American Express 2015 Annual Report Download - page 82

GLOBAL NETWORK & MERCHANT SERVICES
TABLE 15: GNMS 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 ...................................... $5,236 $5,426 $5,229 $(190) (4)% $ 197 4%
Interest income ............................................ 98 52 32 46 88 20 63
Interest expense ........................................... (194) (269) (252) 75 (28) (17) 7
Net interest income ....................................... 292 321 284 (29) (9) 37 13
Total revenues net of interest expense .......................... 5,528 5,747 5,513 (219) (4) 234 4
Provisions for losses .......................................... 54 93 67 (39) (42) 26 39
Total revenues net of interest expense after provisions for losses . . . 5,474 5,654 5,446 (180) (3) 208 4
Expenses
Marketing, promotion, rewards, Card Member services and
other .................................................... 698 819 704 (121) (15) 115 16
Salaries and employee benefits and other operating expenses .... 2,001 2,215 2,273 (214) (10) (58) (3)
Total expenses ........................................... 2,699 3,034 2,977 (335) (11) 57 2
Pretax segment income ....................................... 2,775 2,620 2,469 155 6 151 6
Income tax provision .......................................... 1,004 960 894 44 5 66 7
Segment income ............................................. $ 1,771 $1,660 $ 1,575 $ 111 7% $ 85 5%
Effective tax rate ............................................. 36.2% 36.6% 36.2%
GNMS operates a global payments network that processes and settles proprietary and non-proprietary card
transactions. GNMS acquires merchants; leverages our global closed-loop network to offer multi-channel marketing
programs and capabilities, services and reporting and analytical data to our merchants around the world; and provides
financing products for qualified merchants. It also enters into partnership agreements with third-party card issuers
and acquirers to license the American Express brand and broaden the Card Member and merchant base for our
network worldwide.
TOTAL REVENUES NET OF INTEREST EXPENSE
Non-interest revenues decreased $190 million or 4 percent in 2015 compared to 2014. FX-adjusted non-interest
revenues increased 2 percent, primarily due to higher royalties from our GNS bank partners and an increase in
discount revenue driven by 2 percent growth in global worldwide card billed business.5
Net interest income decreased $29 million or 9 percent in 2015 compared to 2014, due to a reduction in the
interest expense credit, which was partially offset by higher interest income on our merchant financing loans. The
interest expense credit relates to internal transfer pricing and funding rates, which resulted in a net benefit for GNMS
due to its merchant payables.
Total revenues net of interest expense increased $234 million or 4 percent in 2014 compared to 2013, primarily
due to higher merchant-related revenues as a result of global worldwide card billed business growth of 7 percent, and
an increase in net interest income.
PROVISIONS FOR LOSSES
Provisions for losses decreased $39 million or 42 percent in 2015 compared to 2014, and increased $26 million or
39 percent in 2014 compared to 2013. The change in both periods reflected a merchant-related charge in the fourth
quarter of 2014.
EXPENSES
Marketing, promotion, rewards, Card Member services and other expenses decreased $121 million or 15 percent
in 2015 compared to 2014, primarily driven by the reinvestment of a significant portion of the gain from the business
travel joint venture transaction in growth initiatives in the prior year.
Salaries and employee benefits and other operating expenses decreased $214 million or 10 percent in 2015
compared to 2014, primarily driven by a litigation reserve release in the third quarter of 2015, associated with the
rejected 2013 merchant litigation settlement, and a prior-year restructuring charge.
5Refer to footnote 1 on page 55 for details regarding foreign currency adjusted information.
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