AMERICAN EXPRESS CO

We consider a combination of factors when evaluating the composition of our reportable operating segments, including the results reviewed by the chief operating decision maker, economic characteristics, products and services offered, classes of customers, product distribution channels, geographic considerations (primarily United States versus outside the United States) and regulatory considerations. Refer to Note 24 to the “Consolidated Financial Statements” and “Business” for additional discussion of products and services that comprise each segment.

Results of the reportable operating segments generally treat each segment as a stand-alone business. The management reporting process that derives these results allocates revenue and expense using various methodologies as described below.

We allocate discount revenue and certain other revenues among segments using a transfer pricing methodology. Within the USCS, CS and ICS segments, discount revenue generally reflects the issuer component of the overall discount revenue generated by each segment’s Card Members; within the GMNS segment, discount revenue generally reflects the network and acquirer component of the overall discount revenue being allocated.

Net card fees, processed revenue and certain other revenues are directly attributable to the segment in which they are reported.

Interest and fees on loans and certain investment income is directly attributable to the segment in which it is reported. Interest expense represents an allocated funding cost based on a combination of segment funding requirements and internal funding rates.

The provisions for credit losses are directly attributable to the segment in which they are reported.

Card Member rewards and Card Member services expenses are included in each segment based on the actual expenses incurred. Business development and Marketing expenses are included in each segment based on the actual expenses incurred. Global brand advertising is primarily allocated to the segments based on the relative levels of revenue.

Salaries and employee benefits and other expenses reflect both costs incurred directly within each segment, as well as allocated expenses. The allocated expenses include service costs, which primarily reflect salaries and benefits associated with our technology and customer servicing groups, and overhead expenses. Service costs are allocated based on activities directly attributable to the segment, and overhead expenses are allocated based on the relative levels of revenue and Card Member loans and receivables. As a proportion of Salaries and employee benefits and other expenses, allocated costs remain relatively consistent from period to period. Increases in expenses year-over-year driven by allocated costs primarily reflect the changes in salaries and employee benefit costs and other costs related to our technology or servicing organizations and the growth in business volume within our operating segments.

U.S. CONSUMER SERVICES

TABLE 9: USCS SELECTED INCOME STATEMENT DATA

USCS issues a wide range of proprietary consumer cards and provides services to U.S. consumers, including travel and lifestyle services as well as banking and non-card financing products. USCS also manages our dining platform that provides digital tools for restaurants and reservation bookings for diners.

Non-interest revenues increased across all revenue categories, primarily driven by higher Discount revenue and Net card fees.

Discount revenue increased 7 percent, primarily driven by an increase in U.S. consumer billed business. See Tables 5, 6 and 10 for more details on billed business performance.

Net card fees increased 18 percent, primarily driven by growth in our premium card portfolios.

Service fees and other revenue increased 5 percent, primarily driven by revenue from the sale of reward points and higher delinquency fees, partially offset by lower travel commissions and fees from our Amex Travel business.

Interest expense increased, primarily driven by a higher cost of funds due to segment net asset growth and higher interest rates.

Card Member loans provision for credit losses increased, primarily due to higher net write-offs, partially offset by a lower reserve build in the current year. The reserve build in the current year was primarily driven by an increase in loans outstanding. The reserve build in the prior year was primarily driven by an increase in loans outstanding and higher delinquencies.

Card Member receivables provision for credit losses decreased, primarily due to a higher reserve release and lower net write-offs in the current year. The reserve releases in both the current and prior years were primarily driven by lower delinquencies and a decrease in receivables outstanding.

Other provision for credit losses increased, primarily due to higher net write-offs and a higher reserve build in the current year. The reserve builds in both the current and prior years were primarily driven by increases in Other loans outstanding.

Total expenses increased, primarily driven by higher Card Member rewards, Card Member services and Marketing expenses.

Card Member rewards expense increased, primarily driven by higher billed business. In the second half of the year, the increase in Membership Rewards expense was also driven by an increase in the URR and slightly higher redemption costs reflecting a shift in the mix of Card Member redemptions.

Business development expense increased, primarily due to increased partner payments driven by higher billed business.

Salaries and employee benefits and other expenses increased, primarily due to an increase in allocated service costs.

TABLE 10: USCS SELECTED STATISTICAL INFORMATION

COMMERCIAL SERVICES

TABLE 11: CS SELECTED INCOME STATEMENT DATA

CS issues a wide range of proprietary corporate and small business cards and provides services to U.S. businesses, including payment and expense management, banking and non-card financing products. CS also issues proprietary corporate cards and provides services to select global corporate clients.

Non-interest revenues increased, primarily driven by higher Discount revenue and Net card fees.

Discount revenue increased 2 percent, primarily driven by an increase in commercial billed business. See Tables 5, 6 and 12 for more details on billed business performance.

Net card fees increased 12 percent, primarily driven by growth in our premium card portfolios.

Service fees and other revenue decreased 7 percent, primarily driven by lower travel commissions and fees from our Amex Travel business.

Interest expense increased, primarily driven by a higher cost of funds due to segment net asset growth and higher interest rates.

Card Member loans provision for credit losses increased, primarily due to higher net write-offs, partially offset by a lower reserve build in the current year. The reserve build in the current year was primarily driven by an increase in loans outstanding. The reserve build in the prior year was primarily driven by an increase in loans outstanding and higher delinquencies.

Card Member receivables provision for credit losses decreased, primarily due to lower net write-offs, partially offset by a reserve release in the prior year. The reserve release in the prior year was primarily driven by lower delinquencies and a decrease in receivables outstanding.

