American Express Reports Second Quarter EPS of $1.43, Up 13 Percent from a Year Ago; Revenues, Loans and Card Member Spending

  American Express Reports Second Quarter EPS of $1.43, Up 13 Percent from a
  Year Ago; Revenues, Loans and Card Member Spending Increase; Gain from
  Business Travel Transaction Largely Reinvested in Business

Business Wire

NEW YORK -- July 29, 2014

American Express Company (NYSE:AXP) today reported second-quarter net income
of $1.5 billion, up from $1.4 billion a year ago. Diluted earnings per share
rose 13 percent to $1.43, from $1.27 a year ago.


(Millions, except percentages and per share amounts)

                       Quarters Ended              Percentage     Six Months Ended              Percentage
                                                                                     
                       June 30,                    Inc/(Dec)      June 30,                      Inc/(Dec)
                       2014        2013                         2014         2013
Total Revenues
Net of                 $ 8,657       $ 8,245       5    %         $ 16,856       $ 16,126       5    %
Interest
Expense
Net Income             $ 1,529       $ 1,405       9    %         $ 2,961        $ 2,685        10   %
Earnings Per
Common Share –
Diluted:
Net Income
Attributable           $ 1.43        $ 1.27        13   %         $ 2.77         $ 2.42         14   %
to Common
Shareholders^1
Average
Diluted Common           1,058         1,097       (4   ) %         1,062          1,101        (4   ) %
Shares
Outstanding
Return on                28.8  %       23.6  %                      28.8   %       23.6   %
Average Equity


Net income from the quarter included a gain of $626 million ($409 million
after-tax) from the closing of the previously announced joint venture
transaction for the company’s business travel operations. As planned, the
company used a substantial portion of the gain to fund incremental investments
in growth and efficiency initiatives.

Consolidated total revenues net of interest expense rose to $8.7 billion in
the quarter, up 5 percent from $8.2 billion a year ago. The increase reflected
higher Card Member spending, higher net interest income and higher net card
fees.

Consolidated provisions for losses totaled $489 million, down 6 percent from
$518 million a year ago. The decrease reflected lower net write-offs in the
current quarter, offset, in part, by the effect of a larger reserve release a
year ago.

Consolidated expenses totaled $5.9 billion, up 2 percent from $5.7 billion a
year ago. Expenses for the period were impacted by increased marketing, which
included a significant amount of incremental investments in growth
initiatives, and rewards costs. Operating expenses^2 were lower due to a gain
on the business travel joint venture transaction (which was reported as an
expense reduction), partially offset by transaction-related costs of $79
million, as well as the following items:

  *A restructuring charge of $133 million ($90 million after-tax); and
  *A contribution to the American Express Foundation of $40 million ($25
    million after-tax).

The business travel joint venture transaction gain, net of the offsets and
incremental investments mentioned above, contributed approximately $0.05 to
second-quarter diluted earnings per share. The gain was recognized in the
Global Commercial Services segment. The offsetting investments were made
across all of the company’s operating segments.

The effective tax rate for the quarter was 34 percent, up from 30 percent a
year ago, which reflected the resolution of certain prior years’ tax items.

The company’s return on average equity (ROE) was 28.8 percent, up from 23.6
percent a year ago.

“The strong underlying performance this quarter reflected a continuation of
some familiar themes: higher Card Member spending, credit metrics at or near
their historic lows, a modest increase in loan balances, continued success in
containing operating expenses and a substantial return of capital to our
investors through share repurchases,” said Kenneth I. Chenault, chairman and
chief executive officer.

“Card Member spending rose 9 percent from year ago levels, and overall the
growth rate accelerated from earlier this year, with higher volumes across
each of our businesses in the U.S. and internationally.

“As noted above, we completed the formation of the joint venture for our
business travel operations, which will have additional resources from a new
investor group to develop products, create capabilities and attract new
customers. We maintain a 50 percent ownership and will continue to have a
close working relationship with the business travel joint venture.

