10-KPeriod: FY2014

AMERICAN EXPRESS CO Annual Report, Year Ended Dec 31, 2014

Filed February 24, 2015For Securities:AXP

Summary

American Express Company (AXP) reported a solid year in 2014, demonstrating robust growth in Card Member spending and a 4% increase in total revenues to $34.3 billion. Net income saw a healthy 10% rise to $5.9 billion, translating to a 14% increase in diluted earnings per share to $5.56. The company highlighted its achievement of exceeding $1 trillion in annual global Card Member spend for the first time, driven by higher spending and growth in Card Member loans. Credit quality indicators remained at or near historical lows, and the company maintained control over operating expenses. AXP's financial performance reflects the strength of its "closed-loop" network and "spend-centric" business model. The company continues to invest in enhancing digital experiences and developing platforms for online and mobile commerce, acknowledging the increasing competition from non-traditional players. Key focus areas for the company include expanding merchant acceptance and leveraging its strong brand to drive customer loyalty and spending.

Financial Highlights

37 data points
Beta

Net Income

$5.88B

Total Assets

$159.00B

Free Cash Flow

$9.79B

Financial Statements
Beta
Operating Income$5.88B
Interest Expense$1.71B
Net Income$5.88B
Shares Outstanding (Basic)1.04B
Shares Outstanding (Diluted)1.05B

Key Highlights

  • 1Exceeded $1 trillion in annual global Card Member spend for the first time.
  • 2Total revenues net of interest expense increased 4% to $34.3 billion.
  • 3Net income rose 10% to $5.9 billion.
  • 4Diluted earnings per share (EPS) increased 14% to $5.56.
  • 5Return on average equity improved to 29.1%.
  • 6Credit quality indicators remained at or near historical lows.
  • 7Continued control over operating expenses.

Frequently Asked Questions

In 2014, American Express achieved several key financial milestones. They surpassed $1 trillion in global Card Member spend for the first time, reported a 4% increase in total revenues to $34.3 billion, and saw a 10% rise in net income to $5.9 billion. Diluted earnings per share also grew by 14% to $5.56, and the return on average equity improved to 29.1%. The company also noted that credit quality indicators remained strong, near historical lows.

American Express is actively transforming its existing businesses and creating new products and services for the digital marketplace. The company is focusing on enhancing customers' digital experiences and developing platforms for online and mobile commerce to counter competition from non-traditional players leveraging new technologies and existing customer relationships.

American Express believes its "closed-loop" network and "spend-centric" business model are key competitive advantages. The closed-loop system provides access to information at both ends of a card transaction (cardholder and merchant), enabling targeted marketing and differentiated services. The spend-centric model focuses on driving spending on its cards, which, due to higher average spend per card compared to competitors, generates higher discount revenue for merchants and allows American Express to invest in attractive rewards and benefits for cardholders, fostering loyalty.

American Express's primary revenue sources include discount revenue (fees charged to merchants for accepting cards), net card fees (annual membership fees), travel commissions and fees, other commissions and fees (e.g., foreign exchange, card-related fees), other revenue (from network partners, insurance, equity investments), and interest on loans.