American Express 2015 Annual Report Download - page 74

U.S. CARD SERVICES
TABLE 9: USCS SELECTED INCOME STATEMENT DATA
Years Ended December 31,
(Millions, except percentages) 2015 2014 2013 Change 2015 vs. 2014 Change 2014 vs. 2013
Revenues
Non-interest revenues ......................... $13,180 $12,628 $ 12,019 $ 552 4% $609 5%
Interest income .............................. 6,267 5,786 5,565 481 8 221 4
Interest expense .............................. 654 604 693 50 8 (89) (13)
Net interest income ......................... 5,613 5,182 4,872 431 8 310 6
Total revenues net of interest expense ............. 18,793 17,810 16,891 983 6 919 5
Provisions for losses ............................ 1,453 1,396 1,250 57 4 146 12
Total revenues net of interest expense after
provisions for losses .......................... 17,340 16,414 15,641 926 6 773 5
Expenses
Marketing, promotion, rewards, Card Member
services and other .......................... 7,776 7,197 6,721 579 8 476 7
Salaries and employee benefits and other
operating expenses ......................... 4,209 4,117 3,926 92 2 191 5
Total expenses ............................. 11,985 11,314 10,647 671 6 667 6
Pretax segment income ......................... 5,355 5,100 4,994 255 5 106 2
Income tax provision ............................ 1,942 1,900 1,801 42 2 99 5
Segment income ............................... $ 3,413 $ 3,200 $ 3,193 $ 213 7% $ 7 —%
Effective tax rate ............................... 36.3% 37.3% 36.1%
USCS offers a wide range of card products and services to consumers and small businesses in the United States,
provides travel services to Card Members and other consumers, and operates a coalition loyalty business.
TOTAL REVENUES NET OF INTEREST EXPENSE
Non-interest revenues increased $552 million or 4 percent in 2015 compared to 2014, driven by 6 percent growth
in billed business, partially offset by a decline in the average discount rate and increases in contra-discount revenues,
such as cash rebate rewards from new Card Member acquisition offers and payments under previously renewed
cobrand partnership agreements. The increase in billed business was primarily driven by 6 percent higher cards-in-
force and a 1 percent increase in average spending per proprietary basic card.
Net interest income increased $481 million or 8 percent in 2015 compared to 2014, due to higher interest income
resulting from higher average Card Member loans, partially offset by higher interest expense.
Total revenues net of interest expense increased $919 million or 5 percent in 2014 compared to 2013, primarily
driven by higher discount revenue, as a result of 8 percent growth in billed business, partially offset by a decrease in
the average discount rate and higher cash rebate rewards. The increase also reflected higher net interest income,
primarily driven by higher average Card Member loans and lower funding costs.
PROVISIONS FOR LOSSES
Overall, provisions for losses increased $57 million or 4 percent in 2015 compared to 2014. Charge card provision
for losses decreased $31 million or 7 percent, primarily due to a reserve release in 2015 versus a reserve build in 2014,
partially offset by higher write-off rates. Card Member loans provision for losses increased $88 million or 9 percent,
driven by a higher reserve build in the current year, versus a reserve release in 2014, due to a small increase in
delinquency rates combined with an increase in loan balances, partially offset by lower net write-offs and the impact
related to transferring the HFS portfolios to Card Member loans and receivables HFS, as credit costs related to the
HFS portfolios are reported in Other expenses through a valuation allowance adjustment beginning in December 2015.
Provisions for losses increased $146 million in 2014 compared to 2013, primarily due to higher average Card
Member loans, a slower reserve rate improvement and a lower reserve release in 2014, partially offset by the benefit of
lower net write-offs for Card Member loans.
Refer to Table 10 for the charge card and lending write-off rates for 2015, 2014 and 2013.
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