New York
|
13-4922250
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
200 Vesey Street, New York, New York
|
10285
|
|
(Address of principal executive offices)
|
(Zip Code)
|
None
|
Large accelerated filer
|
Accelerated filer
|
Non-accelerated filer (Do not check if a smaller reporting company)
|
Smaller reporting company
Emerging growth company
|
Class
|
Outstanding at October 18, 2017
|
||
Common Shares (par value $0.20 per share)
|
867,996,250 Shares
|
Part I.
|
Page No.
|
|||||
Item 1.
|
||||||
1
|
||||||
2
|
||||||
3
|
||||||
4
|
||||||
5
|
||||||
6
|
||||||
Item 2.
|
30
|
|||||
Item 3.
|
61
|
|||||
Item 4.
|
61
|
|||||
Part II.
|
||||||
Item 1.
|
64
|
|||||
Item 1A.
|
65
|
|||||
Item 2.
|
66
|
|||||
Item 5.
|
67
|
|||||
Item 6.
|
67
|
|||||
68
|
||||||
E-1
|
Three Months Ended September 30 (Millions, except per share amounts)
|
2017
|
2016
|
||||||
Revenues
|
||||||||
Non-interest revenues
|
||||||||
Discount revenue
|
$
|
4,772
|
$
|
4,516
|
||||
Net card fees
|
786
|
747
|
||||||
Other fees and commissions
|
767
|
694
|
||||||
Other
|
436
|
483
|
||||||
Total non-interest revenues
|
6,761
|
6,440
|
||||||
Interest income
|
||||||||
Interest on loans
|
2,129
|
1,690
|
||||||
Interest and dividends on investment securities
|
22
|
34
|
||||||
Deposits with banks and other
|
91
|
40
|
||||||
Total interest income
|
2,242
|
1,764
|
||||||
Interest expense
|
||||||||
Deposits
|
213
|
150
|
||||||
Long-term debt and other
|
354
|
280
|
||||||
Total interest expense
|
567
|
430
|
||||||
Net interest income
|
1,675
|
1,334
|
||||||
Total revenues net of interest expense
|
8,436
|
7,774
|
||||||
Provisions for losses
|
||||||||
Charge card
|
214
|
174
|
||||||
Card Member loans
|
531
|
319
|
||||||
Other
|
24
|
11
|
||||||
Total provisions for losses
|
769
|
504
|
||||||
Total revenues net of interest expense after provisions for losses
|
7,667
|
7,270
|
||||||
Expenses
|
||||||||
Marketing and promotion
|
814
|
930
|
||||||
Card Member rewards
|
1,900
|
1,566
|
||||||
Card Member services and other
|
363
|
278
|
||||||
Salaries and employee benefits
|
1,265
|
1,263
|
||||||
Other, net
|
1,498
|
1,498
|
||||||
Total expenses
|
5,840
|
5,535
|
||||||
Pretax income
|
1,827
|
1,735
|
||||||
Income tax provision
|
471
|
593
|
||||||
Net income
|
$
|
1,356
|
$
|
1,142
|
||||
Earnings per Common Share (Note 15): (a)
|
||||||||
Basic
|
$
|
1.51
|
$
|
1.21
|
||||
Diluted
|
$
|
1.50
|
$
|
1.20
|
||||
Average common shares outstanding for earnings per common share:
|
||||||||
Basic
|
878
|
920
|
||||||
Diluted
|
881
|
923
|
||||||
Cash dividends declared per common share
|
$
|
0.35
|
$
|
0.32
|
(a) |
Represents net income less (i) earnings allocated to participating share awards of $11 million and $9 million for the three months ended September 30, 2017 and 2016, respectively, and (ii) dividends on preferred shares of $21 million for both the three months ended September 30, 2017 and 2016.
|
Nine Months Ended September 30 (Millions, except per share amounts)
|
2017
|
2016
|
||||||
Revenues
|
||||||||
Non-interest revenues
|
||||||||
Discount revenue
|
$
|
14,106
|
$
|
13,983
|
||||
Net card fees
|
2,305
|
2,161
|
||||||
Other fees and commissions
|
2,232
|
2,076
|
||||||
Other
|
1,284
|
1,514
|
||||||
Total non-interest revenues
|
19,927
|
19,734
|
||||||
Interest income
|
||||||||
Interest on loans
|
5,936
|
5,446
|
||||||
Interest and dividends on investment securities
|
68
|
104
|
||||||
Deposits with banks and other
|
233
|
104
|
||||||
Total interest income
|
6,237
|
5,654
|
||||||
Interest expense
|
||||||||
Deposits
|
538
|
450
|
||||||
Long-term debt and other
|
994
|
841
|
||||||
Total interest expense
|
1,532
|
1,291
|
||||||
Net interest income
|
4,705
|
4,363
|
||||||
Total revenues net of interest expense
|
24,632
|
24,097
|
||||||
Provisions for losses
|
||||||||
Charge card
|
590
|
496
|
||||||
Card Member loans
|
1,272
|
831
|
||||||
Other
|
64
|
74
|
||||||
Total provisions for losses
|
1,926
|
1,401
|
||||||
Total revenues net of interest expense after provisions for losses
|
22,706
|
22,696
|
||||||
Expenses
|
||||||||
Marketing and promotion
|
2,344
|
2,445
|
||||||
Card Member rewards
|
5,633
|
5,035
|
||||||
Card Member services and other
|
1,033
|
841
|
||||||
Salaries and employee benefits
|
3,822
|
4,052
|
||||||
Other, net
|
4,281
|
3,388
|
||||||
Total expenses
|
17,113
|
15,761
|
||||||
Pretax income
|
5,593
|
6,935
|
||||||
Income tax provision
|
1,660
|
2,352
|
||||||
Net income
|
$
|
3,933
|
$
|
4,583
|
||||
Earnings per Common Share (Note 15): (a)
|
||||||||
Basic
|
$
|
4.32
|
$
|
4.77
|
||||
Diluted
|
$
|
4.30
|
$
|
4.76
|
||||
Average common shares outstanding for earnings per common share:
|
||||||||
Basic
|
889
|
940
|
||||||
Diluted
|
892
|
943
|
||||||
Cash dividends declared per common share
|
$
|
0.99
|
$
|
0.90
|
(a) |
Represents net income less (i) earnings allocated to participating share awards of $32 million and $37 million for the nine months ended September 30, 2017 and 2016, respectively, and (ii) dividends on preferred shares of $61 million for both the nine months ended September 30, 2017 and 2016.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
(Millions)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Net income
|
$
|
1,356
|
$
|
1,142
|
$
|
3,933
|
$
|
4,583
|
||||||||
Other comprehensive income (loss):
|
||||||||||||||||
Net unrealized securities (losses) gains, net of tax
|
(2
|
)
|
(15
|
)
|
4
|
(8
|
)
|
|||||||||
Foreign currency translation adjustments, net of tax
|
107
|
11
|
456
|
(115
|
)
|
|||||||||||
Net unrealized pension and other postretirement benefits, net of tax
|
7
|
7
|
8
|
39
|
||||||||||||
Other comprehensive income (loss)
|
112
|
3
|
468
|
(84
|
)
|
|||||||||||
Comprehensive income
|
$
|
1,468
|
$
|
1,145
|
$
|
4,401
|
$
|
4,499
|
September 30,
|
December 31,
|
|||||||
(Millions, except share data)
|
2017
|
2016
|
||||||
Assets
|
||||||||
Cash and cash equivalents
|
||||||||
Cash and due from banks
|
$
|
2,820
|
$
|
3,278
|
||||
Interest-bearing deposits in other banks (includes securities purchased under resale agreements: 2017, $86; 2016, $115)
|
22,059
|
20,779
|
||||||
Short-term investment securities
|
1,289
|
1,151
|
||||||
Total cash and cash equivalents
|
26,168
|
25,208
|
||||||
Accounts receivable
|
||||||||
Card Member receivables (includes gross receivables available to settle obligations of a consolidated variable interest entity: 2017, $7,825; 2016, $8,874), less reserves: 2017, $512; 2016, $467
|
51,002
|
46,841
|
||||||
Other receivables, less reserves: 2017, $32; 2016, $45
|
2,701
|
3,232
|
||||||
Loans
|
||||||||
Card Member loans (includes gross loans available to settle obligations of a consolidated variable interest entity: 2017, $24,249; 2016, $26,129), less reserves: 2017, $1,502; 2016, $1,223
|
66,376
|
64,042
|
||||||
Other loans, less reserves: 2017, $64; 2016, $42
|
2,268
|
1,419
|
||||||
Investment securities
|
3,250
|
3,157
|
||||||
Premises and equipment, less accumulated depreciation and amortization: 2017, $5,797; 2016, $5,145
|
4,367
|
4,433
|
||||||
Other assets (includes restricted cash of consolidated variable interest entities: 2017, $1,816; 2016, $38)
|
12,445
|
10,561
|
||||||
Total assets
|
$
|
168,577
|
$
|
158,893
|
||||
Liabilities and Shareholders’ Equity
|
||||||||
Liabilities
|
||||||||
Customer deposits
|
$
|
61,290
|
$
|
53,042
|
||||
Travelers Cheques and other prepaid products
|
2,366
|
2,812
|
||||||
Accounts payable
|
12,240
|
11,190
|
||||||
Short-term borrowings
|
2,352
|
5,581
|
||||||
Long-term debt (includes debt issued by consolidated variable interest entities: 2017, $15,026; 2016, $15,113)
|
48,762
|
46,990
|
||||||
Other liabilities
|
20,482
|
18,777
|
||||||
Total liabilities
|
147,492
|
138,392
|
||||||
Contingencies (Note 8)
|
||||||||
Shareholders’ Equity
|
||||||||
Preferred shares, $1.662/3 par value, authorized 20 million shares; issued and outstanding 1,600 shares as of September 30, 2017 and December 31, 2016
|
―
|
―
|
||||||
Common shares, $0.20 par value, authorized 3.6 billion shares; issued and outstanding 871 million shares as of September 30, 2017 and 904 million shares as of December 31, 2016
|
175
|
181
|
||||||
Additional paid-in capital
|
12,318
|
12,733
|
||||||
Retained earnings
|
10,908
|
10,371
|
||||||
Accumulated other comprehensive loss
|
||||||||
Net unrealized securities gains, net of tax of: 2017, $7; 2016, $5
|
11
|
7
|
||||||
Foreign currency translation adjustments, net of tax of: 2017, $(486); 2016, $24
|
(1,806
|
)
|
(2,262
|
)
|
||||
Net unrealized pension and other postretirement benefits, net of tax of: 2017, $(196); 2016, $(186)
|
(521
|
)
|
(529
|
)
|
||||
Total accumulated other comprehensive loss
|
(2,316
|
)
|
(2,784
|
)
|
||||
Total shareholders’ equity
|
21,085
|
20,501
|
||||||
Total liabilities and shareholders’ equity
|
$
|
168,577
|
$
|
158,893
|
Nine Months Ended September 30 (Millions)
|
2017
|
2016
|
||||||
Cash Flows from Operating Activities
|
||||||||
Net income
|
$
|
3,933
|
$
|
4,583
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Provisions for losses
|
1,926
|
1,401
|
||||||
Depreciation and amortization
|
953
|
810
|
||||||
Deferred taxes and other
|
(61
|
)
|
(1,076
|
)
|
||||
Stock-based compensation
|
212
|
190
|
||||||
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
|
||||||||
Other receivables
|
1,043
|
485
|
||||||
Other assets
|
(137
|
)
|
115
|
|||||
Accounts payable and other liabilities
|
1,197
|
(963
|
)
|
|||||
Travelers Cheques and other prepaid products
|
(485
|
)
|
(594
|
)
|
||||
Net cash provided by operating activities
|
8,581
|
4,951
|
||||||
Cash Flows from Investing Activities
|
||||||||
Sales of available-for-sale investment securities
|
1
|
51
|
||||||
Maturities and redemptions of available-for-sale investment securities
|
2,198
|
1,209
|
||||||
Purchases of investments
|
(2,339
|
)
|
(1,355
|
)
|
||||
Net (increase) decrease in Card Member receivables and loans, including held for sale(a)
|
(7,535
|
)
|
11,818
|
|||||
Purchase of premises and equipment, net of sales: 2017, $1; 2016, $2
|
(812
|
)
|
(975
|
)
|
||||
Acquisitions/dispositions, net of cash acquired
|
(210
|
)
|
(191
|
)
|
||||
Net increase in restricted cash
|
(1,773
|
)
|
(427
|
)
|
||||
Net cash (used in) provided by investing activities
|
(10,470
|
)
|
10,130
|
|||||
Cash Flows from Financing Activities
|
||||||||
Net increase (decrease) in customer deposits
|
8,219
|
(1,499
|
)
|
|||||
Net decrease in short-term borrowings
|
(3,232
|
)
|
(2,040
|
)
|
||||
Issuance of long-term debt
|
19,875
|
5,926
|
||||||
Principal payments on long-term debt
|
(18,349
|
)
|
(9,349
|
)
|
||||
Issuance of American Express common shares
|
82
|
78
|
||||||
Repurchase of American Express common shares
|
(3,087
|
)
|
(3,542
|
)
|
||||
Dividends paid
|
(925
|
)
|
(892
|
)
|
||||
Net cash provided by (used in) financing activities
|
2,583
|
(11,318
|
)
|
|||||
Effect of foreign currency exchange rates on cash and cash equivalents
|
266
|
(5
|
)
|
|||||
Net increase in cash and cash equivalents
|
960
|
3,758
|
||||||
Cash and cash equivalents at beginning of period
|
25,208
|
22,762
|
||||||
Cash and cash equivalents at end of period
|
$
|
26,168
|
$
|
26,520
|
(a) |
Refer to Note 2 for additional information.
|
(Millions)
|
2017
|
2016
|
||||||
U.S. Consumer Services(a)
|
$
|
49,326
|
$
|
48,758
|
||||
International Consumer and Network Services
|
7,823
|
6,971
|
||||||
Global Commercial Services
|
10,729
|
9,536
|
||||||
Card Member loans
|
67,878
|
65,265
|
||||||
Less: Reserve for losses
|
1,502
|
1,223
|
||||||
Card Member loans, net
|
$
|
66,376
|
$
|
64,042
|
||||
Other loans, net(b)
|
$
|
2,268
|
$
|
1,419
|
(a) |
Includes approximately $24.2 billion and $26.1 billion of gross Card Member loans available to settle obligations of a consolidated variable interest entity (VIE) as of September 30, 2017 and December 31, 2016, respectively.
|
(b) |
Other loans primarily represent personal and commercial financing products. Other loans are presented net of reserves for losses of $64 million and $42 million as of September 30, 2017 and December 31, 2016, respectively.
|
(Millions)
|
2017
|
2016
|
||||||
U.S. Consumer Services (a)
|
$
|
11,192
|
$
|
12,302
|
||||
International Consumer and Network Services
|
6,512
|
5,966
|
||||||
Global Commercial Services
|
33,810
|
29,040
|
||||||
Card Member receivables
|
51,514
|
47,308
|
||||||
Less: Reserve for losses
|
512
|
467
|
||||||
Card Member receivables, net
|
$
|
51,002
|
$
|
46,841
|
||||
Other receivables, net (b)
|
$
|
2,701
|
$
|
3,232
|
(a) |
Includes $7.8 billion and $8.9 billion of gross Card Member receivables available to settle obligations of a consolidated VIE as of September 30, 2017 and December 31, 2016, respectively.
|
(b) |
Other receivables primarily represent amounts related to (i) Global Network Services partner banks for items such as royalty and franchise fees, (ii) tax-related receivables, (iii) certain merchants for billed discount revenue, and (iv) loyalty coalition partners for points issued, as well as program participation and servicing fees. Other receivables are presented net of reserves for losses of $32 million and $45 million as of September 30, 2017 and December 31, 2016, respectively.