“The gain we recognized on the business travel joint venture transaction gave
us the flexibility to substantially increase spending on a number of growth
initiatives, including marketing support for products such as the Amex
EveryDay Credit Card and American Express Serve. It also offset a
restructuring charge we recognized during the quarter. That charge relates to
actions that will be taking place over the next year to improve efficiency and
contain operating expenses primarily within our Global Corporate Services
Group. The restructuring will largely involve positions that do not directly
generate revenue.”

Segment Results

U.S. Card Services reported second-quarter net income of $770 million, up 4
percent from $743 million a year ago.

Total revenues net of interest expense increased 6 percent to $4.5 billion
from $4.2 billion a year ago. The rise largely reflected a 9 percent increase
in Card Member spending and higher net interest income.

Provisions for losses totaled $339 million, down 5 percent from $356 million a
year ago. The decrease reflected lower net write-offs in the current quarter,
offset, in part, by a larger reserve release a year ago.

Total expenses increased 8 percent to $2.9 billion from $2.7 billion a year
ago. The increase primarily reflected a portion of the incremental investments
in growth initiatives mentioned earlier, along with higher rewards costs.

The effective tax rate was 36 percent compared to 37 percent a year ago.

International Card Services reported second-quarter net income of $77 million,
down 63 percent from $208 million a year ago.

Total revenues net of interest expense were $1.4 billion, up 7 percent from
$1.3 billion a year ago. The increase primarily reflected higher Card Member
spending and higher revenues from the Loyalty Partner business.

Total expenses were $1.2 billion, up 18 percent from $1.0 billion a year ago.
The increase reflected a portion of the incremental investments and
restructuring charge mentioned earlier.

The effective tax rate was (12) percent compared to (33) percent a year ago
due to the resolution of certain prior years’ tax items.

Global Commercial Services reported second-quarter net income of $561 million,
up from $226 million a year ago. The increase primarily reflected the joint
venture transaction gain.

Total revenues net of interest expense were $1.3 billion, up 3 percent from
$1.2 billion a year ago. The increase primarily reflected higher Card Member
spending.

Total expenses decreased 58 percent to $361 million from $862 million a year
ago. The decrease primarily reflected the joint venture transaction gain
(which was reported as an expense reduction), partially offset by
transaction-related costs and a portion of the incremental investments and
restructuring charge mentioned previously.

The effective tax rate was 35 percent compared to 32 percent from a year ago.

Global Network & Merchant Services reported second-quarter net income of $373
million, down 9 percent from $412 million a year ago.

Total revenues net of interest expense increased 5 percent to $1.5 billion
from $1.4 billion a year ago. The increase primarily reflected higher
merchant-related revenues driven by an increase in global Card Member
spending.

Total expenses increased 20 percent to $859 million from $716 million a year
ago. The increase primarily reflected a portion of the incremental investments
mentioned earlier.

The effective tax rate remained unchanged from a year ago at 36 percent.

Corporate and Other reported second-quarter net loss of $252 million compared
with net loss of $184 million in the year-ago period, largely reflecting that
portion of the previously-mentioned incremental investments that supported
growth initiatives in Enterprise Growth.

About American Express

American Express is a global services company, providing customers with access
to products, insights and experiences that enrich lives and build business
success. Learn more at americanexpress.com and connect with us on
facebook.com/americanexpress, foursquare.com/americanexpress,
linkedin.com/companies/american-express, twitter.com/americanexpress, and
youtube.com/americanexpress.

Key links to products and services: charge and credit cards, business credit
cards, travel services, gift cards, prepaid cards, merchant services,
corporate card and business travel.

The 2014 Second Quarter Earnings Supplement will be available today on the
American Express website at http://ir.americanexpress.com. An investor
conference call will be held at 5:00 p.m. (ET) today to discuss second-quarter
earnings results. Live audio and presentation slides for the investor
conference call will be available to the general public at the same website. A
replay of the conference call will be available later today at the same
website address.

