AMERICAN EXPRESS CO

The discussions in both “Consolidated Results of Operations” and “Business Segment Results of Operations” provide commentary on the variances for the year ended December 31, 2024 compared to the year ended December 31, 2023, as presented in the accompanying tables. For a discussion of the financial condition and results of operations for 2023 compared to 2022, please refer to Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 9, 2024.

TABLE 2: TOTAL REVENUES NET OF INTEREST EXPENSE SUMMARY

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

Net card fees increased, primarily driven by growth in our premium card portfolios. See Table 5 for more details on proprietary new card acquisitions, proprietary cards-in-force and average fee per card.

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

Processed revenue decreased, and was relatively flat on an FX-adjusted basis.2 See Tables 5 and 6 for more details on processed volume performance.

Interest expense increased, primarily driven by higher interest rates paid on, and growth in, customer deposits and long-term debt.

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

TABLE 3: PROVISIONS FOR CREDIT LOSSES SUMMARY

(a)Refer to the “Glossary of Selected Terminology” below for a definition of reserve build (release).

Card Member loans provision for credit losses increased, primarily due to higher net write-offs driven by growth in loans outstanding, 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, partially offset by an increase in receivables outstanding.

Other provision for credit losses increased, primarily due to higher net write-offs.

TABLE 4: EXPENSES SUMMARY

Card Member rewards expense increased, driven by increases in Membership Rewards and cash back rewards expenses, collectively, of $705 million, and cobrand rewards expense of $527 million, all of which were 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 Ultimate Redemption Rate (URR) and slightly higher redemption costs reflecting a shift in the mix of Card Member redemptions.

The Membership Rewards URR for current program participants was 96 percent (rounded down) at both December 31, 2024 and 2023.

Business development expense increased, primarily due to increased partner payments driven by higher network volumes, partially offset by lower client incentives and a prior-year charge related to revenue allocated to a joint venture partner.

Salaries and employee benefits expense increased, primarily driven by higher incentive and compensation costs, partially offset by lower restructuring costs.

Other expenses decreased, primarily driven by the gain recognized on the sale of Accertify, foreign exchange-related gains and net gains on Amex Ventures investments, partially offset by an increase in legal reserves, higher professional service costs and a charge associated with an increase in international non-income tax reserves.

The effective tax rate was 21.5 percent and 20.3 percent for 2024 and 2023, respectively. The increase in the effective tax rate primarily reflected discrete tax benefits in the prior year.

TABLE 5: SELECTED CARD-RELATED STATISTICAL INFORMATION

(a)Average fee per card is computed on an annualized basis based on proprietary Net card fees divided by average proprietary total cards-in-force.

TABLE 6: NETWORK VOLUMES-RELATED STATISTICAL INFORMATION

(a)The foreign currency adjusted information assumes a constant exchange rate between the periods being compared for purposes of conversion into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the current year apply to the corresponding prior-year period against which such results are being compared).

TABLE 7: SELECTED CREDIT-RELATED STATISTICAL INFORMATION

(a)We present a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, as our practice is to include uncollectible interest and/or fees as part of our total provision for credit losses, a net write-off rate including principal, interest and/or fees is also presented.

(b)A net write-off rate based on principal losses only is not available for corporate receivables due to system constraints.

(c)For corporate receivables, delinquency data is tracked based on days past billing status rather than days past due. Refer to Table 12 for 90+ days past billing metrics for corporate receivables.

(d)Other includes foreign currency translation adjustments.

TABLE 8: NET INTEREST YIELD ON AVERAGE CARD MEMBER LOANS

(a)Primarily represents interest expense attributable to maintaining our corporate liquidity pool and funding Card Member receivables.

(b)Primarily represents interest income attributable to Other loans, interest-bearing deposits and the fixed income investment portfolios.

(c)Adjusted net interest income and net interest yield on average Card Member loans are non-GAAP measures. Refer to the “Glossary of Selected Terminology” below for the definitions of these terms. We believe adjusted net interest income is useful to investors because it represents the interest expense and interest income attributable to our Card Member loan portfolio and is a component of net interest yield on average Card Member loans, which provides a measure of profitability of our Card Member loan portfolio. Net interest yield on average Card Member loans reflects adjusted net interest income divided by average Card Member loans, computed on an annualized basis. Net interest income divided by average Card Member loans, computed on an annualized basis, a GAAP measure, includes elements of total interest income and total interest expense that are not attributable to the Card Member loan portfolio, and thus is not representative of net interest yield on average Card Member loans.

(d)For purposes of the calculation of net interest yield on Card Member loans, average loans includes loans held for sale (HFS) as we continue to recognize interest income on these loans until they are sold. Refer to Note 1 to the Consolidated Financial Statements for further information on loans HFS.