|
2017 (Millions)
|
Current
|
30-59 Days Past Due
|
60-89 Days Past Due
|
90+ Days Past Due
|
Total
|
|||||||||||||||
Card Member Loans:
|
||||||||||||||||||||
U.S. Consumer Services
|
$
|
48,707
|
$
|
183
|
$
|
128
|
$
|
308
|
$
|
49,326
|
||||||||||
International Consumer and Network Services
|
7,698
|
39
|
27
|
59
|
7,823
|
|||||||||||||||
Global Commercial Services
|
||||||||||||||||||||
Global Small Business Services
|
10,556
|
36
|
24
|
59
|
10,675
|
|||||||||||||||
Global Corporate Payments(a)
|
(b)
|
(b)
|
(b)
|
―
|
54
|
|||||||||||||||
Card Member Receivables:
|
||||||||||||||||||||
U.S. Consumer Services
|
11,055
|
51
|
26
|
60
|
11,192
|
|||||||||||||||
International Consumer and Network Services
|
6,424
|
28
|
18
|
42
|
6,512
|
|||||||||||||||
Global Commercial Services
|
||||||||||||||||||||
Global Small Business Services
|
$
|
15,651
|
$
|
75
|
$
|
50
|
$
|
102
|
$
|
15,878
|
||||||||||
Global Corporate Payments(a)
|
(b)
|
(b)
|
(b)
|
$
|
153
|
$
|
17,932
|
|||||||||||||
2016 (Millions)
|
Current
|
30-59 Days Past Due
|
60-89 Days Past Due
|
90+ Days Past Due
|
Total
|
|||||||||||||||
Card Member Loans:
|
||||||||||||||||||||
U.S. Consumer Services
|
$
|
48,216
|
$
|
156
|
$
|
119
|
$
|
267
|
$
|
48,758
|
||||||||||
International Consumer and Network Services
|
6,863
|
32
|
24
|
52
|
6,971
|
|||||||||||||||
Global Commercial Services
|
||||||||||||||||||||
Global Small Business Services
|
9,378
|
34
|
23
|
49
|
9,484
|
|||||||||||||||
Global Corporate Payments(a)
|
(b)
|
(b)
|
(b)
|
―
|
52
|
|||||||||||||||
Card Member Receivables:
|
||||||||||||||||||||
U.S. Consumer Services
|
12,158
|
45
|
30
|
69
|
12,302
|
|||||||||||||||
International Consumer and Network Services
|
5,888
|
22
|
15
|
41
|
5,966
|
|||||||||||||||
Global Commercial Services
|
||||||||||||||||||||
Global Small Business Services
|
$
|
14,047
|
$
|
77
|
$
|
47
|
$
|
102
|
$
|
14,273
|
||||||||||
Global Corporate Payments(a)
|
(b)
|
(b)
|
(b)
|
$
|
135
|
$
|
14,767
|
(a) |
For Global Corporate Payments (GCP) Card Member loans and receivables in Global Commercial Services (GCS), delinquency data is tracked based on days past billing status rather than days past due. A Card Member account is considered 90 days past billing if payment has not been received within 90 days of the Card Member’s billing statement date. In addition, if the Company initiates collection procedures on an account prior to the account becoming 90 days past billing, the associated Card Member loan and receivable balance is classified as 90 days past billing. These amounts are shown above as 90+ Days Past Due for presentation purposes. See also (b).
|
(b) |
Delinquency data for periods other than 90 days past billing is not available due to system constraints. Therefore, such data has not been utilized for risk management purposes. The balances that are current to 89 days past due can be derived as the difference between the Total and the 90+ Days Past Due balances.
|
2017
|
2016
|
|||||||||||||
Net Write-Off Rate
|
Net Write-Off Rate
|
|||||||||||||
Principal Only(a)
|
Principal, Interest & Fees(a)
|
30+ Days Past Due as a % of Total
|
Principal Only(a)
|
Principal, Interest & Fees(a)
|
30+ Days Past Due as a % of Total
|
|||||||||
Card Member Loans:
|
||||||||||||||
U.S. Consumer Services
|
1.7
|
%
|
2.0
|
%
|
1.3
|
%
|
1.5
|
%
|
1.8
|
%
|
1.1
|
%
|
||
International Consumer and Network Services
|
2.1
|
%
|
2.6
|
%
|
1.6
|
%
|
2.0
|
%
|
2.5
|
%
|
1.7
|
%
|
||
Global Small Business Services
|
1.6
|
%
|
1.9
|
%
|
1.1
|
%
|
1.4
|
%
|
1.7
|
%
|
1.1
|
%
|
||
Card Member Receivables:
|
||||||||||||||
U.S. Consumer Services
|
1.3
|
%
|
1.5
|
%
|
1.2
|
%
|
1.4
|
%
|
1.6
|
%
|
1.4
|
%
|
||
International Consumer and Network Services
|
2.1
|
%
|
2.2
|
%
|
1.4
|
%
|
2.1
|
%
|
2.3
|
%
|
1.5
|
%
|
||
Global Small Business Services
|
1.6
|
%
|
1.8
|
%
|
1.4
|
%
|
1.6
|
%
|
1.8
|
%
|
1.5
|
%
|
||
2017
|
2016
|
|||||||||||||
Net Loss Ratio as a % of Charge Volume
|
90+ Days Past Billing as a % of Receivables
|
Net Loss Ratio as a % of Charge Volume
|
90+ Days Past Billing as a % of Receivables
|
|||||||||||
Card Member Receivables:
|
||||||||||||||
Global Corporate Payments
|
0.10
|
%
|
0.9
|
%
|
0.09
|
%
|
0.8
|
%
|
(a) |
The Company presents a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, because the Company considers uncollectible interest and/or fees in estimating its reserves for credit losses, a net write-off rate including principal, interest and/or fees is also presented.
|
As of September 30, 2017
|
||||||||||||||||||||||||||||
Accounts Classified as a TDR(c)
|
||||||||||||||||||||||||||||
2017 (Millions)
|
Over 90 days Past Due & Accruing Interest(a)
|
Non-Accruals(b)
|
In Program(d)
|
Out of Program(e)
|
Total Impaired Balance
|
Unpaid Principal Balance
|
Allowance for TDRs
|
|||||||||||||||||||||
Card Member Loans:
|
||||||||||||||||||||||||||||
U.S. Consumer Services
|
$
|
206
|
$
|
158
|
$
|
162
|
$
|
131
|
$
|
657
|
$
|
593
|
$
|
48
|
||||||||||||||
International Consumer and Network Services
|
59
|
―
|
―
|
―
|
59
|
58
|
―
|
|||||||||||||||||||||
Global Commercial Services
|
37
|
32
|
28
|
26
|
123
|
113
|
9
|
|||||||||||||||||||||
Card Member Receivables:
|
||||||||||||||||||||||||||||
U.S. Consumer Services
|
―
|
―
|
12
|
9
|
21
|
21
|
4
|
|||||||||||||||||||||
Global Commercial Services
|
―
|
―
|
31
|
16
|
47
|
47
|
8
|
|||||||||||||||||||||
Total
|
$
|
302
|
$
|
190
|
$
|
233
|
$
|
182
|
$
|
907
|
$
|
832
|
$
|
69
|
As of December 31, 2016
|
||||||||||||||||||||||||||||
Accounts Classified as a TDR(c)
|
||||||||||||||||||||||||||||
2016 (Millions)
|
Over 90 days Past Due & Accruing Interest(a)
|
Non-Accruals(b)
|
In Program(d)
|
Out of Program(e)
|
Total Impaired Balance
|
Unpaid Principal Balance
|
Allowance for TDRs
|
|||||||||||||||||||||
Card Member Loans:
|
||||||||||||||||||||||||||||
U.S. Consumer Services
|
$
|
178
|
$ |
139
|
$ |
165
|
$ |
129
|
$ |
611
|
$ |
558
|
$ |
51
|
||||||||||||||
International Consumer and Network Services
|
52
|
―
|
―
|
―
|
52
|
51
|
―
|
|||||||||||||||||||||
Global Commercial Services
|
30
|
30
|
26
|
26
|
112
|
103
|
9
|
|||||||||||||||||||||
Card Member Receivables:
|
||||||||||||||||||||||||||||
U.S. Consumer Services
|
―
|
―
|
11
|
6
|
17
|
17
|
7
|
|||||||||||||||||||||
Global Commercial Services
|
―
|
―
|
28
|
10
|
38
|
38
|
21
|
|||||||||||||||||||||
Total
|
$
|
260
|
$
|
169
|
$
|
230
|
$
|
171
|
$
|
830
|
$
|
767
|
$
|
88
|
(a) |
The Company’s policy is generally to accrue interest through the date of write-off (typically 180 days past due). The Company establishes reserves for interest that it believes will not be collected. Amounts presented exclude Card Member loans classified as a TDR.
|
(b) |
Non-accrual loans not in modification programs primarily include certain Card Member loans placed with outside collection agencies for which the Company has ceased accruing interest. Amounts presented exclude Card Member loans classified as a TDR.
|
(c) |
Accounts classified as a TDR include $15 million and $20 million that are over 90 days past due and accruing interest and $6 million and $11 million that are non-accruals as of September 30, 2017 and December 31, 2016, respectively.
|
(d) |
In Program TDRs include Card Member accounts that are currently enrolled in a modification program.
|
(e) |
Out of Program TDRs include $139 million and $132 million of Card Member accounts that have successfully completed a modification program and $43 million and $39 million of Card Member accounts that were not in compliance with the terms of the modification programs as of September 30, 2017 and December 31, 2016, respectively.
|
Three Months Ended
September 30, 2017
|
Nine Months Ended
September 30, 2017
|
|||||||||||||||
(Millions)
|
Average Balance
|
Interest Income Recognized
|
Average Balance
|
Interest Income Recognized
|
||||||||||||
Card Member Loans:
|
||||||||||||||||
U.S. Consumer Services
|
$
|
636
|
$
|
17
|
$
|
626
|
$
|
49
|
||||||||
International Consumer and Network Services
|
59
|
4
|
56
|
12
|
||||||||||||
Global Commercial Services
|
122
|
5
|
119
|
13
|
||||||||||||
Card Member Receivables:
|
||||||||||||||||
U.S. Consumer Services
|
20
|
―
|
19
|
―
|
||||||||||||
Global Commercial Services
|
44
|
―
|
42
|
―
|
||||||||||||
Total
|
$
|
881
|
$
|
26
|
$
|
862
|
$
|
74
|
||||||||
Three Months Ended
September 30, 2016
|
Nine Months Ended
September 30, 2016
|
|||||||||||||||
(Millions)
|
Average Balance
|
Interest Income Recognized
|
Average Balance
|
Interest Income Recognized
|
||||||||||||
Card Member Loans:
|
||||||||||||||||
U.S. Consumer Services
|
$
|
587
|
$
|
14
|
$
|
555
|
$
|
38
|
||||||||
International Consumer and Network Services
|
53
|
4
|
52
|
12
|
||||||||||||
Global Commercial Services
|
111
|
4
|
102
|
10
|
||||||||||||
Card Member Receivables:
|
||||||||||||||||
U.S. Consumer Services
|
13
|
―
|
13
|
―
|
||||||||||||
Global Commercial Services
|
29
|
―
|
24
|
―
|
||||||||||||
Total
|
$
|
793
|
$
|
22
|
$
|
746
|
$
|
60
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||||||||||
September 30, 2017
|
September 30, 2017
|
|||||||||||||||||||||||||||||||
Number of Accounts (in thousands)
|
Outstanding Balances
($ in millions)(a)
|
Average Interest Rate Reduction
(% Points)
|
Average Payment Term Extension (# of Months)
|
Number of Accounts (in thousands)
|
Outstanding Balances
($ in millions)(a)
|
Average Interest Rate Reduction (% Points)
|
Average Payment Term Extension (# of Months)
|
|||||||||||||||||||||||||
Troubled Debt Restructurings:
|
||||||||||||||||||||||||||||||||
Card Member Loans
|
8
|
$
|
57
|
9
|
(b)
|
23
|
$
|
160
|
10
|
(b)
|
||||||||||||||||||||||
Card Member Receivables
|
1
|
18
|
(c)
|
31
|
4
|
64
|
(c)
|
27
|
||||||||||||||||||||||||
Total
|
9
|
$
|
75
|
27
|
$
|
224
|
||||||||||||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||||||||||
September 30, 2016
|
September 30, 2016
|
|||||||||||||||||||||||||||||||
Number of Accounts (in thousands)
|
Outstanding Balances
($ in millions)(a)
|
Average Interest Rate Reduction
(% Points)
|
Average Payment Term Extension (# of Months)
|
Number of Accounts (in thousands)
|
Outstanding Balances
($ in millions)(a)
|
Average Interest Rate Reduction (% Points)
|
Average Payment Term Extension (# of Months)
|
|||||||||||||||||||||||||
Troubled Debt Restructurings:
|
||||||||||||||||||||||||||||||||
Card Member Loans
|
8
|
$
|
56
|
9
|
(b)
|
23
|
$
|
163
|
10
|
(b)
|
||||||||||||||||||||||
Card Member Receivables
|
2
|
29
|
(c)
|
19
|
7
|
94
|
(c)
|
17
|
||||||||||||||||||||||||
Total
|
10
|
$
|
85
|
30
|
$
|
257
|
(a) |
Represents the outstanding balance immediately prior to modification. The outstanding balance includes principal, fees and accrued interest on Card Member loans and principal and fees on Card Member receivables.
|
(b) |
For Card Member loans, there have been no payment term extensions.
|
(c) |
The Company does not offer interest rate reduction programs for Card Member receivables as the receivables are non-interest bearing.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30, 2017
|
September 30, 2017
|
|||||||||||||||
Number of Accounts
(in thousands)
|
Aggregated Outstanding Balances Upon Default
($ in millions)(a)
|
Number of Accounts
(in thousands)
|
Aggregated Outstanding Balances Upon Default
($ in millions)(a)
|
|||||||||||||
Troubled Debt Restructurings That Subsequently Defaulted:
|
||||||||||||||||
Card Member Loans
|
2
|
$
|
9
|
5
|
$
|
30
|
||||||||||
Card Member Receivables
|
1
|
2
|
3
|
4
|
||||||||||||
Total
|
3
|
$
|
11
|
8
|
$
|
34
|
||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30, 2016
|
September 30, 2016
|
|||||||||||||||
Number of Accounts
(in thousands)
|
Aggregated Outstanding Balances Upon Default
($ in millions)(a)
|
Number of Accounts
(in thousands)
|
Aggregated Outstanding Balances Upon Default
($ in millions)(a)
|
|||||||||||||
Troubled Debt Restructurings That Subsequently Defaulted:
|
||||||||||||||||
Card Member Loans
|
3
|
$
|
12
|
5
|
$
|
30
|
||||||||||
Card Member Receivables
|
1
|
1
|
3
|
3
|
||||||||||||
Total
|
4
|
$
|
13
|
8
|
$
|
33
|
(a) |
The outstanding balances upon default include principal, fees and accrued interest on Card Member loans, and principal and fees on Card Member receivables.
|
(Millions)
|
2017
|
2016
|
||||||
Balance, January 1
|
$
|
1,223
|
$
|
1,028
|
||||
Provisions(a)
|
1,272
|
831
|
||||||
Net write-offs(b)
|
||||||||
Principal
|
(856
|
)
|
(687
|
)
|
||||
Interest and fees
|
(163
|
)
|
(128
|
)
|
||||
Other(c)
|
26
|
70
|
||||||
Balance, September 30
|
$
|
1,502
|
$
|
1,114
|
(a) |
Provisions for principal, interest and fee reserve components.
|
(b) |
Principal write-offs are presented less recoveries of $307 million and $280 million, and include net write-offs from TDRs of $25 million and $24 million, for the nine months ended September 30, 2017 and 2016, respectively. Recoveries of interest and fees were de minimis.
|
(c) |
Includes foreign currency translation adjustments of $14 million and $(3) million and other adjustments of $12 million and $6 million for the nine months ended September 30, 2017 and 2016, respectively. The nine months ended September 30, 2016 also includes reserves of $67 million associated with $265 million of retained Card Member loans reclassified from HFS to held for investment as a result of retaining certain loans in connection with the respective sales of JetBlue and Costco cobrand card portfolios.
|
(Millions)
|
2017
|
2016
|
||||||
Card Member loans evaluated individually for impairment(a)
|
$
|
347
|
$
|
346
|
||||
Related reserves (a)
|
$
|
57
|
$
|
60
|
||||
Card Member loans evaluated collectively for impairment(b)
|
$
|
67,531
|
$
|
64,919
|
||||
Related reserves (b)
|
$
|
1,445
|
$
|
1,163
|
(a) |
Represents loans modified as a TDR and related reserves.
|
(b) |
Represents current loans and loans less than 90 days past due, loans over 90 days past due and accruing interest, and non-accrual loans. The reserves include the quantitative results of analytical models that are specific to individual pools of loans, and reserves for internal and external qualitative risk factors that apply to loans that are collectively evaluated for impairment.
|
(Millions)
|
2017
|
2016
|
||||||
Balance, January 1
|
$
|
467
|
$
|
462
|
||||
Provisions(a)
|
590
|
496
|
||||||
Net write-offs(b)
|
(548
|
)
|
(518
|
)
|
||||
Other(c)
|
3
|
(3
|
)
|
|||||
Balance, September 30
|
$
|
512
|
$
|
437
|
(a) |
Provisions for principal and fee reserve components.
|
(b) |
Principal and fee write-offs are presented less recoveries of $271 million and $301 million, including net write-offs from TDRs of $2 million and $16 million, for the nine months ended September 30, 2017 and 2016, respectively.
|
(c) |
Includes foreign currency translation adjustments of $18 million and nil and other adjustments of $(15) million and $(3) million for the nine months ended September 30, 2017 and 2016, respectively.
|
(Millions)
|
2017
|
2016
|
||||||
Card Member receivables evaluated individually for impairment(a)
|
$
|
68
|
$
|
55
|
||||
Related reserves (a)
|
$
|
12
|
$
|
28
|
||||
Card Member receivables evaluated collectively for impairment
|
$
|
51,446
|
$
|
47,253
|
||||
Related reserves (b)
|
$
|
500
|
$
|
439
|
(a) |
Represents receivables modified as a TDR and related reserves.
|
(b) |
The reserves include the quantitative results of analytical models that are specific to individual pools of receivables, and reserves for internal and external qualitative risk factors that apply to receivables that are collectively evaluated for impairment.
