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Reportable Operating Segment
 12 Months Ended
Dec. 31, 2016
Disclosure Text Block Abstract  
Reportable Operating Segments

NOTE 25

Reportable Operating Segments and Geographic Operations

Reportable Operating Segments

The Company is a global services company that is principally engaged in businesses comprising four reportable operating segments: USCS, ICNS, GCS and GMS.

The Company considers a combination of factors when evaluating the composition of its 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 environment considerations.

The following is a brief description of the primary business activities of the Company’s four reportable operating segments:

  • USCS issues a wide range of proprietary consumer cards and provides services to consumers in the United States, including consumer travel services.
  • ICNS issues a wide range of proprietary consumer cards outside the United States and enters into partnership agreements with third-party card issuers and acquirers, licensing the American Express brand and extending the reach of the global network. It also provides travel services to consumers outside the United States.
  • GCS issues a wide range of proprietary corporate and small business cards and provides payment and expense management services globally. In addition, GCS provides commercial financing products.
  • GMS operates a global payments network that processes and settles proprietary and non-proprietary card transactions. GMS acquires merchants and provides multi-channel marketing programs and capabilities, services and data analytics, leveraging the Company’s global closed-loop network. GMS also operates loyalty coalition businesses in certain countries around the world.

Corporate functions and certain other businesses and operations, including the Company’s Prepaid Services business and the GBT operations up to June 30, 2014, and subsequent activities related to the GBT JV, are included in Corporate & Other.

The following table presents certain selected financial information for the Company’s reportable operating segments and Corporate & Other as of or for the years ended December 31, 2016, 2015 and 2014:

(Millions, except where indicated)USCSICNSGCSGMSCorporate & Other(a)Consolidated
2016    
Non-interest revenues$7,874  $4,785$9,007  $4,235$447$26,348
Interest income5,082  9221,209  12617,475
Interest expense536  219401  (237)7851,704
Total revenues net of interest expense12,420  5,4889,815  4,473(77)32,119
Total provisions (b)1,065  325604  2572,026
Pretax income (loss) from continuing operations3,881  8182,945  2,295(1,843)8,096
Income tax provision (benefit)1,368  1631,036  837(716)2,688
Net income (loss)2,513  6551,909  1,458(1,127)5,408
Total assets (billions)$87$36$47$24$(35)$159
Total equity (billions)$7.2$2.5$7.0$2.5$1.3$20.5
2015    
Non-interest revenues$8,479$4,627$8,930$4,471$389$26,896
Interest income5,1989451,17512267,545
Interest expense488235365(211)7461,623
Total revenues net of interest expense13,1895,3379,7404,683(131)32,818
Total provisions (b)1,0643005883151,988
Pretax income (loss) from continuing operations3,6779043,1642,381(2,188)7,938
Income tax provision (benefit)1,3222201,142882(791)2,775
Net income (loss)2,3556842,0221,499(1,397)5,163
Total assets (billions)$93$35$45$24$(36)$161
Total equity (billions)$7.2  $2.6$7.0  $2.4$1.5$20.7
2014    
Non-interest revenues$8,198$5,091$9,571$4,571$1,285$28,716
Interest income4,8211,0881,02622427,179
Interest expense453325409(287)8071,707
Total revenues net of interest expense12,5665,85410,1884,86072034,188
Total provisions1,03035456979122,044
Pretax income (loss) from continuing operations3,5028873,7232,330(1,451)8,991
Income tax provision (benefit)1,2831941,381872(624)3,106
Net income (loss)2,2196932,3421,458(827)5,885
Total assets (billions)$90  $31$44  $18$(24)$159
Total equity (billions)$7.6  $2.6$6.9  $2.1$1.5$20.7

  • Corporate & Other includes adjustments and eliminations for intersegment activity.
  • Beginning December 1, 2015 through to the sale completion dates, in the USCS and GCS segments, total provisions does not include credit costs related to Card Member loans and receivables HFS, which were reported in Other expenses through a valuation allowance adjustment.

Total Revenues Net of Interest Expense

The Company allocates discount revenue and certain other revenues among segments using a transfer pricing methodology. Within the USCS, ICNS and GCS segments, discount revenue reflects the issuer component of the overall discount revenue generated by each segment’s Card Members; within the GMS segment, discount revenue reflects the network and acquirer component of the overall discount revenue. Net card fees and Other fees and commissions 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.

Provisions for Losses

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

Expenses

Marketing and promotion expenses are included in each segment based on actual expenses incurred. Global brand advertising is primarily reflected in Corporate & Other and may be allocated to the segment based on the actual expense incurred. Rewards and Card Member services expenses are included in each segment based on the actual expenses incurred within the segment.

Salaries and employee benefits and other operating expenses includes expenses such as professional services, occupancy and equipment and communications incurred directly within each segment. In addition, expenses related to support services, such as technology costs, are allocated to each segment primarily based on support service activities directly attributable to the segment. Other overhead expenses, such as staff group support functions, are allocated from Corporate & Other to the other segments based on a mix of each segment’s direct consumption of services and relative level of pretax income.

Capital

Each business segment is allocated capital based on established business model operating requirements, risk measures and regulatory capital requirements. The business model operating requirements include capital needed to support operations and specific balance sheet items. The risk measures include considerations for credit, market and operational risk.

Income Taxes

An income tax provision (benefit) is allocated to each business segment based on the effective tax rates applicable to various businesses that comprise the segment.

Geographic Operations

The following table presents the Company’s total revenues net of interest expense and pretax income (loss) from continuing operations in different geographic regions:

(Millions)  United States  EMEA(a)JAPA(a)LACC(a)Other Unallocated(b)Consolidated
2016(c)    
Total revenues net of interest expense  $24,133  $3,248$3,052$2,274$(588)$32,119
Pretax income (loss) from continuing operations  8,202  482559597(1,744)8,096
2015(c)    
Total revenues net of interest expense  $24,927  $3,293$2,791$2,412$(605)$32,818
Pretax income (loss) from continuing operations  7,500  544587693(1,386)7,938
2014(c)    
Total revenues net of interest expense  $24,678  $3,574$2,923$2,784$229$34,188
Pretax income (loss) from continuing operations  8,406  528565675(1,183)8,991

  • EMEA represents Europe, the Middle East and Africa; JAPA represents Japan, Asia/Pacific and Australia; and LACC represents Latin America, Canada and the Caribbean.
  • Other Unallocated includes net costs which are not directly allocable to specific geographic regions, including costs related to the net negative interest spread on excess liquidity funding and executive office operations expenses.
  • The data in the above table is, in part, based upon internal allocations, which necessarily involve management’s judgment.