,988 2,044 1,832 (56) (3) 212 12
Expenses .................................... 22,892 23,153 23,150 (261) (1) 3 —
Net income .................................. 5,163 5,885 5,359 (722) (12) 526 10
Earnings per common share — diluted (a) ......... $ 5.05 $ 5.56 $ 4.88 $ (0.51) (9)% $ 0.68 14%
Return on average equity (b) .................... 24.0% 29.1% 27.8%
Return on average tangible common equity (c) ..... 31.0% 35.9% 34.9%
(a) Earnings per common share — diluted was reduced by the impact of (i) earnings allocated to participating share awards and other items of $38
million, $46 million and $47 million for the years ended December 31, 2015, 2014 and 2013, respectively, and (ii) dividends on preferred shares
of $62 million for the year ended December 31, 2015, and nil for both the years ended December 31, 2014 and 2013.
(b) Return on Average Equity (ROE) is computed by dividing (i) one-year period net income ($5.2 billion, $5.9 billion and $5.4 billion for 2015, 2014
and 2013, respectively) by (ii) one-year average total shareholders’ equity ($21.5 billion, $20.3 billion and $19.3 billion for 2015, 2014 and 2013,
respectively).
(c) Return on average tangible common equity (ROTCE), 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 one-year average total shareholders’ equity, one-year average
goodwill and other intangibles of $3.8 billion, $3.9 billion and $4.1 billion as of December 31, 2015, 2014 and 2013, respectively, and one-year
average preferred shares of $1.6 billion, $0.7 billion and nil as of December 31, 2015, 2014, and 2013, respectively. We believe ROTCE is a useful
measure of the profitability of our business.
TABLE 2: TOTAL REVENUES NET OF INTEREST EXPENSE SUMMARY
Years Ended December 31,
(Millions, except percentages) 2015 2014 2013 Change 2015 vs. 2014 Change 2014 vs. 2013
Discount revenue ............................... $ 19,297 $19,389 $ 18,591 $ (92) —% $ 798 4%
Net card fees ................................... 2,700 2,712 2,631 (12) — 81 3
Travel commissions and fees ..................... 349 1,118 1,913 (769) (69) (795) (42)
Other commissions and fees ...................... 2,517 2,508 2,414 9 — 94 4
Other .......................................... 2,033 2,989 2,274 (956) (32) 715 31
Total non-interest revenues ....................... 26,896 28,716 27,823 (1,820) (6) 893 3
Total interest income ............................ 7,545 7,179 7,005 366 5 174 2
Total interest expense ........................... 1,623 1,707 1,958 (84) (5) (251) (13)
Net interest income ............................. 5,922 5,472 5,047 450 8 425 8
Total revenues net of interest expense .......... $ 32,818 $34,188 $32,870 $(1,370) (4)% $1,318 4%
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