|
2017
|
2016
|
|||||||||||||||||||||||||||||||
Gross
|
Gross
|
Estimated
|
Gross
|
Gross
|
Estimated
|
|||||||||||||||||||||||||||
Unrealized
|
Unrealized
|
Fair
|
Unrealized
|
Unrealized
|
Fair
|
|||||||||||||||||||||||||||
Description of Securities (Millions)
|
Cost
|
Gains
|
Losses
|
Value
|
Cost
|
Gains
|
Losses
|
Value
|
||||||||||||||||||||||||
State and municipal obligations
|
$
|
1,412
|
$
|
17
|
$
|
(2
|
)
|
$
|
1,427
|
$
|
2,019
|
$
|
28
|
$
|
(11
|
)
|
$
|
2,036
|
||||||||||||||
U.S. Government agency obligations
|
12
|
―
|
―
|
12
|
12
|
―
|
―
|
12
|
||||||||||||||||||||||||
U.S. Government treasury obligations
|
1,115
|
8
|
(5
|
)
|
1,118
|
465
|
3
|
(8
|
)
|
460
|
||||||||||||||||||||||
Corporate debt securities
|
28
|
―
|
―
|
28
|
19
|
―
|
―
|
19
|
||||||||||||||||||||||||
Mortgage-backed securities (a)
|
74
|
2
|
―
|
76
|
92
|
3
|
―
|
95
|
||||||||||||||||||||||||
Equity securities
|
1
|
―
|
―
|
1
|
1
|
―
|
―
|
1
|
||||||||||||||||||||||||
Foreign government bonds and obligations
|
539
|
1
|
―
|
540
|
486
|
1
|
(1
|
)
|
486
|
|||||||||||||||||||||||
Other (b)
|
50
|
―
|
(2
|
)
|
48
|
50
|
―
|
(2
|
)
|
48
|
||||||||||||||||||||||
Total
|
$
|
3,231
|
$
|
28
|
$
|
(9
|
)
|
$
|
3,250
|
$
|
3,144
|
$
|
35
|
$
|
(22
|
)
|
$
|
3,157
|
(a) |
Represents mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.
|
(b) |
Other comprises investments in various mutual funds.
|
2017
|
2016
|
|||||||||||||||||||||||||||||||
Less than 12 months
|
12 months or more
|
Less than 12 months
|
12 months or more
|
|||||||||||||||||||||||||||||
Gross
|
Gross
|
Gross
|
Gross
|
|||||||||||||||||||||||||||||
Description of Securities (Millions)
|
Estimated Fair Value
|
Unrealized Losses
|
Estimated Fair Value
|
Unrealized Losses
|
Estimated Fair Value
|
Unrealized Losses
|
Estimated Fair Value
|
Unrealized Losses
|
||||||||||||||||||||||||
State and municipal obligations
|
$
|
101
|
$
|
(2
|
)
|
$
|
―
|
$
|
―
|
$
|
153
|
$
|
(11
|
)
|
$
|
―
|
$
|
―
|
||||||||||||||
U.S. Government treasury obligations
|
366
|
(5
|
)
|
―
|
―
|
298
|
(8
|
)
|
―
|
―
|
||||||||||||||||||||||
Other
|
―
|
―
|
32
|
(2
|
)
|
―
|
―
|
32
|
(2
|
)
|
||||||||||||||||||||||
Total
|
$
|
467
|
$
|
(7
|
)
|
$
|
32
|
$
|
(2
|
)
|
$
|
451
|
$
|
(19
|
)
|
$
|
32
|
$
|
(2
|
)
|
Less than 12 months
|
12 months or more
|
Total
|
||||||||||||||||||||||||||||||||||
Ratio of Fair Value to
|
Gross
|
Gross
|
Gross
|
|||||||||||||||||||||||||||||||||
Amortized Cost
|
Number of
|
Estimated
|
Unrealized
|
Number of
|
Estimated
|
Unrealized
|
Number of
|
Estimated
|
Unrealized
|
|||||||||||||||||||||||||||
(Dollars in millions)
|
Securities
|
Fair Value
|
Losses
|
Securities
|
Fair Value
|
Losses
|
Securities
|
Fair Value
|
Losses
|
|||||||||||||||||||||||||||
2017:
|
||||||||||||||||||||||||||||||||||||
90%–100%
|
22
|
$
|
467
|
$
|
(7
|
)
|
6
|
$
|
32
|
$
|
(2
|
)
|
28
|
$
|
499
|
$
|
(9
|
)
|
||||||||||||||||||
Total as of September 30, 2017
|
22
|
$
|
467
|
$
|
(7
|
)
|
6
|
$
|
32
|
$
|
(2
|
)
|
28
|
$
|
499
|
$
|
(9
|
)
|
||||||||||||||||||
2016:
|
||||||||||||||||||||||||||||||||||||
90%–100%
|
33
|
$
|
411
|
$
|
(13
|
)
|
6
|
$
|
32
|
$
|
(2
|
)
|
39
|
$
|
443
|
$
|
(15
|
)
|
||||||||||||||||||
Less than 90%
|
4
|
40
|
(6
|
)
|
―
|
―
|
―
|
4
|
40
|
(6
|
)
|
|||||||||||||||||||||||||
Total as of December 31, 2016
|
37
|
$
|
451
|
$
|
(19
|
)
|
6
|
$
|
32
|
$
|
(2
|
)
|
43
|
$
|
483
|
$
|
(21
|
)
|
Estimated
|
||||||||
(Millions)
|
Cost
|
Fair Value
|
||||||
Due within 1 year
|
$
|
648
|
$
|
648
|
||||
Due after 1 year but within 5 years
|
998
|
1,000
|
||||||
Due after 5 years but within 10 years
|
268
|
272
|
||||||
Due after 10 years
|
1,267
|
1,282
|
||||||
Total
|
$
|
3,181
|
$
|
3,202
|
(Millions)
|
2017
|
2016
|
||||||
Lending Trust
|
$
|
1,814
|
$
|
35
|
||||
Charge Trust
|
2
|
3
|
||||||
Total
|
$
|
1,816
|
$
|
38
|
(Millions)
|
2017
|
2016
|
||||||
U.S.:
|
||||||||
Interest bearing
|
$
|
60,573
|
$
|
52,316
|
||||
Non-interest bearing (includes Card Member credit balances of: 2017, $300 million; 2016, $331 million)
|
337
|
367
|
||||||
Non-U.S.:
|
||||||||
Interest bearing
|
32
|
58
|
||||||
Non-interest bearing (includes Card Member credit balances of: 2017, $334 million; 2016, $285 million)
|
348
|
301
|
||||||
Total customer deposits
|
$
|
61,290
|
$
|
53,042
|
(Millions)
|
2017
|
2016
|
||||||
U.S. retail deposits:
|
||||||||
Savings accounts – Direct
|
$
|
30,780
|
$
|
30,980
|
||||
Certificates of deposit:(a)
|
||||||||
Direct
|
290
|
291
|
||||||
Third-party (brokered)
|
17,229
|
11,925
|
||||||
Sweep accounts – Third-party (brokered)
|
12,274
|
9,120
|
||||||
Other deposits:
|
||||||||
U.S. non-interest bearing deposits
|
37
|
36
|
||||||
Non-U.S. deposits
|
46
|
74
|
||||||
Card Member credit balances ― U.S. and non-U.S.
|
634
|
616
|
||||||
Total customer deposits
|
$
|
61,290
|
$
|
53,042
|
(a) |
The weighted average remaining maturity and weighted average interest rate at issuance on the total portfolio of U.S. retail certificates of deposit issued through direct and third-party programs were 44 months and 2.10 percent, respectively, as of September 30, 2017.
|
(Millions)
|
U.S.
|
Non-U.S.
|
Total
|
|||||||||
2017
|
$
|
1,450
|
$
|
3
|
$
|
1,453
|
||||||
2018
|
5,160
|
16
|
5,176
|
|||||||||
2019
|
4,252
|
―
|
4,252
|
|||||||||
2020
|
3,511
|
―
|
3,511
|
|||||||||
2021
|
1,234
|
―
|
1,234
|
|||||||||
After 5 years
|
1,912
|
―
|
1,912
|
|||||||||
Total
|
$
|
17,519
|
$
|
19
|
$
|
17,538
|
(Millions)
|
2017
|
2016
|
||||||
U.S.
|
$
|
113
|
$
|
117
|
||||
Non-U.S.
|
8
|
7
|
||||||
Total
|
$
|
121
|
$
|
124
|
Other Assets Fair Value
|
Other Liabilities Fair Value
|
|||||||||||||||
(Millions)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Derivatives designated as hedging instruments:
|
||||||||||||||||
Fair value hedges - Interest rate contracts(a)
|
$
|
26
|
$
|
111
|
$
|
15
|
$
|
69
|
||||||||
Net investment hedges - Foreign exchange contracts
|
41
|
347
|
210
|
35
|
||||||||||||
Total derivatives designated as hedging instruments
|
67
|
458
|
225
|
104
|
||||||||||||
Derivatives not designated as hedging instruments:
|
||||||||||||||||
Foreign exchange contracts, including certain embedded derivatives(b)
|
168
|
308
|
102
|
176
|
||||||||||||
Total derivatives, gross
|
235
|
766
|
327
|
280
|
||||||||||||
Less: Cash collateral netting(c)(d)
|
(17
|
)
|
(54
|
)
|
(8
|
)
|
(68
|
)
|
||||||||
Derivative asset and derivative liability netting(e)
|
(92
|
)
|
(157
|
)
|
(92
|
)
|
(157
|
)
|
||||||||
Total derivatives, net(f)
|
$
|
126
|
$
|
555
|
$
|
227
|
$
|
55
|
(a) |
Effective January 2017, the Central Clearing Party (CCP) changed the legal characterization of variation margin payments for centrally cleared derivatives to be settlement payments, as opposed to collateral. Accordingly, the amounts disclosed for 2017 related to centrally cleared derivatives are based on gross assets of $11 million and liabilities of $87 million net of variation margin of $11 million and $79 million, respectively. The Company also maintained several bilateral interest rate contracts that are not subject to the CCP’s rule change and amounts related to such contracts are shown gross of any collateral exchanged.
|
(b) |
Includes foreign currency derivatives embedded in certain operating agreements.
|
(c) |
Represents the offsetting of the fair value of bilateral interest rate contracts and certain foreign exchange contracts with the right to reclaim cash collateral or the obligation to return cash collateral.
|
(d) |
The Company held no non-cash collateral as of September 30, 2017. As of December 31, 2016, the Company received non-cash collateral from a counterparty in the form of security interests in U.S. Treasury securities, with a fair value of $18 million, none of which was sold or repledged. Such non-cash collateral economically reduced the Company’s risk exposure to $537 million as of December 31, 2016, but did not reduce the net exposure on the Company’s Consolidated Balance Sheets. Additionally, the Company posted $152 million and $169 million as of September 30, 2017 and December 31, 2016, respectively, as initial margin on its centrally cleared interest rate swaps; such amounts are recorded within Other receivables on the Consolidated Balance Sheets and are not netted against the derivative balances.
|
(e) |
Represents the amount of netting of derivative assets and derivative liabilities executed with the same counterparty under an enforceable master netting arrangement.
|
(f) |
The Company has no individually significant derivative counterparties and therefore, no significant risk exposure to any single derivative counterparty. The total net derivative assets and net derivative liabilities are presented within Other assets and Other liabilities, respectively, on the Consolidated Balance Sheets.
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
(Millions)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Interest rate derivative contracts
|
$
|
(31
|
)
|
$
|
(123
|
)
|
$
|
(100
|
)
|
$
|
103
|
|||||
Hedged items
|
39
|
134
|
64
|
(90
|
)
|
|||||||||||
Net hedge ineffectiveness
|
$
|
8
|
$
|
11
|
$
|
(36
|
)
|
$
|
13
|
2017
|
2016
|
|||||||||||||||||||||||||||||||
(Millions)
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||||||||||
Investment securities:(a)
|
||||||||||||||||||||||||||||||||
Equity securities and other
|
$
|
49
|
$
|
1
|
$
|
48
|
$
|
―
|
$
|
49
|
$
|
1
|
$
|
48
|
$
|
―
|
||||||||||||||||
Debt securities
|
3,201
|
1,118
|
2,083
|
―
|
3,108
|
460
|
2,648
|
―
|
||||||||||||||||||||||||
Derivatives(a)
|
235
|
―
|
235
|
―
|
765
|
―
|
765
|
―
|
||||||||||||||||||||||||
Total Assets
|
3,485
|
1,119
|
2,366
|
―
|
3,922
|
461
|
3,461
|
―
|
||||||||||||||||||||||||
Liabilities:
|
||||||||||||||||||||||||||||||||
Derivatives(a)
|
327
|
―
|
327
|
―
|
280
|
―
|
280
|
―
|
||||||||||||||||||||||||
Total Liabilities
|
$
|
327
|
$
|
―
|
$
|
327
|
$
|
―
|
$
|
280
|
$
|
―
|
$
|
280
|
$
|
―
|
(a) |
Refer to Note 5 for the fair values of investment securities and to Note 9 for the fair values of derivative assets and liabilities, on a further disaggregated basis.
|
Carrying
|
Corresponding Fair Value Amount
|
|||||||||||||||||||
2017 (Billions)
|
Value
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||||
Financial Assets:
|
||||||||||||||||||||
Financial assets for which carrying values equal or approximate fair value
|
||||||||||||||||||||
Cash and cash equivalents(a)
|
$
|
26
|
$
|
26
|
$
|
24
|
$
|
2
|
$
|
―
|
||||||||||
Other financial assets(b)
|
56
|
56
|
―
|
56
|
―
|
|||||||||||||||
Financial assets carried at other than fair value
|
||||||||||||||||||||
Loans, net(c)
|
69
|
69
|
―
|
―
|
69
|
|||||||||||||||
Financial Liabilities:
|
||||||||||||||||||||
Financial liabilities for which carrying values equal or approximate fair value
|
69
|
69
|
―
|
69
|
―
|
|||||||||||||||
Financial liabilities carried at other than fair value
|
||||||||||||||||||||
Certificates of deposit(d)
|
18
|
18
|
―
|
18
|
―
|
|||||||||||||||
Long-term debt(c)
|
$
|
49
|
$
|
50
|
$
|
―
|
$
|
50
|
$
|
―
|
||||||||||
Carrying
|
Corresponding Fair Value Amount
|
|||||||||||||||||||
2016 (Billions)
|
Value
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||||
Financial Assets:
|
||||||||||||||||||||
Financial assets for which carrying values equal or approximate fair value
|
||||||||||||||||||||
Cash and cash equivalents(a)
|
$
|
25
|
$
|
25
|
$
|
22
|
$
|
3
|
$
|
―
|
||||||||||
Other financial assets(b)
|
51
|
51
|
―
|
51
|
―
|
|||||||||||||||
Financial assets carried at other than fair value
|
||||||||||||||||||||
Loans, net(c)
|
65
|
66
|
―
|
―
|
66
|
|||||||||||||||
Financial Liabilities:
|
||||||||||||||||||||
Financial liabilities for which carrying values equal or approximate fair value
|
67
|
67
|
―
|
67
|
―
|
|||||||||||||||
Financial liabilities carried at other than fair value
|
||||||||||||||||||||
Certificates of deposit(d)
|
12
|
12
|
―
|
12
|
―
|
|||||||||||||||
Long-term debt(c)
|
$
|
47
|
$
|
48
|
$
|
―
|
$
|
48
|
$
|
―
|
(a) |
Level 2 amounts reflect time deposits and short-term investments.
|
(b) |
Includes Card Member receivables (including fair values of Card Member receivables of $7.8 billion and $8.8 billion held by a consolidated VIE as of September 30, 2017 and December 31, 2016, respectively), Other receivables, restricted cash and other miscellaneous assets.
|
(c) |
Balances include amounts held by a consolidated VIE for which the fair values of Card Member loans were $24.1 billion and $26.0 billion as of September 30, 2017 and December 31, 2016, respectively, and the fair values of long-term debt were $15.1 billion and $15.2 billion as of September 30, 2017 and December 31, 2016, respectively.
|
(d) |
Presented as a component of customer deposits on the Consolidated Balance Sheets.