This release includes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are based
on the company’s expected business and financial performance and are subject
to risks and uncertainties. Actual results may differ from those set forth in
the forward-looking statements due to a variety of factors, including those
contained in the company's Annual Report on Form 10-K for the year ended
December 31, 2013, its Quarterly Report on Form 10-Q for the quarter ended
March 31, 2014 and the company’s other filings with the Securities and
Exchange Commission. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date on which
they are made. The company undertakes no obligation to update or revise any
forward-looking statements.

^1 Represents net income less earnings allocated to participating share awards
of $12 million and $13 million for the three months ended June 30, 2014 and
2013, respectively, and $24 million for both the six months ended June 30,
2014 and 2013.

^2 Operating expenses represent salaries and employee benefits, professional
services, occupancy and equipment, communications and other, net.

All information in the following tables is presented on a basis prepared in
accordance with U.S. generally accepted accounting principles (GAAP), unless
otherwise indicated. Certain reclassifications of prior period amounts have
been made to conform to the current period presentation.


(Preliminary)
American Express Company
Consolidated Statements of Income

(Millions)
                    Quarters Ended                              Six Months Ended                  
                         June 30,                        Percentage         June 30,                             Percentage
                         2014         2013            Inc/(Dec)          2014          2013                Inc/(Dec)
                                                                                                         
Revenues
Non-interest
revenues
Discount                 $ 4,945         $ 4,729         5       %          $ 9,591          $ 9,167             5       %
revenue
Net card fees              687             647           6                    1,361            1,300             5
Travel
commissions                500             495           1                    923              932               (1   )
and fees
Other
commissions                624             605           3                    1,242            1,178             5
and fees
Other                     585           567          3                   1,086          1,104            (2   )
Total
non-interest              7,341         7,043        4                   14,203         13,681           4
revenues
Interest
income
Interest on                1,696           1,622         5                    3,407            3,305             3
loans
Interest and
dividends on               45              52            (13  )               91               105               (13  )
investment
securities
Deposits with
banks and                 18            20           (10  )              37             46               (20  )
other
Total interest            1,759         1,694        4                   3,535          3,456            2
income
Interest
expense
Deposits                   91              107           (15  )               185              221               (16  )
Long-term debt            352           385          (9   )              697            790              (12  )
and other
Total interest            443           492          (10  )              882            1,011            (13  )
expense
Net interest              1,316         1,202        9                   2,653          2,445            9
income
Total revenues
net of                    8,657         8,245        5                   16,856         16,126           5
interest
expense
Provisions for
losses
Charge card                183             161           14                   398              315               26
Card Member                282             334           (16  )               532              577               (8   )
loans
Other                     24            23           4                   44             42               5
Total
provisions for            489           518          (6   )              974            934              4
losses
Total revenues
net of
interest                  8,168         7,727        6                   15,882         15,192           5
expense after
provisions for
losses
                                                                                                                         
Expenses
Marketing and              985             786           25                   1,598            1,407             14
promotion
Card Member                1,773           1,601         11                   3,355            3,121             7
rewards
Card Member
services and               192             193           (1   )               414              382               8
other
Salaries and
employee                   1,658           1,543         7                    3,198            3,158             1
benefits
Professional               817             763           7                    1,509            1,479             2
services
Occupancy and              467             460           2                    929              932               -
equipment
Communications             101             92            10                   194              188               3
Other, net                (137  )        294          #                   165            621              (73  )
Total                     5,856         5,732        2                   11,362         11,288           1
Pretax income              2,312           1,995         16                   4,520            3,904             16
Income tax                783           590          33                  1,559          1,219            28
provision
Net income               $ 1,529        $ 1,405        9                  $ 2,961         $ 2,685            10
Net income
attributable
to common                $ 1,517        $ 1,392        9                  $ 2,937         $ 2,661            10
shareholders
(A)
Effective tax              33.9  %         29.6  %                            34.5   %         31.2   %
rate
                       
# - Denotes a
variance of
more than 100
percent.

(A) Represents net income, less earnings allocated to participating share awards of $12 million and $13 million for the
three months ended June 30, 2014 and 2013, respectively, and $24 million for both the six months ended June 30, 2013 and
2012, respectively.


