10-KPeriod: FY2015

AMERICAN EXPRESS CO Annual Report, Year Ended Dec 31, 2015

Filed February 19, 2016For Securities:AXP

Summary

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 billion, 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 billion 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.

Financial Highlights

39 data points
Beta

Net Income

$5.16B

Total Assets

$161.00B

Cash & Equivalents

$23.24B

Free Cash Flow

$9.37B

Financial Statements
Beta
Operating Income$5.16B
Interest Expense$1.62B
Net Income$5.16B
Shares Outstanding (Basic)999.00M
Shares Outstanding (Diluted)1.00B

Key Highlights

  • 1Net income was $5.2 billion, or $5.05 per diluted share, down from $5.9 billion, or $5.56 per diluted share, in 2014.
  • 2Total 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.
  • 3The company returned over $5.6 billion to shareholders in 2015 through dividends ($1.1 billion) and share repurchases ($4.5 billion).
  • 4Card 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'.
  • 5Provisions for losses decreased by 3% to $2.0 billion, reflecting strong credit performance.
  • 6Marketing, 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.
  • 7Salaries and employee benefits expenses decreased significantly by 18% to $5.0 billion, partly due to restructuring charges in 2014.
  • 8The company announced cost initiatives expected to remove $1 billion from its cost base by the end of 2017.

Frequently Asked Questions

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.

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.

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.

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.