|
Three Months Ended September 30, 2017 (Millions), net of tax
|
Net Unrealized Gains (Losses) on Investment Securities
|
Foreign Currency Translation Adjustments
|
Net Unrealized Pension and Other Postretirement Benefit (Losses) Gains
|
Accumulated Other Comprehensive (Loss) Income
|
||||||||||||
Balances as of June 30, 2017
|
$
|
13
|
$
|
(1,913
|
)
|
$
|
(528
|
)
|
$
|
(2,428
|
)
|
|||||
Net unrealized losses
|
(2
|
)
|
―
|
―
|
(2
|
)
|
||||||||||
Decrease due to amounts reclassified into earnings
|
―
|
(1
|
)
|
―
|
(1
|
)
|
||||||||||
Net translation gain of investments in foreign operations
|
―
|
292
|
―
|
292
|
||||||||||||
Net losses related to hedges of investments in foreign operations
|
―
|
(184
|
)
|
―
|
(184
|
)
|
||||||||||
Pension and other postretirement benefit
|
―
|
―
|
7
|
7
|
||||||||||||
Net change in accumulated other comprehensive loss
|
(2
|
)
|
107
|
7
|
112
|
|||||||||||
Balances as of September 30, 2017
|
$
|
11
|
$
|
(1,806
|
)
|
$
|
(521
|
)
|
$
|
(2,316
|
)
|
|||||
Nine Months Ended September 30, 2017 (Millions), net of tax
|
Net Unrealized Gains (Losses) on Investment Securities
|
Foreign Currency Translation Adjustments
|
Net Unrealized Pension and Other Postretirement Benefit (Losses) Gains
|
Accumulated Other Comprehensive (Loss) Income
|
||||||||||||
Balances as of December 31, 2016
|
$
|
7
|
$
|
(2,262
|
)
|
$
|
(529
|
)
|
$
|
(2,784
|
)
|
|||||
Net unrealized gains
|
4
|
―
|
―
|
4
|
||||||||||||
Decrease due to amounts reclassified into earnings
|
―
|
(1
|
)
|
―
|
(1
|
)
|
||||||||||
Net translation gain of investments in foreign operations(a)
|
―
|
972
|
―
|
972
|
||||||||||||
Net losses related to hedges of investments in foreign operations
|
―
|
(515
|
)
|
―
|
(515
|
)
|
||||||||||
Pension and other postretirement benefit
|
―
|
―
|
8
|
8
|
||||||||||||
Net change in accumulated other comprehensive loss
|
4
|
456
|
8
|
468
|
||||||||||||
Balances as of September 30, 2017
|
$
|
11
|
$
|
(1,806
|
)
|
$
|
(521
|
)
|
$
|
(2,316
|
)
|
Three Months Ended September 30, 2016 (Millions), net of tax
|
Net Unrealized Gains (Losses) on Investment Securities
|
Foreign Currency Translation Adjustments
|
Net Unrealized Pension and Other Postretirement Benefit (Losses) Gains
|
Accumulated Other Comprehensive (Loss) Income
|
||||||||||||
Balances as of June 30, 2016
|
$
|
65
|
$
|
(2,170
|
)
|
$
|
(516
|
)
|
$
|
(2,621
|
)
|
|||||
Net unrealized losses
|
(14
|
)
|
―
|
―
|
(14
|
)
|
||||||||||
Decrease due to amounts reclassified into earnings
|
(1
|
)
|
―
|
―
|
(1
|
)
|
||||||||||
Net translation gain of investments in foreign operations
|
―
|
29
|
―
|
29
|
||||||||||||
Net losses related to hedges of investments in foreign operations
|
―
|
(18
|
)
|
―
|
(18
|
)
|
||||||||||
Pension and other postretirement benefit
|
―
|
―
|
7
|
7
|
||||||||||||
Net change in accumulated other comprehensive loss
|
(15
|
)
|
11
|
7
|
3
|
|||||||||||
Balances as of September 30, 2016
|
$
|
50
|
$
|
(2,159
|
)
|
$
|
(509
|
)
|
$
|
(2,618
|
)
|
|||||
Nine Months Ended September 30, 2016 (Millions), net of tax
|
Net Unrealized Gains (Losses) on Investment Securities
|
Foreign Currency Translation Adjustments
|
Net Unrealized Pension and Other Postretirement Benefit (Losses) Gains
|
Accumulated Other Comprehensive (Loss) Income
|
||||||||||||
Balances as of December 31, 2015
|
$
|
58
|
$
|
(2,044
|
)
|
$
|
(548
|
)
|
$
|
(2,534
|
)
|
|||||
Net unrealized losses
|
(5
|
)
|
―
|
―
|
(5
|
)
|
||||||||||
Decrease due to amounts reclassified into earnings
|
(3
|
)
|
―
|
―
|
(3
|
)
|
||||||||||
Net translation loss of investments in foreign operations
|
―
|
(140
|
)
|
―
|
(140
|
)
|
||||||||||
Net gains related to hedges of investments in foreign operations
|
―
|
25
|
―
|
25
|
||||||||||||
Pension and other postretirement benefit
|
―
|
―
|
39
|
39
|
||||||||||||
Net change in accumulated other comprehensive loss
|
(8
|
)
|
(115
|
)
|
39
|
(84
|
)
|
|||||||||
Balances as of September 30, 2016
|
$
|
50
|
$
|
(2,159
|
)
|
$
|
(509
|
)
|
$
|
(2,618
|
)
|
Tax (benefit) expense
|
||||||||||||||||
Three Months Ended September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
(Millions)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Investment securities
|
$
|
(1
|
)
|
$
|
(9
|
)
|
$
|
2
|
$
|
(7
|
)
|
|||||
Foreign currency translation adjustments(a)
|
(25
|
)
|
(6
|
)
|
(204
|
)
|
30
|
|||||||||
Net investment hedges
|
(99
|
)
|
(18
|
)
|
(306
|
)
|
7
|
|||||||||
Pension and other postretirement benefits
|
(2
|
)
|
7
|
(10
|
)
|
36
|
||||||||||
Total tax impact
|
$
|
(127
|
)
|
$
|
(26
|
)
|
$
|
(518
|
)
|
$
|
66
|
Gains (losses) recognized in earnings
|
|||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
||||||||||||||||
September 30,
|
September 30,
|
||||||||||||||||
Amount
|
Amount
|
||||||||||||||||
Description (Millions)
|
Income Statement Line Item
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Available-for-sale securities
|
|||||||||||||||||
Reclassifications for previously unrealized net gains on investment securities
|
Other non-interest revenues
|
$
|
―
|
$
|
1
|
$
|
―
|
$
|
5
|
||||||||
Related income tax expense
|
Income tax provision
|
―
|
―
|
―
|
(2
|
)
|
|||||||||||
Reclassification to net income related to available-for-sale securities
|
―
|
1
|
―
|
3
|
|||||||||||||
Foreign currency translation adjustments
|
|||||||||||||||||
Reclassification of realized losses on translation adjustments and related net investments hedges
|
Other expenses
|
(6
|
)
|
―
|
(6
|
)
|
―
|
||||||||||
Related income tax benefit
|
Income tax provision
|
7
|
―
|
7
|
―
|
||||||||||||
Reclassification to net income related to foreign currency translation adjustments
|
1
|
―
|
1
|
―
|
|||||||||||||
Total
|
$
|
1
|
$
|
1
|
$
|
1
|
$
|
3
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
(Millions)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Delinquency fees
|
$
|
221
|
$
|
183
|
$
|
653
|
$
|
575
|
||||||||
Foreign currency conversion fee revenue
|
219
|
207
|
630
|
610
|
||||||||||||
Loyalty coalition-related fees
|
116
|
106
|
332
|
304
|
||||||||||||
Travel commissions and fees
|
93
|
89
|
267
|
256
|
||||||||||||
Other(a)
|
118
|
109
|
350
|
331
|
||||||||||||
Total Other fees and commissions
|
$
|
767
|
$
|
694
|
$
|
2,232
|
$
|
2,076
|
(a) |
Other primarily includes service fees and fees related to Membership Rewards programs.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
(Millions)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Global Network Services partner revenues
|
$
|
150
|
$
|
156
|
$
|
456
|
$
|
498
|
||||||||
Other(a)
|
286
|
327
|
828
|
1,016
|
||||||||||||
Total Other revenues
|
$
|
436
|
$
|
483
|
$
|
1,284
|
$
|
1,514
|
(a) |
Other includes revenues arising from net revenue earned on cross-border Card Member spending, insurance premiums earned from Card Member travel and other insurance programs, merchant-related fees, revenues related to the GBT JV transition services agreement, Prepaid card and Travelers Cheque-related revenues, earnings from equity method investments (including the GBT JV) and other miscellaneous revenue and fees.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
(Millions)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Occupancy and equipment
|
$
|
568
|
$
|
429
|
$
|
1,527
|
$
|
1,332
|
||||||||
Professional services
|
501
|
630
|
1,534
|
1,862
|
||||||||||||
Gain on sale of HFS portfolios(a)
|
―
|
―
|
―
|
(1,218
|
)
|
|||||||||||
Other(b)
|
429
|
439
|
1,220
|
1,412
|
||||||||||||
Total Other expenses
|
$
|
1,498
|
$
|
1,498
|
$
|
4,281
|
$
|
3,388
|
(a) |
Refer to Note 2 for additional information.
|
(b) |
Other expense primarily includes general operating expenses, Card and merchant-related fraud losses, communication expenses, certain loyalty coalition-related expenses, foreign currency-related gains and losses and insurance costs. In addition, for the nine months ended September 30, 2016, Other expenses includes the valuation allowance adjustment associated with loans and receivables HFS.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
(Millions, except per share amounts)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Numerator:
|
||||||||||||||||
Basic and diluted:
|
||||||||||||||||
Net income
|
$
|
1,356
|
$
|
1,142
|
$
|
3,933
|
$
|
4,583
|
||||||||
Preferred dividends
|
(21
|
)
|
(21
|
)
|
(61
|
)
|
(61
|
)
|
||||||||
Net income available to common shareholders
|
1,335
|
1,121
|
3,872
|
4,522
|
||||||||||||
Earnings allocated to participating share awards(a)
|
(11
|
)
|
(9
|
)
|
(32
|
)
|
(37
|
)
|
||||||||
Net income attributable to common shareholders
|
$
|
1,324
|
$
|
1,112
|
$
|
3,840
|
$
|
4,485
|
||||||||
Denominator: (a)
|
||||||||||||||||
Basic: Weighted-average common stock
|
878
|
920
|
889
|
940
|
||||||||||||
Add: Weighted-average stock options (b)
|
3
|
3
|
3
|
3
|
||||||||||||
Diluted
|
881
|
923
|
892
|
943
|
||||||||||||
Basic EPS
|
$
|
1.51
|
$
|
1.21
|
$
|
4.32
|
$
|
4.77
|
||||||||
Diluted EPS
|
$
|
1.50
|
$
|
1.20
|
$
|
4.30
|
$
|
4.76
|
(a) |
The Company’s unvested restricted stock awards, which include the right to receive non-forfeitable dividends or dividend equivalents, are considered participating securities. Calculations of EPS under the two-class method exclude from the numerator any dividends paid or owed on participating securities and any undistributed earnings considered to be attributable to participating securities. The related participating securities are similarly excluded from the denominator.
|
(b) |
The dilutive effect of unexercised stock options excludes from the computation of EPS 0.5 million and 3.2 million of options for the three months ended September 30, 2017 and 2016, respectively, and 0.8 million and 2.2 million of options for the nine months ended September 30, 2017 and 2016, respectively, because inclusion of the options would have been anti-dilutive.
|
Three Months Ended September 30, 2017
(Millions, except where indicated)
|
USCS
|
ICNS
|
GCS
|
GMS
|
Corporate & Other(a)
|
Consolidated
|
||||||||||||||||||
Non-interest revenues
|
$
|
1,976
|
$
|
1,277
|
$
|
2,360
|
$
|
1,088
|
$
|
60
|
$
|
6,761
|
||||||||||||
Interest income
|
1,509
|
271
|
351
|
―
|
111
|
2,242
|
||||||||||||||||||
Interest expense
|
202
|
65
|
144
|
(65
|
)
|
221
|
567
|
|||||||||||||||||
Total revenues net of interest expense
|
3,283
|
1,483
|
2,567
|
1,153
|
(50
|
)
|
8,436
|
|||||||||||||||||
Net income (loss)
|
$
|
475
|
$
|
286
|
$
|
529
|
$
|
368
|
$
|
(302
|
)
|
$
|
1,356
|
|||||||||||
Total assets (billions)
|
$
|
88
|
$
|
39
|
$
|
53
|
$
|
27
|
$
|
(38
|
)
|
$
|
169
|
|||||||||||
Total equity (billions)
|
$
|
7
|
$
|
3
|
$
|
7
|
$
|
3
|
$
|
1
|
$
|
21
|
||||||||||||
Nine Months Ended September 30, 2017
(Millions, except where indicated)
|
USCS
|
ICNS
|
GCS
|
GMS
|
Corporate & Other(a)
|
Consolidated
|
||||||||||||||||||
Non-interest revenues
|
$
|
5,832
|
$
|
3,719
|
$
|
6,999
|
$
|
3,191
|
$
|
186
|
$
|
19,927
|
||||||||||||
Interest income
|
4,186
|
752
|
1,004
|
1
|
294
|
6,237
|
||||||||||||||||||
Interest expense
|
519
|
178
|
382
|
(188
|
)
|
641
|
1,532
|
|||||||||||||||||
Total revenues net of interest expense
|
9,499
|
4,293
|
7,621
|
3,380
|
(161
|
)
|
24,632
|
|||||||||||||||||
Net income (loss)
|
$
|
1,384
|
$
|
713
|
$
|
1,447
|
$
|
1,161
|
$
|
(772
|
)
|
$
|
3,933
|
|||||||||||
Total assets (billions)
|
$
|
88
|
$
|
39
|
$
|
53
|
$
|
27
|
$
|
(38
|
)
|
$
|
169
|
|||||||||||
Total equity (billions)
|
$
|
7
|
$
|
3
|
$
|
7
|
$
|
3
|
$
|
1
|
$
|
21
|
||||||||||||
Three Months Ended September 30, 2016
(Millions, except where indicated)
|
USCS
|
ICNS
|
GCS
|
GMS
|
Corporate & Other(a)
|
Consolidated
|
||||||||||||||||||
Non-interest revenues
|
$
|
1,849
|
$
|
1,205
|
$
|
2,240
|
$
|
1,044
|
$
|
102
|
$
|
6,440
|
||||||||||||
Interest income
|
1,178
|
231
|
282
|
―
|
73
|
1,764
|
||||||||||||||||||
Interest expense
|
125
|
55
|
98
|
(60
|
)
|
212
|
430
|
|||||||||||||||||
Total revenues net of interest expense
|
2,902
|
1,381
|
2,424
|
1,104
|
(37
|
)
|
7,774
|
|||||||||||||||||
Net income (loss)
|
$
|
401
|
$
|
155
|
$
|
466
|
$
|
359
|
$
|
(239
|
)
|
$
|
1,142
|
|||||||||||
Total assets (billions)
|
$
|
79
|
$
|
34
|
$
|
47
|
$
|
23
|
$
|
(30
|
)
|
$
|
153
|
|||||||||||
Total equity (billions)
|
$
|
8
|
$
|
3
|
$
|
7
|
$
|
2
|
$
|
1
|
$
|
21
|
||||||||||||
Nine Months Ended September 30, 2016
(Millions, except where indicated)
|
USCS
|
ICNS
|
GCS
|
GMS
|
Corporate & Other(a)
|
Consolidated
|
||||||||||||||||||
Non-interest revenues
|
$
|
5,947
|
$
|
3,587
|
$
|
6,710
|
$
|
3,172
|
$
|
318
|
$
|
19,734
|
||||||||||||
Interest income
|
3,847
|
692
|
913
|
1
|
201
|
5,654
|
||||||||||||||||||
Interest expense
|
404
|
167
|
297
|
(180
|
)
|
603
|
1,291
|
|||||||||||||||||
Total revenues net of interest expense
|
9,390
|
4,112
|
7,326
|
3,353
|
(84
|
)
|
24,097
|
|||||||||||||||||
Net income (loss)
|
$
|
2,162
|
$
|
571
|
$
|
1,527
|
$
|
1,089
|
$
|
(766
|
)
|
$
|
4,583
|
|||||||||||
Total assets (billions)
|
$
|
79
|
$
|
34
|
$
|
47
|
$
|
23
|
$
|
(30
|
)
|
$
|
153
|
|||||||||||
Total equity (billions)
|
$
|
8
|
$
|
3
|
$
|
7
|
$
|
2
|
$
|
1
|
$
|
21
|
(a) |
Corporate & Other includes adjustments and eliminations for intersegment activity.
|
• |
Discount revenue, our largest revenue source, represents fees generally charged to merchants for accepting our cards as payment for goods or services sold;
|
• |
Interest on loans, principally represents interest income earned on outstanding balances;
|
• |
Net card fees, represent revenue earned from annual card membership fees, which varies based on the type of card and the number of cards for each account;
|
• |
Other fees and commissions, represent foreign currency conversion fees charged to Card Members, Card Member delinquency fees, loyalty coalition-related fees, travel commissions and fees, service fees and fees related to our Membership Rewards program; and
|
• |
Other revenue, primarily represents revenues arising from contracts with partners of our Global Network Services (GNS) business (including commissions and signing fees), cross-border Card Member spending, insurance premiums earned from Card Members, ancillary merchant-related fees, revenues related to the GBT JV transition services agreement, prepaid card and Travelers Cheque-related revenue and earnings from equity method investments (including the GBT JV).
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||||||||||
September 30,
|
Change
|
September 30,
|
Change
|
|||||||||||||||||||||||||||||
(Millions, except percentages and per share amounts)
|
2017
|
2016
|
2017 vs. 2016
|
2017
|
2016
|
2017 vs. 2016
|
||||||||||||||||||||||||||
Total revenues net of interest expense
|
$
|
8,436
|
$
|
7,774
|
$
|
662
|
9
|
%
|
$
|
24,632
|
$
|
24,097
|
$
|
535
|
2
|
%
|
||||||||||||||||
Provisions for losses
|
769
|
504
|
265
|
53
|
1,926
|
1,401
|
525
|
37
|
||||||||||||||||||||||||
Expenses
|
5,840
|
5,535
|
305
|
6
|
17,113
|
15,761
|
1,352
|
9
|
||||||||||||||||||||||||
Net income
|
1,356
|
1,142
|
214
|
19
|
3,933
|
4,583
|
(650
|
)
|
(14
|
)
|
||||||||||||||||||||||
Earnings per common share - diluted(a)
|
$
|
1.50
|
$
|
1.20
|
$
|
0.30
|
25
|
%
|
$
|
4.30
|
$
|
4.76
|
$
|
(0.46
|
)
|
(10
|
)%
|
|||||||||||||||
Return on average equity(b)
|
22.7
|
%
|
26.1
|
%
|
22.7
|
%
|
26.1
|
%
|
(a) |
Earnings per common share — diluted was reduced by the impact of (i) earnings allocated to participating share awards and other items of $11 million and $9 million for the three months ended September 30, 2017 and 2016, respectively, and $32 million and $37 million for the nine months ended September 30, 2017 and 2016, respectively, and (ii) dividends on preferred shares of $21 million for both the three months ended September 30, 2017 and 2016, and $61 million for both the nine months ended September 30, 2017 and 2016.
|
(b) |
Return on average equity (ROE) is computed by dividing (i) one-year period net income ($4.8 billion and $5.5 billion for September 30, 2017 and 2016, respectively) by (ii) one-year average total shareholders’ equity ($21.0 billion for both September 30, 2017 and 2016).