(Preliminary)
American Express Company
Condensed Consolidated Balance Sheets
                                                         
(Billions)
                                                                  
                                     June 30,                     December 31,
                                     2014       2013
                                                                  
Assets
Cash & cash equivalents              $          18                $     19
Accounts receivable                             49                      47
Investment securities                           5                       5
Loans                                           66                      67
Other assets                                   14                     15
Total assets                         $          152               $     153
                                                                  
Liabilities and
Shareholders' Equity
Customer deposits                    $          42                $     42
Short-term borrowings                           3                       5
Long-term debt                                  55                      55
Other liabilities                              32                     32
Total liabilities                              132                    134
                                                                  
Shareholders' Equity                           20                     19
Total liabilities and                $          152               $     153
shareholders' equity



(Preliminary)
American Express Company
Financial Summary
(Millions)       
                       Quarters Ended                              Six Months Ended              
                        June 30,                        Percentage         June 30,                         Percentage
                        2014         2013            Inc/(Dec)          2014          2013            Inc/(Dec)
                                                                                                                    
Total
revenues net
of interest
expense
U.S. Card               $ 4,477         $ 4,239         6       %          $ 8,767          $ 8,321         5       %
Services
International             1,391           1,299         7                    2,743            2,616         5
Card Services
Global
Commercial                1,269           1,231         3                    2,463            2,394         3
Services
Global
Network &                1,455         1,384        5                   2,820          2,687        5
Merchant
Services
                          8,592           8,153         5                    16,793           16,018        5
Corporate &              65            92           (29  )              63             108          (42  )
Other
                                                                                                                    
CONSOLIDATED
TOTAL
REVENUES NET            $ 8,657        $ 8,245        5                  $ 16,856        $ 16,126       5
OF INTEREST
EXPENSE
                                                                                                                    
Pretax income
(loss)
U.S. Card               $ 1,200         $ 1,175         2                  $ 2,606          $ 2,445         7
Services
International             69              156           (56  )               272              349           (22  )
Card Services
Global
Commercial                865             333           #                    1,150            616           87
Services
Global
Network &                578           647          (11  )              1,280          1,229        4
Merchant
Services
                          2,712           2,311         17                   5,308            4,639         14
Corporate &              (400  )        (316  )       27                  (788   )        (735   )      7
Other
                                                                                                                    
PRETAX INCOME           $ 2,312        $ 1,995        16                 $ 4,520         $ 3,904        16
                                                                                                                    
Net income
(loss)
U.S. Card               $ 770           $ 743           4                  $ 1,646          $ 1,547         6
Services
International             77              208           (63  )               236              386           (39  )
Card Services
Global
Commercial                561             226           #                    745              417           79
Services
Global
Network &                373           412          (9   )              816            785          4
Merchant
Services
                          1,781           1,589         12                   3,443            3,135         10
Corporate &              (252  )        (184  )       37                  (482   )        (450   )      7
Other
                                                                                                                    
NET INCOME              $ 1,529        $ 1,405        9                  $ 2,961         $ 2,685        10
                                                                                                                    
# - Denotes a
variance of
more than 100
percent.



(Preliminary)
American Express Company
Financial Summary (continued)

                                                                  
                   Quarters Ended                                 Six Months Ended            
                       June 30,                        Percentage            June 30,                       Percentage
                       2014         2013            Inc/(Dec)            2014         2013           Inc/(Dec)
EARNINGS PER
COMMON SHARE
                                                                                                                    
BASIC
Net income
attributable           $ 1.44         $ 1.28         13                    $ 2.78         $ 2.43        14      %
to common
shareholders
                                                                                                                    
Average
common shares           1,052         1,090        (3    )    %           1,056         1,094       (3   )  %
outstanding
(millions)
                                                                                                                    
DILUTED
Net income
attributable           $ 1.43         $ 1.27         13                    $ 2.77         $ 2.42        14      %
to common
shareholders
                                                                                                                    
Average
common shares           1,058         1,097        (4    )    %           1,062         1,101       (4   )  %
outstanding
(millions)
                                                                                                                    