Total expenses increased, primarily driven by higher Marketing and Card Member rewards expenses, partially offset by a decrease in Operating expenses and Business development expense.

Card Member rewards expense increased, primarily driven by higher billed business and slightly higher redemption costs in the second half of the year, partially offset by a decrease in the Membership Rewards URR.

Business development expense decreased, primarily due to lower client incentives, partially offset by increased partner payments due to higher billed business.

Salaries and employee benefits and other expenses decreased, primarily driven by a decrease in allocated service costs and lower restructuring costs, partially offset by higher compensation.

TABLE 12: CS SELECTED STATISTICAL INFORMATION

(e)Refer to Table 8 footnote (d).

(f)For corporate 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. Corporate receivables delinquency data for periods other than 90+ days past billing and the net write-off rate based on principal losses only are not available due to system constraints.

INTERNATIONAL CARD SERVICES

TABLE 13: ICS SELECTED INCOME STATEMENT DATA

ICS issues a wide range of proprietary consumer, small business and corporate cards outside the United States. ICS also provides services to our international customers, including travel and lifestyle services, and manages certain international joint ventures and our loyalty coalition business.

Non-interest revenues increased, primarily driven by higher Discount revenue and Net card fees.

Discount revenue increased 10 percent (13 percent on an FX-adjusted basis), primarily reflecting an increase in billed business.3 See Tables 5, 6 and 14 for more details on billed business performance.

Net card fees increased 16 percent (20 percent on an FX-adjusted basis), primarily driven by growth in our premium card portfolios.3

Service fees and other revenue increased 2 percent, primarily driven by higher foreign exchange related revenues associated with Card Member cross-currency spending and loyalty coalition-related fees, partially offset by a benefit in the prior year related to a portion of the revenue allocated to a joint venture partner as described in Business development expense below, as well as lower delinquency fees.

Interest income increased, primarily driven by growth in revolving loan balances, partially offset by lower interest rates.

Interest expense increased, primarily driven by a higher cost of funds due to segment net asset growth.

Card Member loans provision for credit losses increased, primarily due to higher net write-offs, partially offset by a lower reserve build in the current year. The reserve build in the current year was primarily driven by an increase in loans outstanding, partially offset by lower delinquencies. The reserve build in the prior year was primarily driven by an increase in loans outstanding, partially offset by the performance of portfolios in certain international markets.

Card Member receivables provision for credit losses decreased, primarily due to lower net write-offs, partially offset by a reserve build in the current year versus a reserve release in the prior year. The reserve build in the current year was primarily driven by an increase in receivables outstanding. The reserve release in the prior year was primarily driven by lower delinquencies, partially offset by an increase in receivables outstanding.

3 Refer to footnote 1 on page 45 for details regarding foreign currency adjusted information.

Total expenses increased, primarily driven by higher Card Member rewards, Card Member services and Operating expenses.

Card Member rewards expense increased, primarily driven by higher billed business and an increase in the Membership Rewards URR, partially offset by lower redemption costs.

Business development expense increased, primarily due to increased partner payments driven by higher billed business, partially offset by a prior-year charge related to revenue allocated to a joint venture partner.

Salaries and employee benefits and other expenses increased, primarily due to a charge associated with an increase in international non-income tax reserves and higher allocated service costs, partially offset by a one-time fee from a partner.

TABLE 14: ICS SELECTED STATISTICAL INFORMATION

(e)For corporate 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. Corporate receivables delinquency data for periods other than 90+ days past billing and the net write-off rate based on principal losses only are not available due to system constraints.

GLOBAL MERCHANT AND NETWORK SERVICES

TABLE 15: GMNS SELECTED INCOME STATEMENT AND OTHER DATA

GMNS operates a global payments network that processes and settles card transactions, acquires merchants and provides multi-channel marketing programs and capabilities, services and data analytics, leveraging our global integrated network. GMNS manages our partnership relationships with third-party card issuers, merchant acquirers and a prepaid reloadable and gift card program manager, licensing the American Express brand and extending the reach of the global network.

Non-interest revenues increased, primarily driven by higher Discount revenue, partially offset by lower Processed revenue.

Discount revenue increased 3 percent, primarily driven by an increase in billed business, partially offset by lower average merchant discount rates. See Tables 5 and 6 for more details on billed business performance.

Service fees and other revenue increased 1 percent, primarily driven by higher merchant service fees and foreign exchange-related revenues associated with Card Member cross-currency spending, largely offset by Accertify revenues included in the prior year.

Processed revenue decreased 2 percent and increased 4 percent on an FX-adjusted basis.4

GMNS receives an interest expense credit relating to internal transfer pricing due to its merchant payables. Net interest income decreased, primarily due to a lower interest expense credit, largely driven by a decrease in interest rates in international markets, partially offset by higher average merchant payables.

4 Refer to footnote 1 on page 45 for details regarding foreign currency adjusted information.

Total expenses decreased, primarily driven by lower Operating expenses.

Business development expense decreased, primarily due to decreased partner payments driven by lower volumes from certain network issuing partners.

Marketing expense decreased, reflecting lower levels of spending on merchant engagement and other growth initiatives.

Salaries and employee benefits and other expenses decreased, primarily driven by the gain recognized on the sale of Accertify included in the Other, net component of operating expenses, partially offset by an increase in allocated service costs.

CORPORATE & OTHER

Corporate functions and certain other businesses are included in Corporate & Other.

Corporate & Other pretax loss was $2.4 billion in both 2024 and 2023. Increases in foreign exchange gains and net gains on Amex Ventures investments year-over-year were offset largely by an increase in legal reserves.