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||||||||||
September 30,
|
Change
|
September 30,
|
Change
|
|||||||||||||||||||||||||||||
(Millions, except percentages)
|
2017
|
2016
|
2017 vs. 2016
|
2017
|
2016
|
2017 vs. 2016
|
||||||||||||||||||||||||||
Discount revenue
|
$
|
4,772
|
$
|
4,516
|
$
|
256
|
6
|
%
|
$
|
14,106
|
$
|
13,983
|
$
|
123
|
1
|
%
|
||||||||||||||||
Net card fees
|
786
|
747
|
39
|
5
|
2,305
|
2,161
|
144
|
7
|
||||||||||||||||||||||||
Other fees and commissions
|
767
|
694
|
73
|
11
|
2,232
|
2,076
|
156
|
8
|
||||||||||||||||||||||||
Other
|
436
|
483
|
(47
|
)
|
(10
|
)
|
1,284
|
1,514
|
(230
|
)
|
(15
|
)
|
||||||||||||||||||||
Total non-interest revenues
|
6,761
|
6,440
|
321
|
5
|
19,927
|
19,734
|
193
|
1
|
||||||||||||||||||||||||
Total interest income
|
2,242
|
1,764
|
478
|
27
|
6,237
|
5,654
|
583
|
10
|
||||||||||||||||||||||||
Total interest expense
|
567
|
430
|
137
|
32
|
1,532
|
1,291
|
241
|
19
|
||||||||||||||||||||||||
Net interest income
|
1,675
|
1,334
|
341
|
26
|
4,705
|
4,363
|
342
|
8
|
||||||||||||||||||||||||
Total revenues net of interest expense
|
$
|
8,436
|
$
|
7,774
|
$
|
662
|
9
|
%
|
$
|
24,632
|
$
|
24,097
|
$
|
535
|
2
|
%
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||||||||||
September 30,
|
Change
|
September 30,
|
Change
|
|||||||||||||||||||||||||||||
(Millions, except percentages)
|
2017
|
2016
|
2017 vs. 2016
|
2017
|
2016
|
2017 vs. 2016
|
||||||||||||||||||||||||||
Charge card
|
$
|
214
|
$
|
174
|
$
|
40
|
23
|
%
|
$
|
590
|
$
|
496
|
$
|
94
|
19
|
%
|
||||||||||||||||
Card Member loans
|
531
|
319
|
212
|
66
|
1,272
|
831
|
441
|
53
|
||||||||||||||||||||||||
Other
|
24
|
11
|
13
|
#
|
64
|
74
|
(10
|
)
|
(14
|
)
|
||||||||||||||||||||||
Total provisions for losses(a)
|
$
|
769
|
$
|
504
|
$
|
265
|
53
|
%
|
$
|
1,926
|
$
|
1,401
|
$
|
525
|
37
|
%
|
(a) |
Beginning December 1, 2015 through to the sale completion dates, does not reflect the HFS portfolios.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||||||||||
September 30,
|
Change
|
September 30,
|
Change
|
|||||||||||||||||||||||||||||
(Millions, except percentages)
|
2017
|
2016
|
2017 vs. 2016
|
2017
|
2016
|
2017 vs. 2016
|
||||||||||||||||||||||||||
Marketing and promotion
|
$
|
814
|
$
|
930
|
$
|
(116
|
)
|
(12
|
)%
|
$
|
2,344
|
$
|
2,445
|
$
|
(101
|
)
|
(4
|
)%
|
||||||||||||||
Card Member rewards
|
1,900
|
1,566
|
334
|
21
|
5,633
|
5,035
|
598
|
12
|
||||||||||||||||||||||||
Card Member services and other
|
363
|
278
|
85
|
31
|
1,033
|
841
|
192
|
23
|
||||||||||||||||||||||||
Total marketing, promotion, rewards, Card Member services and other
|
3,077
|
2,774
|
303
|
11
|
9,010
|
8,321
|
689
|
8
|
||||||||||||||||||||||||
Salaries and employee benefits
|
1,265
|
1,263
|
2
|
―
|
3,822
|
4,052
|
(230
|
)
|
(6
|
)
|
||||||||||||||||||||||
Other, net(a)
|
1,498
|
1,498
|
―
|
―
|
4,281
|
3,388
|
893
|
26
|
||||||||||||||||||||||||
Total expenses
|
$
|
5,840
|
$
|
5,535
|
$
|
305
|
6
|
%
|
$
|
17,113
|
$
|
15,761
|
$
|
1,352
|
9
|
%
|
(a) |
Beginning December 1, 2015 through to the portfolio sale completion dates, includes the valuation allowance adjustment associated with the HFS portfolios.
|
As of or for the
|
Change
|
As of or for the
|
Change
|
|||||||||||||||||||||
Three Months Ended
|
2017
|
Nine Months Ended
|
2017
|
|||||||||||||||||||||
September 30,
|
vs.
|
September 30,
|
vs.
|
|||||||||||||||||||||
2017
|
2016
|
2016
|
2017
|
2016
|
2016
|
|||||||||||||||||||
Card billed business: (billions)
|
||||||||||||||||||||||||
United States
|
$
|
176.4
|
$
|
164.6
|
7
|
%
|
$
|
519.4
|
$
|
526.0
|
(1
|
)%
|
||||||||||||
Outside the United States
|
95.5
|
86.6
|
10
|
274.4
|
248.3
|
11
|
||||||||||||||||||
Worldwide
|
$
|
271.9
|
$
|
251.2
|
8
|
$
|
793.8
|
$
|
774.3
|
3
|
||||||||||||||
Proprietary
|
$
|
225.3
|
$
|
206.4
|
9
|
$
|
658.0
|
$
|
645.2
|
2
|
||||||||||||||
Global Network Services
|
46.6
|
44.8
|
4
|
135.8
|
129.1
|
5
|
||||||||||||||||||
Worldwide
|
$
|
271.9
|
$
|
251.2
|
8
|
$
|
793.8
|
$
|
774.3
|
3
|
||||||||||||||
Total cards-in-force: (millions)
|
||||||||||||||||||||||||
United States
|
49.5
|
47.1
|
5
|
49.5
|
47.1
|
5
|
||||||||||||||||||
Outside the United States
|
63.4
|
61.7
|
3
|
63.4
|
61.7
|
3
|
||||||||||||||||||
Worldwide
|
112.9
|
108.8
|
4
|
112.9
|
108.8
|
4
|
||||||||||||||||||
Proprietary
|
63.9
|
60.7
|
5
|
63.9
|
60.7
|
5
|
||||||||||||||||||
Global Network Services
|
49.0
|
48.1
|
2
|
49.0
|
48.1
|
2
|
||||||||||||||||||
Worldwide
|
112.9
|
108.8
|
4
|
112.9
|
108.8
|
4
|
||||||||||||||||||
Basic cards-in-force: (millions)
|
||||||||||||||||||||||||
United States
|
39.0
|
37.0
|
5
|
39.0
|
37.0
|
5
|
||||||||||||||||||
Outside the United States
|
52.7
|
51.1
|
3
|
52.7
|
51.1
|
3
|
||||||||||||||||||
Worldwide
|
91.7
|
88.1
|
4
|
91.7
|
88.1
|
4
|
||||||||||||||||||
Average basic Card Member spending: (dollars)(a)
|
||||||||||||||||||||||||
United States
|
$
|
5,018
|
$
|
4,937
|
2
|
$
|
15,009
|
$
|
13,732
|
9
|
||||||||||||||
Outside the United States
|
3,598
|
3,264
|
10
|
10,351
|
9,667
|
7
|
||||||||||||||||||
Worldwide Average
|
4,596
|
4,433
|
4
|
13,620
|
12,628
|
8
|
||||||||||||||||||
Card Member loans: (billions)
|
||||||||||||||||||||||||
United States
|
59.9
|
53.9
|
11
|
59.9
|
53.9
|
11
|
||||||||||||||||||
Outside the United States
|
8.0
|
6.7
|
19
|
8.0
|
6.7
|
19
|
||||||||||||||||||
Worldwide
|
$
|
67.9
|
$
|
60.6
|
12
|
$
|
67.9
|
$
|
60.6
|
12
|
||||||||||||||
Average discount rate
|
2.42
|
%
|
2.47
|
%
|
2.44
|
%
|
2.45
|
%
|
||||||||||||||||
Average fee per card (dollars)(a)
|
$
|
49
|
$
|
49
|
―
|
%
|
$
|
49
|
$
|
43
|
14
|
%
|
(a) |
Average basic Card Member spending and average fee per card are computed from proprietary card activities only. Average fee per card is computed based on net card fees divided by average worldwide proprietary cards-in-force.
|
Three Months Ended
|
|||||
September 30, 2017
|
|||||
Percentage Increase
|
|||||
Percentage
|
(Decrease) Assuming
|
||||
Increase
|
No Changes in
|
||||
(Decrease)
|
FX Rates(a)
|
||||
Worldwide(b)
|
|||||
Total billed business
|
8
|
%
|
8
|
%
|
|
Proprietary billed business
|
9
|
9
|
|||
GNS billed business(c)
|
4
|
4
|
|||
Airline-related volume (8% of worldwide billed business)
|
5
|
3
|
|||
United States(b)
|
|||||
Billed business
|
7
|
||||
Proprietary consumer card billed business(d)
|
7
|
||||
Proprietary small business and corporate services billed business(e)
|
9
|
||||
T&E-related volume (25% of U.S. billed business)
|
3
|
||||
Non-T&E-related volume (75% of U.S. billed business)
|
8
|
||||
Airline-related volume (7% of U.S. billed business)
|
2
|
||||
Outside the United States(b)
|
|||||
Billed business
|
10
|
9
|
|||
Japan, Asia Pacific & Australia (JAPA) billed business
|
8
|
9
|
|||
Latin America & Canada (LACC) billed business
|
10
|
8
|
|||
Europe, the Middle East & Africa (EMEA) billed business
|
13
|
10
|
|||
Proprietary consumer card billed business(c)
|
15
|
13
|
|||
Proprietary small business and corporate services billed business(e)
|
14
|
%
|
11
|
%
|
(a) |
The foreign currency adjusted information 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 period apply to the corresponding prior year period against which such results are being compared).
|
(b) |
Captions in the table above not designated as “proprietary” or “GNS” include both proprietary and GNS data.
|
(c) |
Included in the ICNS segment.
|
(d) |
Included in the USCS segment.
|
(e) |
Included in the GCS segment.
|
Nine Months Ended
|
|||||
September 30, 2017
|
|||||
Percentage Increase
|
|||||
Percentage
|
(Decrease) Assuming
|
||||
Increase
|
No Changes in
|
||||
(Decrease)
|
FX Rates(a)
|
||||
Worldwide(b)
|
|||||
Total billed business
|
3
|
%
|
3
|
%
|
|
Proprietary billed business
|
2
|
2
|
|||
GNS billed business(c)
|
5
|
5
|
|||
Airline-related volume (8% of worldwide billed business)
|
2
|
2
|
|||
United States(b)
|
|||||
Billed business
|
(1)
|
||||
Proprietary consumer card billed business(d)
|
(6)
|
||||
Proprietary small business and corporate services billed business(e)
|
5
|
||||
T&E-related volume (26% of U.S. billed business)
|
(2)
|
||||
Non-T&E-related volume (74% of U.S. billed business)
|
(1)
|
||||
Airline-related volume (7% of U.S. billed business)
|
(1)
|
||||
Outside the United States(b)
|
|||||
Billed business
|
11
|
11
|
|||
Japan, Asia Pacific & Australia billed business
|
12
|
12
|
|||
Latin America & Canada billed business
|
10
|
9
|
|||
Europe, the Middle East & Africa billed business
|
9
|
11
|
|||
Proprietary consumer card billed business(c)
|
11
|
12
|
|||
Proprietary small business and corporate services billed business(e)
|
12
|
%
|
12
|
%
|
(a) |
Refer to Note (a) in Table 6.
|
(b) |
Captions in the table above not designated as “proprietary” or “GNS” include both proprietary and GNS data.
|
(c) |
Included in the ICNS segment.
|
(d) |
Included in the USCS segment.
|
(e) |
Included in the GCS segment.
|
As of or for the
|
Change
|
As of or for the
|
Change
|
|||||||||||||||||||||
Three Months Ended
|
2017
|
Nine Months Ended
|
2017
|
|||||||||||||||||||||
September 30,
|
vs.
|
September 30,
|
vs.
|
|||||||||||||||||||||
(Millions, except percentages and where indicated)
|
2017
|
2016
|
2016
|
2017
|
2016
|
2016
|
||||||||||||||||||
Worldwide Card Member loans: (a)
|
||||||||||||||||||||||||
Total loans (billions)
|
$
|
67.9
|
$
|
60.6
|
12
|
$
|
67.9
|
$
|
60.6
|
12
|
||||||||||||||
Loss reserves:
|
||||||||||||||||||||||||
Beginning balance
|
$
|
1,320
|
$
|
1,091
|
21
|
$
|
1,223
|
$
|
1,028
|
19
|
||||||||||||||
Provisions (b)
|
531
|
319
|
66
|
1,272
|
831
|
53
|
||||||||||||||||||
Net write-offs — principal only (c)
|
(299
|
)
|
(250
|
)
|
20
|
(856
|
)
|
(687
|
)
|
25
|
||||||||||||||
Net write-offs — interest and fees (c)
|
(57
|
)
|
(48
|
)
|
19
|
(163
|
)
|
(128
|
)
|
27
|
||||||||||||||
Other (d)
|
7
|
2
|
#
|
26
|
70
|
(63
|
)
|
|||||||||||||||||
Ending balance
|
$
|
1,502
|
$
|
1,114
|
35
|
$
|
1,502
|
$
|
1,114
|
35
|
||||||||||||||
Ending reserves — principal
|
$
|
1,427
|
$
|
1,050
|
36
|
$
|
1,427
|
$
|
1,050
|
36
|
||||||||||||||
Ending reserves — interest and fees
|
$
|
75
|
$
|
64
|
17
|
$
|
75
|
$
|
64
|
17
|
||||||||||||||
% of loans
|
2.2
|
%
|
1.8
|
%
|
2.2
|
%
|
1.8
|
%
|
||||||||||||||||
% of past due
|
174
|
%
|
160
|
%
|
174
|
%
|
160
|
%
|
||||||||||||||||
Average loans (billions)(a)
|
$
|
67.1
|
$
|
60.3
|
11
|
%
|
$
|
65.4
|
$
|
58.9
|
11
|
%
|
||||||||||||
Net write-off rate — principal only (e)
|
1.8
|
%
|
1.7
|
%
|
1.7
|
%
|
1.6
|
%
|
||||||||||||||||
Net write-off rate — principal, interest and fees (e)
|
2.1
|
2.0
|
2.1
|
1.8
|
||||||||||||||||||||
30+ days past due as a % of total (e)
|
1.3
|
%
|
1.1
|
%
|
1.3
|
%
|
1.1
|
%
|
||||||||||||||||
Worldwide Card Member receivables: (a)
|
||||||||||||||||||||||||
Total receivables (billions)
|
$
|
51.5
|
$
|
45.3
|
14
|
%
|
$
|
51.5
|
$
|
45.3
|
14
|
%
|
||||||||||||
Loss reserves:
|
||||||||||||||||||||||||
Beginning balance
|
$
|
475
|
$
|
423
|
12
|
$
|
467
|
$
|
462
|
1
|
||||||||||||||
Provisions (b)
|
214
|
174
|
23
|
590
|
496
|
19
|
||||||||||||||||||
Net write-offs (c)
|
(175
|
)
|
(159
|
)
|
10
|
(548
|
)
|
(518
|
)
|
6
|
||||||||||||||
Other
|
(2
|
)
|
(1
|
)
|
#
|
3
|
(3
|
)
|
#
|
|||||||||||||||
Ending balance
|
$
|
512
|
$
|
437
|
17
|
$
|
512
|
$
|
437
|
17
|
||||||||||||||
% of receivables
|
1.0
|
%
|
1.0
|
%
|
1.0
|
%
|
1.0
|
%
|
||||||||||||||||
Net write-off rate — principal only (e)
|
1.5
|
1.4
|
1.6
|
1.6
|
||||||||||||||||||||
Net write-off rate — principal and fees (e)
|
1.7
|
1.6
|
1.8
|
1.8
|
||||||||||||||||||||
30+ days past due as a % of total (e)
|
1.3
|
1.4
|
1.3
|
1.4
|
||||||||||||||||||||
Net loss ratio as a % of charge volume — GCP
|
0.09
|
0.11
|
0.10
|
0.09
|
||||||||||||||||||||
90+ days past billing as a % of total — GCP
|
0.9
|
%
|
0.8
|
%
|
0.9
|
%
|
0.8
|
%
|
(a) |
Beginning December 1, 2015 through to the sale completion dates, does not reflect the HFS portfolios.
