American Express 2015 Annual Report Download - page 75
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EXPENSES
Marketing, promotion, rewards, Card Member services and other expenses increased $579 million or 8 percent in
2015 compared to 2014, driven in part by a $233 million or 5 percent increase in Card Member rewards expense. The
increase in rewards costs was driven by higher cobrand rewards expenses of $252 million, partially offset by a
decrease in Membership Rewards expense of $19 million. The increase in cobrand rewards expense was driven by
higher spending volumes and rate increases, which were due in part to the previously renewed cobrand partnership
agreements. The decrease in Membership Rewards expense was primarily driven by slower growth in the URR and a
decline in the WAC per point assumption, including the impact of a $96 million charge in the fourth quarter of 2014
related to the Delta partnership renewal, partially offset by higher spending volumes. Card Member services and other
expenses increased $207 million or 42 percent in 2015 compared to 2014, primarily driven by higher costs related to
renewed cobrand partnership agreements. Marketing and promotion increased $139 million or 9 percent in 2015
compared to 2014, reflecting elevated levels of spending on growth initiatives.
Salaries and employee benefits and other operating expenses increased $92 million or 2 percent in 2015,
compared to 2014, primarily driven by higher spending on growth initiatives and the December 2015 valuation
allowance adjustment related to the HFS portfolios mentioned previously, partially offset by lower fraud losses in the
current year and a change in the estimated value of certain investments in our Community Reinvestment Act (CRA)
portfolio in the prior year.
Total expenses increased $667 million in 2014 compared to 2013, primarily driven by higher marketing and
promotion expenses, higher cobrand rewards expenses related to higher spending volumes and an increase in
Membership Rewards expense, which was due to higher new points earned and a higher WAC per point assumption,
including the impact of the previously mentioned charge related to the Delta partnership renewal. The increase also
reflected higher salaries and employee benefits and other expenses, driven by an increase in card-related fraud losses,
a change in the estimated value of certain investments in our CRA portfolio and higher restructuring charges in 2014.
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