01—Abstract
Summary
Summary of the 10-K filed February 19, 2016. Cited figures are marked; the original filing is the authoritative source.
American Express Company (AXP) filed its 2015 annual report on Form 10-K, detailing its financial performance and business operations for the year ended December 30, 2015.
The company reported net income of $5.2 billiona, a decrease from $5.9 billion in 2014, with diluted earnings per share of $5.05. This decline was attributed to increased spending on growth initiatives, the strengthening U.S. dollar, and tougher economic and competitive environments, as well as costs associated with the early renewal of certain cobrand relationships and the termination of the Costco relationship in Canada. Despite these headwinds, AXP highlighted strong performance in areas such as loan growth, card acquisitions, excellent credit performance, and disciplined operating expense control.
The company also returned over $5 billionb to shareholders through dividends and share repurchases, underscoring its strong capital position. Key strategic initiatives include expanding its global presence, growing in commercial payments, and developing new opportunities in loyalty coalitions. The company also announced cost-saving initiatives projected to remove $1 billion from its cost base by the end of 2017.
02—Key points
Key Highlights
- Net income was $5.2 billion, or $5.05 per diluted share, down from $5.9 billion, or $5.56 per diluted share, in 2014.
- Total revenues net of interest expense decreased 4% to $32.8 billion, impacted by a stronger U.S. dollar and a decline in the average discount rate.
- The company returned over $5.6 billion to shareholders in 2015 through dividends ($1.1 billion) and share repurchases ($4.5 billion).
- Card Member loans held for investment decreased by 17% to $58.6 billion, primarily due to the transfer of the Costco and JetBlue loan portfolios to 'held for sale'.
- Provisions for losses decreased by 3% to $2.0 billion, reflecting strong credit performance.
- Marketing, promotion, rewards, and Card Member services expenses increased by 1% to $11.1 billion, driven by spending on growth initiatives and higher cobrand rewards expenses.
- Salaries and employee benefits expenses decreased significantly by 18% to $5.0 billion, partly due to restructuring charges in 2014.
- The company announced cost initiatives expected to remove $1 billion from its cost base by the end of 2017.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 19, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Operating Income | $5.16B$5.88B | −12.3% |
| Interest Expense | $1.62B$1.71B | −4.9% |
| Net Income | $5.16B$5.88B | −12.3% |
| Shares Outstanding (Basic) | 999.00M1.04B | −4.4% |
| Shares Outstanding (Diluted) | 1.00B1.05B | −4.6% |
05—Questions
Frequently Asked Questions
What was the overall financial performance of American Express in 2015?
In 2015, American Express reported a net income of $5.2 billion, or $5.05 per diluted share, a decrease from $5.9 billion, or $5.56 per diluted share, in 2014. Total revenues net of interest expense decreased by 4% to $32.8 billion, mainly due to the strengthening U.S. dollar and a lower average discount rate. The company highlighted strong credit performance and disciplined expense control despite facing headwinds from competitive pressures and increased spending on growth initiatives.
What are the key factors impacting American Express's revenue growth?
Revenue growth was impacted by several factors in 2015. The strengthening U.S. dollar reduced reported international revenues. A decline in the average discount rate, driven by the rollout of the OptBlue program for small merchants and international regulatory changes, also pressured discount revenue. Increased spending on growth initiatives and costs associated with renewed cobrand partnerships and the termination of the Costco relationship in Canada also presented challenges.
How is American Express managing its cost structure?
American Express is focused on managing its cost structure and launched cost initiatives in the first quarter of 2016 designed to remove $1 billion from its overall cost base (including total operating expenses and marketing/promotion costs) by the end of 2017. These initiatives are expected to drive benefits in 2017 and beyond, potentially resulting in restructuring charges in 2016.
What is the company's strategy for capital return to shareholders?
American Express demonstrated a strong commitment to returning capital to shareholders. In 2015, the company returned over $5.6 billion through common stock dividends ($1.1 billion) and share repurchases ($4.5 billion). This represented approximately 105% of the total capital generated during the year, indicating a robust capital position that allowed for significant shareholder distributions.
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