|
(b) |
Reflects provisions for principal, interest and/or fees on Card Member loans and receivables. Refer to Table 3 footnote (a).
|
(c) |
Write-offs, less recoveries.
|
(d) |
The nine months ended September 30, 2016 includes reserves associated with Card Member loans reclassified from HFS to held for investment. Refer to Changes in Card Member loans reserve for losses under Note 4 to our Consolidated Financial Statements for additional information.
|
(e) |
We present a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, because we consider uncollectible interest and/or fees in our reserves for credit losses, a net write-off rate including principal, interest and/or fees is also presented. The net write-off rates and 30+ days past due as a percentage of total for Card Member receivables relate to USCS, ICNS and Global Small Business Services (GSBS) Card Member receivables.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
(Millions, except percentages and where indicated)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Net interest income
|
$
|
1,675
|
$
|
1,334
|
$
|
4,705
|
$
|
4,363
|
||||||||
Exclude:
|
||||||||||||||||
Interest expense not attributable to our Card Member loan portfolio
|
315
|
261
|
869
|
746
|
||||||||||||
Interest income not attributable to our Card Member loan portfolio
|
(174
|
)
|
(104
|
)
|
(459
|
)
|
(309
|
)
|
||||||||
Adjusted net interest income (a)
|
$
|
1,816
|
$
|
1,491
|
$
|
5,115
|
$
|
4,800
|
||||||||
Average loans (billions)(b)
|
$
|
67.1
|
$
|
60.3
|
$
|
65.4
|
$
|
66.6
|
||||||||
Net interest income divided by average loans
|
10.0
|
%
|
8.8
|
%
|
9.6
|
%
|
8.7
|
%
|
||||||||
Net interest yield on Card Member loans (a)
|
10.7
|
%
|
9.8
|
%
|
10.5
|
%
|
9.6
|
%
|
(a) |
Adjusted net interest income and net interest yield on Card Member loans are non-GAAP measures. Refer to “Glossary of Selected Terminology” for definitions of these terms. We believe adjusted net interest income is useful to investors because it is a component of net interest yield on Card Member loans, which provides a measure of profitability of our Card Member loan portfolio.
|
(b) |
Beginning December 1, 2015 through to the sale completion dates, for the purposes of the calculation of net interest yield on Card Member loans, average loans included the HFS loan portfolios.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||||||||||
September 30,
|
Change
|
September 30,
|
Change
|
|||||||||||||||||||||||||||||
(Millions, except percentages)
|
2017
|
2016
|
2017 vs. 2016
|
2017
|
2016
|
2017 vs. 2016
|
||||||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||||||||||||
Non-interest revenues
|
$
|
1,976
|
$
|
1,849
|
$
|
127
|
7
|
%
|
$
|
5,832
|
$
|
5,947
|
(115
|
)
|
(2
|
)%
|
||||||||||||||||
Interest income
|
1,509
|
1,178
|
331
|
28
|
4,186
|
3,847
|
339
|
9
|
||||||||||||||||||||||||
Interest expense
|
202
|
125
|
77
|
62
|
519
|
404
|
115
|
28
|
||||||||||||||||||||||||
Net interest income
|
1,307
|
1,053
|
254
|
24
|
3,667
|
3,443
|
224
|
7
|
||||||||||||||||||||||||
Total revenues net of interest expense
|
3,283
|
2,902
|
381
|
13
|
9,499
|
9,390
|
109
|
1
|
||||||||||||||||||||||||
Provisions for losses
|
459
|
275
|
184
|
67
|
1,098
|
702
|
396
|
56
|
||||||||||||||||||||||||
Total revenues net of interest expense after provisions for losses
|
2,824
|
2,627
|
197
|
7
|
8,401
|
8,688
|
(287
|
)
|
(3
|
)
|
||||||||||||||||||||||
Expenses
|
||||||||||||||||||||||||||||||||
Marketing, promotion, rewards, Card Member services and other
|
1,440
|
1,274
|
166
|
13
|
4,206
|
3,991
|
215
|
5
|
||||||||||||||||||||||||
Salaries and employee benefits and other operating expenses
|
684
|
738
|
(54
|
)
|
(7
|
)
|
2,126
|
1,297
|
829
|
64
|
||||||||||||||||||||||
Total expenses
|
2,124
|
2,012
|
112
|
6
|
6,332
|
5,288
|
1,044
|
20
|
||||||||||||||||||||||||
Pretax segment income
|
700
|
615
|
85
|
14
|
2,069
|
3,400
|
(1,331
|
)
|
(39
|
)
|
||||||||||||||||||||||
Income tax provision
|
225
|
214
|
11
|
5
|
685
|
1,238
|
(553
|
)
|
(45
|
)
|
||||||||||||||||||||||
Segment income
|
$
|
475
|
$
|
401
|
$
|
74
|
18
|
%
|
$
|
1,384
|
$
|
2,162
|
(778
|
)
|
(36
|
)%
|
||||||||||||||||
Effective tax rate
|
32.1
|
%
|
34.8
|
%
|
33.1
|
%
|
36.4
|
%
|
As of or for the
|
Change
|
As of or for the
|
Change
|
|||||||||||||||||||||
Three Months Ended
|
2017
|
Nine Months Ended
|
2017
|
|||||||||||||||||||||
September 30,
|
vs.
|
September 30,
|
vs.
|
|||||||||||||||||||||
(Millions, except percentages and where indicated)
|
2017
|
2016
|
2016
|
2017
|
2016
|
2016
|
||||||||||||||||||
Card billed business (billions)
|
$
|
83.7
|
$
|
78.6
|
6
|
%
|
$
|
246.0
|
$
|
261.0
|
(6
|
)%
|
||||||||||||
Total cards-in-force
|
34.4
|
32.3
|
7
|
34.4
|
32.3
|
7
|
||||||||||||||||||
Basic cards-in-force
|
24.6
|
22.9
|
7
|
24.6
|
22.9
|
7
|
||||||||||||||||||
Average basic Card Member spending (dollars)
|
$
|
3,433
|
$
|
3,452
|
(1
|
)
|
$
|
10,271
|
$
|
9,878
|
4
|
|||||||||||||
Total segment assets (billions)
|
$
|
87.7
|
$
|
79.4
|
10
|
$
|
87.7
|
$
|
79.4
|
10
|
||||||||||||||
Segment capital (billions)
|
$
|
7.1
|
$
|
7.5
|
(5
|
)
|
$
|
7.1
|
$
|
7.5
|
(5
|
)
|
||||||||||||
Return on average segment capital (a)
|
24.2
|
%
|
37.4
|
%
|
24.2
|
%
|
37.4
|
%
|
||||||||||||||||
Card Member loans: (b)
|
||||||||||||||||||||||||
Total loans (billions)
|
$
|
49.3
|
$
|
44.9
|
10
|
$
|
49.3
|
$
|
44.9
|
10
|
||||||||||||||
Average loans (billions)
|
$
|
49.0
|
$
|
44.8
|
9
|
$
|
48.1
|
$
|
43.7
|
10
|
||||||||||||||
Net write-off rate – principal only (c)
|
1.8
|
%
|
1.6
|
%
|
1.7
|
%
|
1.5
|
%
|
||||||||||||||||
Net write-off rate – principal, interest and fees (c)
|
2.1
|
%
|
1.9
|
%
|
2.0
|
%
|
1.8
|
%
|
||||||||||||||||
30+ days past due loans as a % of total
|
1.3
|
%
|
1.1
|
%
|
1.3
|
%
|
1.1
|
%
|
||||||||||||||||
Calculation of Net Interest Yield on Card Member loans:
|
||||||||||||||||||||||||
Net interest income
|
$
|
1,307
|
$
|
1,053
|
$
|
3,667
|
$
|
3,443
|
||||||||||||||||
Exclude:
|
||||||||||||||||||||||||
Interest expense not attributable to our Card Member loan portfolio
|
33
|
20
|
84
|
59
|
||||||||||||||||||||
Interest income not attributable to our Card Member loan portfolio
|
(29
|
)
|
(6
|
)
|
(70
|
)
|
(16
|
)
|
||||||||||||||||
Adjusted net interest income (d)
|
$
|
1,311
|
$
|
1,067
|
$
|
3,681
|
$
|
3,486
|
||||||||||||||||
Average loans (billions)(e)
|
$
|
49.0
|
$
|
44.8
|
$
|
48.1
|
$
|
50.1
|
||||||||||||||||
Net interest income divided by average loans
|
10.7
|
%
|
9.4
|
%
|
10.2
|
%
|
9.2
|
%
|
||||||||||||||||
Net interest yield on Card Member loans(d)
|
10.6
|
%
|
9.5
|
%
|
10.2
|
%
|
9.3
|
%
|
||||||||||||||||
Card Member receivables: (b)
|
||||||||||||||||||||||||
Total receivables (billions)
|
$
|
11.2
|
$
|
10.1
|
11
|
%
|
$
|
11.2
|
$
|
10.1
|
11
|
%
|
||||||||||||
Net write-off rate – principal only (c)
|
1.2
|
%
|
1.1
|
%
|
1.3
|
%
|
1.4
|
%
|
||||||||||||||||
Net write-off rate – principal and fees (c)
|
1.3
|
%
|
1.3
|
%
|
1.5
|
%
|
1.6
|
%
|
||||||||||||||||
30+ days past due as a % of total
|
1.2
|
%
|
1.4
|
%
|
1.2
|
%
|
1.4
|
%
|
(a) |
Return on average segment capital is calculated by dividing (i) one-year period segment income ($1.7 billion and $2.7 billion for the twelve months ended September 30, 2017 and 2016, respectively) by (ii) one-year average segment capital ($7.2 billion for both the twelve months ended September 30, 2017 and 2016).
|
(b) |
Refer to Table 8 footnote (a).
|
(c) |
Refer to Table 8 footnote (e).
|
(d) |
Adjusted net interest income and net interest yield on Card Member loans are non-GAAP measures. Refer to “Glossary of Selected Terminology” for the definitions of these terms. We believe adjusted net interest income is useful to investors because it is a component of net interest yield on Card Member loans, which provides a measure of profitability of our Card Member loan portfolio.
|
(e) |
Refer to Table 9 footnote (b).
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||||||||||
September 30,
|
Change
|
September 30,
|
Change
|
|||||||||||||||||||||||||||||
(Millions, except percentages)
|
2017
|
2016
|
2017 vs. 2016
|
2017
|
2016
|
2017 vs. 2016
|
||||||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||||||||||||
Non-interest revenues
|
$
|
1,277
|
$
|
1,205
|
$
|
72
|
6
|
%
|
$
|
3,719
|
$
|
3,587
|
$
|
132
|
4
|
%
|
||||||||||||||||
Interest income
|
271
|
231
|
40
|
17
|
752
|
692
|
60
|
9
|
||||||||||||||||||||||||
Interest expense
|
65
|
55
|
10
|
18
|
178
|
167
|
11
|
7
|
||||||||||||||||||||||||
Net interest income
|
206
|
176
|
30
|
17
|
574
|
525
|
49
|
9
|
||||||||||||||||||||||||
Total revenues net of interest expense
|
1,483
|
1,381
|
102
|
7
|
4,293
|
4,112
|
181
|
4
|
||||||||||||||||||||||||
Provisions for losses
|
106
|
84
|
22
|
26
|
256
|
233
|
23
|
10
|
||||||||||||||||||||||||
Total revenues net of interest expense after provisions for losses
|
1,377
|
1,297
|
80
|
6
|
4,037
|
3,879
|
158
|
4
|
||||||||||||||||||||||||
Expenses
|
||||||||||||||||||||||||||||||||
Marketing, promotion, rewards, Card Member services and other
|
587
|
554
|
33
|
6
|
1,653
|
1,535
|
118
|
8
|
||||||||||||||||||||||||
Salaries and employee benefits and other operating expenses
|
483
|
535
|
(52
|
)
|
(10
|
)
|
1,510
|
1,608
|
(98
|
)
|
(6
|
)
|
||||||||||||||||||||
Total expenses
|
1,070
|
1,089
|
(19
|
)
|
(2
|
)
|
3,163
|
3,143
|
20
|
1
|
||||||||||||||||||||||
Pretax segment income
|
307
|
208
|
99
|
48
|
874
|
736
|
138
|
19
|
||||||||||||||||||||||||
Income tax provision
|
21
|
53
|
(32
|
)
|
(60
|
)
|
161
|
165
|
(4
|
)
|
(2
|
)
|
||||||||||||||||||||
Segment income
|
$
|
286
|
$
|
155
|
$
|
131
|
85
|
%
|
$
|
713
|
$
|
571
|
$
|
142
|
25
|
%
|
||||||||||||||||
Effective tax rate
|
6.8
|
%
|
25.5
|
%
|
18.4
|
%
|
22.4
|
%
|
As of or for the
|
Change
|
As of or for the
|
Change
|
|||||||||||||||||||||
Three Months Ended
|
2017
|
Nine Months Ended
|
2017
|
|||||||||||||||||||||
September 30,
|
vs.
|
September 30,
|
vs.
|
|||||||||||||||||||||
(Millions, except percentages and where indicated)
|
2017
|
2016
|
2016
|
2017
|
2016
|
2016
|
||||||||||||||||||
Card billed business (billions)
|
||||||||||||||||||||||||
Proprietary
|
$
|
30.5
|
$
|
26.6
|
15
|
%
|
$
|
86.0
|
$
|
77.8
|
11
|
%
|
||||||||||||
GNS
|
46.6
|
44.8
|
4
|
135.8
|
129.1
|
5
|
||||||||||||||||||
Total
|
$
|
77.1
|
$
|
71.4
|
8
|
$
|
221.8
|
$
|
206.9
|
7
|
||||||||||||||
Total cards-in-force
|
||||||||||||||||||||||||
Proprietary
|
15.6
|
14.8
|
5
|
15.6
|
14.8
|
5
|
||||||||||||||||||
GNS
|
49.0
|
48.1
|
2
|
49.0
|
48.1
|
2
|
||||||||||||||||||
Total
|
64.6
|
62.9
|
3
|
64.6
|
62.9
|
3
|
||||||||||||||||||
Proprietary basic cards-in-force
|
10.8
|
10.3
|
5
|
10.8
|
10.3
|
5
|
||||||||||||||||||
Average proprietary basic Card Member spending (dollars)
|
$
|
2,840
|
$
|
2,596
|
9
|
$
|
8,111
|
$
|
7,665
|
6
|
||||||||||||||
Total segment assets (billions)
|
$
|
38.9
|
$
|
34.4
|
13
|
$
|
38.9
|
$
|
34.4
|
13
|
||||||||||||||
Segment capital (billions)
|
$
|
2.9
|
$
|
2.7
|
7
|
$
|
2.9
|
$
|
2.7
|
7
|
||||||||||||||
Return on average segment capital (a)
|
29.5
|
%
|
26.4
|
%
|
29.5
|
%
|
26.4
|
%
|
||||||||||||||||
Card Member loans: (b)
|
||||||||||||||||||||||||
Total loans (billions)
|
$
|
7.8
|
$
|
6.7
|
16
|
$
|
7.8
|
$
|
6.7
|
16
|
||||||||||||||
Average loans (billions)
|
$
|
7.5
|
$
|
6.7
|
12
|
$
|
7.2
|
$
|
6.8
|
6
|
%
|
|||||||||||||
Net write-off rate – principal only (c)
|
2.2
|
%
|
2.1
|
%
|
2.1
|
%
|
2.0
|
%
|
||||||||||||||||
Net write-off rate – principal, interest and fees (c)
|
2.7
|
%
|
2.6
|
%
|
2.6
|
%
|
2.5
|
%
|
||||||||||||||||
30+ days past due loans as a % of total
|
1.6
|
%
|
1.7
|
%
|
1.6
|
%
|
1.7
|
%
|
||||||||||||||||
Calculation of Net Interest Yield on Card Member loans:
|
||||||||||||||||||||||||
Net interest income
|
$
|
206
|
$
|
176
|
$
|
574
|
$
|
525
|
||||||||||||||||
Exclude:
|
||||||||||||||||||||||||
Interest expense not attributable to our Card Member loan portfolio
|
17
|
12
|
41
|
33
|
||||||||||||||||||||
Interest income not attributable to our Card Member loan portfolio
|
(4
|
)
|
―
|
(10
|
)
|
(7
|
)
|
|||||||||||||||||
Adjusted net interest income (d)
|
$
|
219
|
$
|
188
|
$
|
605
|
$
|
551
|
||||||||||||||||
Average loans (billions)
|
$
|
7.5
|
$
|
6.7
|
$
|
7.2
|
$
|
6.8
|
||||||||||||||||
Net interest income divided by average loans
|
11.0
|
%
|
10.5
|
%
|
10.6
|
%
|
10.4
|
%
|
||||||||||||||||
Net interest yield on Card Member loans (d)
|
11.6
|
%
|
11.2
|
%
|
11.2
|
%
|
10.9
|
%
|
||||||||||||||||
Card Member receivables: (b)
|
||||||||||||||||||||||||
Total receivables (billions)
|
$
|
6.5
|
$
|
5.6
|
16
|
%
|
$
|
6.5
|
$
|
5.6
|
16
|
%
|
||||||||||||
Net write-off rate – principal only (c)
|
2.2
|
%
|
2.0
|
%
|
2.1
|
%
|
2.1
|
%
|
||||||||||||||||
Net write-off rate – principal and fees(c)
|
2.4
|
%
|
2.2
|
%
|
2.2
|
%
|
2.3
|
%
|
||||||||||||||||
30+ days past due as a % of total
|
1.4
|
%
|
1.5
|
%
|
1.4
|
%
|
1.5
|
%
|
(a) |
Return on average segment capital is calculated by dividing (i) one-year period segment income ($797 million and $711 million for the twelve months ended September 30, 2017 and 2016, respectively) by (ii) one-year average segment capital ($2.7 billion for both the twelve months ended September 30, 2017 and 2016).