Cash
dividends              $ 0.26         $ 0.23         13         %          $ 0.49         $ 0.43        14      %
declared per
common share
                                                                                                                    
                                                                                                                    
                    Selected Statistical Information
                                                                                                                    
                       Quarters Ended                                        Six Months Ended
                       June 30,                        Percentage            June 30,                       Percentage
                       2014            2013            Inc/(Dec)             2014            2013           Inc/(Dec)
                                                                                                                    
Return on
average                  28.8  %         23.6  %                               28.8  %         23.6  %
equity (A)
Return on
average                  28.5  %         23.4  %                               28.5  %         23.4  %
common equity
(A)
Return on
average
tangible                 35.8  %         29.7  %                               35.8  %         29.7  %
common equity
(A)
Common shares
outstanding              1,046           1,084         (3    )    %            1,046           1,084        (3   )  %
(millions)
Book value
per common             $ 19.32         $ 17.57         10         %          $ 19.32         $ 17.57        10      %
share
Shareholders'
equity                 $ 20.2          $ 19.0          6          %          $ 20.2          $ 19.0         6       %
(billions)
                                                                                                                    
# - Denotes a
variance of
more than 100
percent.
                                                                                                                    
(A) Refer to Appendix I for components of return on average equity, return on average common equity and return on
average tangible common equity, a non-GAAP measure.

(Preliminary)
American Express Company
Components of Return on Average Equity (ROE), Return on Average Common Equity (ROCE),
and Return on Average Tangible Common Equity (ROTCE)
Appendix I

(Millions)
                   For the Twelve Months Ended
                       June 30,      March 31,     December      September     June 30,
                                                        31,             30,
                       2014             2014            2013            2013            2013
                                                                                        
ROE
                                                                                        
Net income             $ 5,635          $ 5,511         $ 5,359         $ 4,688         $ 4,572
Average
shareholders'          $ 19,591         $ 19,442        $ 19,254        $ 19,289        $ 19,372
equity
Return on
average equity           28.8   %         28.3   %        27.8   %        24.3   %        23.6   %
(A)
                                                                                        
Reconciliation
of ROCE and
ROTCE
                                                                                        
Net income             $ 5,635          $ 5,511         $ 5,359         $ 4,688         $ 4,572
Earnings
allocated to
participating           47             48            47            43            45     
share awards
and other
Net income
attributable           $ 5,588         $ 5,463        $ 5,312        $ 4,645        $ 4,527  
to common
shareholders
                                                                                        
Average
shareholders'          $ 19,591        $ 19,442       $ 19,254       $ 19,289       $ 19,372 
equity
Average common
shareholders'          $ 19,591        $ 19,442       $ 19,254       $ 19,289       $ 19,372 
equity
Average
goodwill and            3,994          4,012         4,055         4,091         4,128  
other
intangibles
Average
tangible
common                 $ 15,597        $ 15,430       $ 15,199       $ 15,198       $ 15,244 
shareholders'
equity
Return on
average common           28.5   %         28.1   %        27.6   %        24.1   %        23.4   %
equity (A)
Return on
average
tangible                 35.8   %         35.4   %        34.9   %        30.6   %        29.7   %
common equity
(B)

(A) Return on average equity and return on average common equity are calculated by dividing one
year period net income/net income attributable to common shareholders by one year average total
shareholders’ equity/average common shareholders' equity, respectively.

(B) Return on average tangible common equity, a non-GAAP measure, is computed in the same manner
as return on average common equity except the computation of average tangible common shareholders'
equity, a non-GAAP measure, excludes from average total shareholders' equity, average goodwill and
other intangibles. The Company believes that return on average tangible common equity is a useful
measure of the profitability of its business.

Contact:

Media Contacts:
Marina H. Norville, +1-212-640-2832
marina.h.norville@aexp.com
or
Mike O’Neill, +1-212-640-5951
mike.o'neill@aexp.com
or
Investors/Analysts Contacts:
Ken Paukowits, +1-212-640-6348
ken.f.paukowits@aexp.com
or
Rick Petrino, +1-212-640-5574
richard.petrino@aexp.com
 
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