|
(b) |
Refer to Table 8 footnote (a).
|
(c) |
Refer to Table 8 footnote (e).
|
(d) |
Adjusted net interest income and net interest yield on Card Member loans are non-GAAP measures. Refer to “Glossary of Selected Terminology” for the definitions of these terms. We believe adjusted net interest income is useful to investors because it is a component of net interest yield on Card Member loans, which provides a measure of profitability of our Card Member loan portfolio.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||||||||||
September 30,
|
Change
|
September 30,
|
Change
|
|||||||||||||||||||||||||||||
(Millions, except percentages)
|
2017
|
2016
|
2017 vs. 2016
|
2017
|
2016
|
2017 vs. 2016
|
||||||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||||||||||||
Non-interest revenues
|
$
|
2,360
|
$
|
2,240
|
$
|
120
|
5
|
%
|
$
|
6,999
|
$
|
6,710
|
$
|
289
|
4
|
%
|
||||||||||||||||
Interest income
|
351
|
282
|
69
|
24
|
1,004
|
913
|
91
|
10
|
||||||||||||||||||||||||
Interest expense
|
144
|
98
|
46
|
47
|
382
|
297
|
85
|
29
|
||||||||||||||||||||||||
Net interest income
|
207
|
184
|
23
|
13
|
622
|
616
|
6
|
1
|
||||||||||||||||||||||||
Total revenues net of interest expense
|
2,567
|
2,424
|
143
|
6
|
7,621
|
7,326
|
295
|
4
|
||||||||||||||||||||||||
Provisions for losses
|
194
|
134
|
60
|
45
|
556
|
433
|
123
|
28
|
||||||||||||||||||||||||
Total revenues net of interest expense after provisions for losses
|
2,373
|
2,290
|
83
|
4
|
7,065
|
6,893
|
172
|
2
|
||||||||||||||||||||||||
Expenses
|
||||||||||||||||||||||||||||||||
Marketing, promotion, rewards, Card Member services and other
|
905
|
808
|
97
|
12
|
2,792
|
2,415
|
377
|
16
|
||||||||||||||||||||||||
Salaries and employee benefits and other operating expenses
|
696
|
753
|
(57
|
)
|
(8
|
)
|
2,098
|
2,078
|
20
|
1
|
||||||||||||||||||||||
Total expenses
|
1,601
|
1,561
|
40
|
3
|
4,890
|
4,493
|
397
|
9
|
||||||||||||||||||||||||
Pretax segment income
|
772
|
729
|
43
|
6
|
2,175
|
2,400
|
(225
|
)
|
(9
|
)
|
||||||||||||||||||||||
Income tax provision
|
243
|
263
|
(20
|
)
|
(8
|
)
|
728
|
873
|
(145
|
)
|
(17
|
)
|
||||||||||||||||||||
Segment income
|
$
|
529
|
$
|
466
|
$
|
63
|
14
|
%
|
$
|
1,447
|
$
|
1,527
|
$
|
(80
|
)
|
(5
|
)%
|
|||||||||||||||
Effective tax rate
|
31.5
|
%
|
36.1
|
%
|
33.5
|
%
|
36.4
|
%
|
As of or for the
|
Change
|
As of or for the
|
Change
|
|||||||||||||||||||||
Three Months Ended
|
2017
|
Nine Months Ended
|
2017
|
|||||||||||||||||||||
September 30,
|
vs.
|
September 30,
|
vs.
|
|||||||||||||||||||||
(Millions, except percentages and where indicated)
|
2017
|
2016
|
2016
|
2017
|
2016
|
2016
|
||||||||||||||||||
Card billed business (billions)
|
$
|
109.7
|
$
|
100.1
|
10
|
%
|
$
|
321.5
|
$
|
302.8
|
6
|
%
|
||||||||||||
Total cards-in-force
|
13.9
|
13.6
|
2
|
13.9
|
13.6
|
2
|
||||||||||||||||||
Basic cards-in-force
|
13.9
|
13.6
|
2
|
13.9
|
13.6
|
2
|
||||||||||||||||||
Average basic Card Member spending (dollars)
|
$
|
7,907
|
$
|
7,386
|
7
|
$
|
23,364
|
$
|
20,857
|
12
|
||||||||||||||
Total segment assets (billions)
|
$
|
52.7
|
$
|
46.8
|
13
|
$
|
52.7
|
$
|
46.8
|
13
|
||||||||||||||
Segment capital (billions)
|
$
|
7.3
|
$
|
7.3
|
―
|
$
|
7.3
|
$
|
7.3
|
―
|
||||||||||||||
Return on average segment capital (a)
|
25.3
|
%
|
28.0
|
%
|
25.3
|
%
|
28.0
|
%
|
||||||||||||||||
Card Member loans (billions)
|
$
|
10.7
|
$
|
9.1
|
18
|
$
|
10.7
|
$
|
9.1
|
18
|
||||||||||||||
Card Member receivables (billions)
|
$
|
33.8
|
$
|
29.6
|
14
|
$
|
33.8
|
$
|
29.6
|
14
|
||||||||||||||
Card Member loans: (b)
|
||||||||||||||||||||||||
Total loans - GSBS (billions)
|
$
|
10.7
|
$
|
9.0
|
19
|
$
|
10.7
|
$
|
9.0
|
19
|
||||||||||||||
Average loans - GSBS (billions)
|
$
|
10.5
|
$
|
8.8
|
19
|
$
|
10.1
|
$
|
8.4
|
20
|
||||||||||||||
Net write-off rate (principal only) - GSBS (c)
|
1.6
|
%
|
1.5
|
%
|
1.6
|
%
|
1.4
|
%
|
||||||||||||||||
Net write-off rate (principal, interest and fees) - GSBS (c)
|
1.9
|
%
|
1.8
|
%
|
1.9
|
%
|
1.7
|
%
|
||||||||||||||||
30+ days past due as a % of total - GSBS
|
1.1
|
%
|
1.1
|
%
|
1.1
|
%
|
1.1
|
%
|
||||||||||||||||
Calculation of Net Interest Yield on Card Member loans:
|
||||||||||||||||||||||||
Net interest income
|
$
|
207
|
$
|
184
|
$
|
622
|
$
|
616
|
||||||||||||||||
Exclude:
|
||||||||||||||||||||||||
Interest expense not attributable to our Card Member loan portfolio
|
108
|
79
|
290
|
231
|
||||||||||||||||||||
Interest income not attributable to our Card Member loan portfolio
|
(29
|
)
|
(28
|
)
|
(83
|
)
|
(85
|
)
|
||||||||||||||||
Adjusted net interest income(d)
|
$
|
286
|
$
|
235
|
$
|
829
|
$
|
762
|
||||||||||||||||
Average loans (billions)(e)
|
$
|
10.5
|
$
|
8.8
|
$
|
10.1
|
$
|
9.8
|
||||||||||||||||
Net interest income divided by average loans
|
7.9
|
%
|
8.3
|
%
|
8.2
|
%
|
8.4
|
%
|
||||||||||||||||
Net interest yield on Card Member loans (d)
|
10.8
|
%
|
10.6
|
%
|
10.9
|
%
|
10.4
|
%
|
||||||||||||||||
Card Member receivables: (b)
|
||||||||||||||||||||||||
Total receivables - GCP (billions)
|
$
|
17.9
|
$
|
15.8
|
13
|
$
|
17.9
|
$
|
15.8
|
13
|
||||||||||||||
90+ days past billing as a % of total - GCP (f)
|
0.9
|
%
|
0.8
|
%
|
0.9
|
%
|
0.8
|
%
|
||||||||||||||||
Net loss ratio (as a % of charge volume) - GCP
|
0.09
|
%
|
0.11
|
%
|
0.10
|
%
|
0.09
|
%
|
||||||||||||||||
Total receivables - GSBS (billions)
|
$
|
15.9
|
$
|
13.8
|
15
|
%
|
$
|
15.9
|
$
|
13.8
|
15
|
%
|
||||||||||||
Net write-off rate (principal only) - GSBS (c)
|
1.5
|
%
|
1.3
|
%
|
1.6
|
%
|
1.6
|
%
|
||||||||||||||||
Net write-off rate (principal and fees) - GSBS (c)
|
1.7
|
%
|
1.5
|
%
|
1.8
|
%
|
1.8
|
%
|
||||||||||||||||
30+ days past due as a % of total - GSBS
|
1.4
|
%
|
1.5
|
%
|
1.4
|
%
|
1.5
|
%
|
(a) |
Return on average segment capital is calculated by dividing (i) one-year period segment income ($1.8 billion and $2.0 billion for the twelve months ended September 30, 2017 and 2016, respectively) by (ii) one-year average segment capital ($7.2 billion for both the twelve months ended September 30, 2017 and 2016).
|
(b) |
Refer to Table 8 footnote (a).
|
(c) |
Refer to Table 8 footnote (e).
|
(d) |
Adjusted net interest income and net interest yield on Card Member loans are non-GAAP measures. Refer to “Glossary of Selected Terminology” for the definitions of these terms. We believe adjusted net interest income is useful to investors because it is a component of net interest yield on Card Member loans, which provides a measure of profitability of our Card Member loan portfolio.
|
(e) |
Refer to Table 9 footnote (b).
|
(f) |
For GCP Card Member receivables, delinquency data is tracked based on days past billing status rather than days past due. A Card Member account is considered 90 days past billing if payment has not been received within 90 days of the Card Member’s billing statement date. In addition, if we initiate collection procedures on an account prior to the account becoming 90 days past billing, the associated Card Member receivable balance is classified as 90 days past billing. These amounts are shown above as 90+ Days Past Due for presentation purposes.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||||||||||
September 30,
|
Change
|
September 30,
|
Change
|
|||||||||||||||||||||||||||||
(Millions, except percentages)
|
2017
|
2016
|
2017 vs. 2016
|
2017
|
2016
|
2017 vs. 2016
|
||||||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||||||||||||
Non-interest revenues
|
$
|
1,088
|
$
|
1,044
|
$
|
44
|
4
|
%
|
$
|
3,191
|
$
|
3,172
|
$
|
19
|
1
|
%
|
||||||||||||||||
Interest income
|
―
|
―
|
―
|
―
|
1
|
1
|
―
|
―
|
||||||||||||||||||||||||
Interest expense
|
(65
|
)
|
(60
|
)
|
(5
|
)
|
8
|
(188
|
)
|
(180
|
)
|
(8
|
)
|
4
|
||||||||||||||||||
Net interest income
|
65
|
60
|
5
|
8
|
189
|
181
|
8
|
4
|
||||||||||||||||||||||||
Total revenues net of interest expense
|
1,153
|
1,104
|
49
|
4
|
3,380
|
3,353
|
27
|
1
|
||||||||||||||||||||||||
Provisions for losses
|
8
|
8
|
―
|
―
|
11
|
21
|
(10
|
)
|
(48
|
)
|
||||||||||||||||||||||
Total revenues net of interest expense after provisions for losses
|
1,145
|
1,096
|
49
|
4
|
3,369
|
3,332
|
37
|
1
|
||||||||||||||||||||||||
Expenses
|
||||||||||||||||||||||||||||||||
Marketing, promotion, rewards, Card Member services and other
|
48
|
55
|
(7
|
)
|
(13
|
)
|
117
|
171
|
(54
|
)
|
(32
|
)
|
||||||||||||||||||||
Salaries and employee benefits and other operating expenses
|
580
|
470
|
110
|
23
|
1,488
|
1,422
|
66
|
5
|
||||||||||||||||||||||||
Total expenses
|
628
|
525
|
103
|
20
|
1,605
|
1,593
|
12
|
1
|
||||||||||||||||||||||||
Pretax segment income
|
517
|
571
|
(54
|
)
|
(9
|
)
|
1,764
|
1,739
|
25
|
1
|
||||||||||||||||||||||
Income tax provision
|
149
|
212
|
(63
|
)
|
(30
|
)
|
603
|
650
|
(47
|
)
|
(7
|
)
|
||||||||||||||||||||
Segment income
|
$
|
368
|
$
|
359
|
$
|
9
|
3
|
%
|
$
|
1,161
|
$
|
1,089
|
$
|
72
|
7
|
%
|
||||||||||||||||
Effective tax rate
|
28.8
|
%
|
37.1
|
%
|
34.2
|
%
|
37.4
|
%
|
As of or for the
|
Change
|
As of or for the
|
Change
|
|||||||||||||||||||||
Three Months Ended
|
2017
|
Nine Months Ended
|
2017
|
|||||||||||||||||||||
September 30,
|
vs.
|
September 30,
|
vs.
|
|||||||||||||||||||||
(Millions, except percentages and where indicated)
|
2017
|
2016
|
2016
|
2017
|
2016
|
2016
|
||||||||||||||||||
Loyalty Coalition revenue
|
$
|
116
|
$
|
106
|
9
|
%
|
$
|
332
|
$
|
304
|
9
|
%
|
||||||||||||
Average discount rate
|
2.42
|
%
|
2.47
|
%
|
2.44
|
%
|
2.45
|
%
|
||||||||||||||||
Total segment assets (billions)
|
$
|
26.7
|
$
|
23.2
|
15
|
%
|
$
|
26.7
|
$
|
23.2
|
15
|
%
|
||||||||||||
Segment capital (billions)
|
$
|
2.6
|
$
|
2.3
|
13
|
%
|
$
|
2.6
|
$
|
2.3
|
13
|
%
|
||||||||||||
Return on average segment capital (a)
|
59.3
|
%
|
59.9
|
%
|
59.3
|
%
|
59.9
|
%
|
(a) |
Return on average segment capital is calculated by dividing (i) one-year period segment income ($1.5 billion for both the twelve months ended September 30, 2017 and 2016) by (ii) one-year average segment capital ($2.6 billion and $2.4 billion for the twelve months ended September 30, 2017 and 2016, respectively).
|
• |
A solid and flexible equity capital profile;
|
• |
A broad, deep and diverse set of funding sources to finance our assets and meet operating requirements; and
|
• |
Liquidity programs that enable us to continuously meet expected future financing obligations and business requirements for at least a twelve-month period, even in the event we are unable to continue to raise new funds under our traditional funding programs during a substantial weakening in economic conditions.
|
Basel III
|
Ratios as of
|
||||||
Standards
|
September 30,
|
||||||
2017(a)
|
2017
|
||||||
Risk-Based Capital
|
|||||||
Common Equity Tier 1
|
5.8
|
%
|
|||||
American Express Company
|
11.9
|
%
|
|||||
American Express Centurion Bank
|
16.6
|
||||||
American Express Bank, FSB
|
13.3
|
||||||
Tier 1
|
7.3
|
||||||
American Express Company
|
13.0
|
||||||
American Express Centurion Bank
|
16.6
|
||||||
American Express Bank, FSB
|
13.3
|
||||||
Total
|
9.3
|
||||||
American Express Company
|
14.7
|
||||||
American Express Centurion Bank
|
17.9
|
||||||
American Express Bank, FSB
|
14.6
|
||||||
Tier 1 Leverage
|
4.0
|
||||||
American Express Company
|
10.9
|
||||||
American Express Centurion Bank
|
15.9
|
||||||
American Express Bank, FSB
|
11.8
|
||||||
Supplementary Leverage Ratio(b)
|
3.0
|
%
|
|||||
American Express Company
|
9.3
|
||||||
American Express Centurion Bank
|
12.3
|
||||||
American Express Bank, FSB
|
9.7
|
%
|
(a) |
Transitional Basel III minimum capital requirement and additional capital conservation buffer as defined by the Federal Reserve for calendar year 2017 for advanced approaches institutions.
|
(b) |
The minimum supplementary leverage ratio (SLR) requirement of 3 percent is effective January 1, 2018.
|
American Express Company
|
September 30,
|
|||
($ in Billions)
|
2017
|
|||
Risk-Based Capital
|
||||
Common Equity Tier 1
|
$
|
16.4
|
||
Tier 1 Capital
|
17.9
|
|||
Tier 2 Capital(a)
|
2.3
|
|||
Total Capital
|
20.2
|
|||
Risk-Weighted Assets
|
138.0
|
|||
Average Total Assets to calculate the Tier 1 Leverage Ratio
|
164.6
|
|||
Total Leverage Exposure to calculate SLR
|
$
|
191.7
|
(a) |
Tier 2 capital is the sum of the allowance for loan and receivable losses (limited to 1.25 percent of risk-weighted assets) and $600 million of subordinated notes adjusted for capital held by insurance subsidiaries.
|
September 30,
|
||||
($ in Billions)
|
2017
|
|||
Estimated Common Equity Tier 1 Ratio under Fully Phased-In Basel III(a)
|
11.5
|
%
|
||
Estimated Tier 1 Capital Ratio under Fully Phased-In Basel III (a)
|
12.7
|
|||
Estimated Tier 1 Leverage Ratio under Fully Phased-In Basel III(b)
|
10.7
|
|||
Estimated Supplementary Leverage Ratio under Fully Phased-In Basel III(b)
|
9.2
|
%
|
||
Estimated Risk-Weighted Assets under Fully Phased-In Basel III(c)
|
$
|
139.2
|
||
Estimated Average Total Assets to calculate the Tier 1 Leverage Ratio(b)
|
164.4
|
|||
Estimated Total Leverage Exposure to calculate SLR under Fully Phased-In Basel III (d)
|
$
|
191.5
|
(a) |
The Fully Phased-in Basel III Common Equity Tier 1 and Tier 1 risk-based capital ratios, non-GAAP measures, are calculated as Common Equity Tier 1 or Tier 1 capital under Fully Phased-in Basel III rules, as applicable, divided by risk-weighted assets under Fully Phased-in Basel III rules. Refer to Table 21 for a reconciliation of Common Equity Tier 1 and Tier 1 capital under Fully Phased-in Basel III rules to Common Equity Tier 1 and Tier 1 capital under Transitional Basel III rules.
|
(b) |
The Fully Phased-in Basel III Tier 1 and supplementary leverage ratios, non-GAAP measures, are calculated by dividing Fully Phased-in Basel III Tier 1 capital by our average total assets and Fully Phased-in total leverage exposure for supplementary leverage ratio purposes under Fully Phased-in Basel III, respectively.
|
(c) |
Estimated Fully Phased-in Basel III risk-weighted assets, a non-GAAP measure, reflect our Basel III risk-weighted assets, with all transition provisions fully phased in. This includes incremental risk weighting applied to deferred tax assets and significant investments in unconsolidated financial institutions, as well as exposures to past due accounts, equities and sovereigns.
|
(d) |
Estimated Fully Phased-in Basel III Leverage Exposure, a non-GAAP measure, reflects average total consolidated assets with adjustments for Tier 1 capital deductions on a fully phased-in basis, off-balance sheet derivatives, undrawn conditionally and unconditionally cancellable commitments and other off-balance sheet liabilities.
|
(Billions)
|
CET1
|
Tier 1
|
||||||
Risk-Based Capital under Transitional Basel III
|
$
|
16.4
|
$
|
17.9
|
||||
Adjustments related to:
|
||||||||
AOCI
|
(0.1
|
)
|
(0.1
|
)
|
||||
Transition provisions for intangible assets
|
(0.2
|
)
|
(0.2
|
)
|
||||
Estimated CET1 and Tier 1 Risk-Based Capital under Fully Phased-in Basel III
|
$
|
16.1
|
$
|
17.6
|
(Billions)
|
September 30, 2017
|
December 31, 2016
|
||||||
Short-term borrowings
|
$
|
2.3
|
$
|
5.6
|
||||
Long-term debt
|
48.8
|
47.0
|
||||||
Total debt
|
51.1
|
52.6
|
||||||
Customer deposits
|
61.3
|
53.0
|
||||||
Total debt and customer deposits
|
$
|
112.4
|
$
|
105.6
|
Credit Agency
|
American Express Entity
|
Short-Term Ratings
|
Long-Term Ratings
|
Outlook
|
||||
DBRS
|
|
All rated entities
|
|
R-1 (middle)
|
A (high)
|
Stable
|
||
Fitch
|
|
All rated entities
|
|
F1
|
A
|
Stable
|
||
Moody’s
|
TRS and rated operating subsidiaries (a)
|
Prime 1
|
A2
|
Stable
|
||||
Moody's
|
|
American Express Company
|
|
Prime 2
|
A3
|
Stable
|
||
S&P
|
TRS (a)
|
N/A
|
A-
|
Stable
|
||||
S&P
|
Other rated operating subsidiaries
|
A-2
|
A-
|
Stable
|
||||
S&P
|
|
American Express Company
|
|
A-2
|
BBB+
|
Stable
|
(a) |
American Express Travel Related Services Company, Inc.
|
• |
Maintaining diversified funding sources (refer to the “Funding Strategy” section for more details);
|
• |
Maintaining unencumbered liquid assets and off-balance sheet liquidity sources;
|
• |
Projecting cash inflows and outflows under a variety of economic and market scenarios;
|
• |
Establishing clear objectives for liquidity risk management, including compliance with regulatory requirements;
|
• |
Incorporating liquidity risk management as appropriate into our capital adequacy framework.
|
(Billions)
|
2017
|
2016
|
||||||
Total cash provided by (used in):
|
||||||||
Operating activities
|
$
|
8.6
|
$
|
5.0
|
||||
Investing activities
|
(10.5
|
)
|
10.1
|
|||||
Financing activities
|
2.6
|
(11.3
|
)
|
|||||
Effect of foreign currency exchange rates on cash and cash equivalents
|
0.3
|
―
|
||||||
Net increase in cash and cash equivalents
|
$
|
1.0
|
$
|
3.8
|
• |
our ability to grow in the future, which will depend in part on the following: revenues growing consistently with current expectations, which could be impacted by, among other things, the factors identified in the subsequent bullet; credit performance remaining consistent with current expectations; the level of spend in bonus categories on rewards-based and/or cash-back cards and redemptions of Card Member rewards and offers; the impact of any future contingencies, including, but not limited to, litigation-related settlements, judgments or expenses, the imposition of fines or civil money penalties, an increase in Card Member reimbursements, restructurings, impairments and changes in reserves; the ability to continue to realize benefits from restructuring actions and operating leverage at levels consistent with current expectations; the amount we spend on Card Member engagement and our ability to drive growth from such investments; changes in interest rates beyond current expectations (including the impact of hedge ineffectiveness and deposit rate increases); the impact of regulation and litigation, which could affect the profitability of our business activities, limit our ability to pursue business opportunities, require changes to business practices or alter our relationships with partners, merchants and Card Members; our tax rate remaining in line with current expectations, which could be impacted by, among other things, our geographic mix of income being weighted more to higher tax jurisdictions than expected, changes in tax laws and regulation and unfavorable tax audits and other unanticipated tax items; write-downs of deferred tax assets as a result of tax law or other changes; the impact of accounting changes and reclassifications; and our ability to continue executing the share repurchase program;
|
• |
our ability to grow revenues net of interest expense, which could be impacted by, among other things, weakening economic conditions in the United States or internationally, a decline in consumer confidence impacting the willingness and ability of Card Members to sustain and grow spending, continued growth of Card Member loans, a greater erosion of the average discount rate than expected, the strengthening of the U.S. dollar, a greater impact on discount revenue from cash back and cobrand partner and client incentive payments, more cautious spending by large and global corporate Card Members, the willingness of Card Members to pay higher card fees, and lower spending on new cards acquired than estimated; and will depend on factors such as our success in addressing competitive pressures and implementing our strategies and business initiatives, including growing profitable spending from existing and new Card Members, increasing penetration among middle market and small business clients, expanding our international footprint and increasing merchant acceptance;
|
• |
changes in the substantial and increasing worldwide competition in the payments industry, including competitive pressure that may impact the prices we charge merchants that accept our cards, competition for cobrand relationships and the success of marketing, promotion or rewards programs;
|
• |
rewards expense and cost of Card Member services growing inconsistently from expectations, which will depend in part on Card Member behavior as it relates to their spending patterns and actual usage and redemption of rewards, as well as the degree of interest of Card Members in the value proposition we offer; increasing competition, which could result in greater rewards offerings; our ability to enhance card products and services to make them attractive to Card Members; and the amount we spend on the promotion of enhanced services and rewards categories and the success of such promotion;
|
• |
the actual amount to be spent on marketing and promotion, which will be based in part on management’s assessment of competitive opportunities; overall business performance and changes in macroeconomic conditions; the actual amount of advertising and Card Member acquisition costs; competitive pressures that may require additional expenditures; our ability to continue to shift Card Member acquisition to digital channels; contractual obligations with business partners and other fixed costs and prior commitments; management’s ability to identify attractive investment opportunities and make such investments, which could be impacted by business, regulatory or legal complexities; and our ability to realize efficiencies, optimize investment spending and control expenses to fund such spending;
|
• |
our ability to reduce our overall cost base, which will depend in part on the timing and financial impact of reengineering plans, which could be impacted by factors such as our inability to mitigate the operational and other risks posed by potential staff reductions, our inability to develop and implement technology resources to realize cost savings and underestimating hiring and other employee needs; our ability to reduce annual operating expenses, which could be impacted by, among other things, the factors identified below; our ability to optimize marketing and promotion expenses, which could be impacted by the factors identified in the preceding bullet;
|
• |
the ability to reduce annual operating expenses, which could be impacted by the need to increase significant categories of operating expenses, such as consulting or professional fees, including as a result of increased litigation, compliance or regulatory-related costs, or fraud costs; our ability to develop, implement and achieve substantial benefits from reengineering plans; higher than expected employee levels; the impact of changes in foreign currency exchange rates on costs; the payment of civil money penalties, disgorgement, restitution, non-income tax assessments and litigation-related settlements; impairments of goodwill or other assets; management’s decision to increase or decrease spending in such areas as technology, business and product development and sales forces; greater than expected inflation; our ability to balance expense control and investments in the business; the impact of accounting changes and reclassifications; and the level of M&A activity and related expenses;
|
• |
our delinquency and write-off rates and growth of provisions for losses being higher than current expectations, which will depend in part on changes in the level of loan balances and delinquencies, mix of loan balances, loans and receivables related to new Card Members and other borrowers performing as expected, credit performance of new and enhanced lending products, unemployment rates, the volume of bankruptcies and recoveries of previously written-off loans;
|
• |
our ability to execute against our lending strategy to grow loans, which may be affected by increasing competition, brand perceptions and reputation, our ability to manage risk in a growing Card Member loan portfolio, and the behavior of Card Members and their actual spending and borrowing patterns, which in turn may be driven by our ability to issue new and enhanced card products, offer attractive non-card lending products, capture a greater share of existing Card Members’ spending and borrowings, reduce Card Member attrition and attract new customers;
|
• |
the growth in net interest income moderating more than expected, which will be impacted by the growth and mix of Card Member and other loans, which will depend in part on the factors identified in the preceding bullet, and our net interest yield on Card Member loans, which will be influenced by, among other things, interest rates, changes in consumer behavior that affect loan balances, such as paydown rates, Card Member acquisition strategy, product mix, cost of funds, credit actions, including line size and other adjustments to credit availability, potential pricing changes and deposit rates, which could be impacted by, among other things, the factors identified in the subsequent bullet;
|
• |
deposit rates increasing faster or slower than current expectations due to changes in our funding mix, market pressures, regulatory constraints or changes in benchmark interest rates, which could affect net interest yield and our funding costs;
|
• |
the possibility that we will not execute on our plans to significantly increase merchant coverage, which will depend in part on the success of OptBlue merchant acquirers in signing merchants to accept American Express, which could be impacted by the pricing set by the merchant acquirers, the value proposition offered to small merchants and the efforts of OptBlue merchant acquirers to sign merchants for American Express acceptance, as well as the awareness and willingness of Card Members to use American Express cards at small merchants and of those merchants to accept American Express cards;
|
• |
changes affecting our ability or desire to return capital to shareholders through dividends and share repurchases, which will depend on factors such as approval of our capital plans by our primary regulators, the amount we spend on acquisitions of companies and our results of operations and capital needs and economic environment in any given period;
|
• |
changes in global economic and business conditions, consumer and business spending, the availability and cost of capital, unemployment rates, geopolitical conditions (including potential impacts resulting from the U.S. Administration and the proposed exit of the United Kingdom from the European Union), foreign currency rates and interest rates, all of which may significantly affect demand for and spending on American Express cards, delinquency rates, loan balances and other aspects of our business and results of operations;
|
• |
changes in capital and credit market conditions, including sovereign creditworthiness, which may significantly affect our ability to meet our liquidity needs, expectations regarding capital and liquidity ratios, access to capital and cost of capital, including changes in interest rates; changes in market conditions affecting the valuation of our assets; or any reduction in our credit ratings or those of our subsidiaries, which could materially increase the cost and other terms of our funding, restrict our access to the capital markets or result in contingent payments under contracts;
|
• |
legal and regulatory developments, including with regard to broad payment system regulatory regimes, actions by the CFPB and other regulators and the stricter regulation of financial institutions, which could require us to make fundamental changes to many of our business practices, including our ability to continue certain GNS and other partnerships; exert further pressure on the average discount rate and GNS volumes; result in increased costs related to regulatory oversight, litigation-related settlements, judgments or expenses, restitution to Card Members or the imposition of fines or civil money penalties; materially affect our capital or liquidity requirements, results of operations or ability to pay dividends or repurchase our stock; or result in harm to the American Express brand;
|
• |
uncertainty relating to the ultimate outcome of the antitrust lawsuit filed against us by the U.S. Department of Justice and certain state attorneys general, including the review of the case by the U.S. Supreme Court and the impact on existing private merchant cases and potentially additional litigation and/or arbitrations;
|
• |
potential actions by the FDIC and credit rating agencies applicable to securitization trusts, which could impact our asset securitization program;
|
• |
potential changes to the taxation of our businesses, the allowance of deductions for significant expenses, or the incidence of consumption taxes on our transactions, products and services;
|
• |
changes in the financial condition and creditworthiness of our business partners, such as bankruptcies, restructurings or consolidations, including merchants that represent a significant portion of our business, such as the airline industry, or our partners in GNS or financial institutions that we rely on for routine funding and liquidity, which could materially affect our financial condition or results of operations; and
|
• |
factors beyond our control such as fire, power loss, disruptions in telecommunications, severe weather conditions, natural disasters (including further impacts from the recent hurricanes in Texas, Florida and Puerto Rico), health pandemics, terrorism, cyberattacks or fraud, any of which could significantly affect demand for and spending on American Express cards, delinquency rates, loan balances and other aspects of our business and results of operations or disrupt our global network systems and ability to process transactions.
|
Total Number of Shares Purchased
|
Average Price Paid Per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(c)
|
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
|
|||||||||||||
July 1-31, 2017
|
||||||||||||||||
Repurchase program(a)
|
3,203,577
|
$
|
85.05
|
3,203,577
|
110,708,033
|
|||||||||||
Employee transactions(b)
|
―
|
―
|
N/A
|
N/A
|
||||||||||||
August 1-31, 2017
|
||||||||||||||||
Repurchase program(a)
|
6,481,629
|
$
|
85.65
|
6,481,629
|
104,226,404
|
|||||||||||
Employee transactions(b)
|
26,593
|
$
|
84.80
|
N/A
|
N/A
|
|||||||||||
September 1-30, 2017
|
||||||||||||||||
Repurchase program(a)
|
5,530,176
|
$
|
87.18
|
5,530,176
|
98,696,228
|
|||||||||||
Employee transactions(b)
|
12
|
$
|
85.97
|
N/A
|
N/A
|
|||||||||||
Total
|
||||||||||||||||
Repurchase program(a)
|
15,215,382
|
$
|
86.08
|
15,215,382
|
98,696,228
|
|||||||||||
Employee transactions(b)
|
26,605
|
$
|
84.80
|
N/A
|
N/A
|
(a) |
On September 26, 2016, the Board of Directors authorized the repurchase of up to 150 million shares of common stock from time to time, subject to market conditions and the Federal Reserve’s non-objection to our capital plans. This authorization replaced the prior repurchase authorization and does not have an expiration date.
|
(b) |
Includes: (i) shares surrendered by holders of employee stock options who exercised options (granted under our incentive compensation plans) in satisfaction of the exercise price and/or tax withholding obligation of such holders and (ii) restricted shares withheld (under the terms of grants under our incentive compensation plans) to offset tax withholding obligations that occur upon vesting and release of restricted shares. Our incentive compensation plans provide that the value of the shares delivered or attested to, or withheld, be based on the price of our common stock on the date the relevant transaction occurs.
|
(c) |
Share purchases under publicly announced programs are made pursuant to open market purchases or privately negotiated transactions (including employee benefit plans) as market conditions warrant and at prices we deem appropriate.
|
|
|
AMERICAN EXPRESS COMPANY
|
||||
|
|
|
(Registrant)
|
|||
Date: October 24, 2017
|
|
|
By
|
|
/s/ Jeffrey C. Campbell
|
|
|
|
|
Jeffrey C. Campbell
|
|||
|
|
|
Executive Vice President and
|
|||
|
|
|
Chief Financial Officer
|
|||
Date: October 24, 2017
|
|
|
By
|
|
/s/ Linda Zukauckas
|
|
|
|
|
Linda Zukauckas
|
|||
|
|
|
Executive Vice President and
|
|||
|
|
|
Corporate Controller
|
|||
|
|
|
(Principal Accounting Officer)
|
Exhibit
|
Description
|
12
|
|
31.1
|
|
31.2
|
|
32.1
|
|
32.2
|
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|