Fourth-quarter consolidated total revenues net of interest expense rose to $9.1 billion from $8.5 billion a year ago, up 7 percent (9 percent when adjusted for foreign currency translations2). The revenue increase primarily reflected the previously reported gain of $719 million ($453 million after-tax) on the sale of the company’s investment in Concur Technologies. The increase also reflected a rise in Card Member spending and higher net interest income. Last year’s fourth quarter included revenue from the company’s business travel operations, which were deconsolidated as a result of the joint venture transaction that closed on June 30, 2014.

Consolidated provisions for losses totaled $582 million, up 22 percent from $479 million a year ago. The increase primarily reflected a build in reserves this quarter compared to a reserve release last year. Credit indicators continued to be at historically strong levels.

Consolidated expenses totaled $6.3 billion, up 3 percent (6 percent FX adjusted2) from $6.1 billion a year ago. As indicated last quarter, the company used a substantial portion of the Concur gain for:

• Companywide initiatives to improve operating efficiencies, which entailed a restructuring charge of $313 million ($206 million after-tax);
• Incremental investments in growth initiatives, which were largely reflected in higher marketing and promotion expenses; and
• The renewal of the company’s partnership with Delta Air Lines, which created additional rewards costs of $109 million ($68 million after-tax).

In addition, fourth-quarter results were negatively affected by the impact of foreign currency translations on international operations.

The effective tax rate for the quarter was 35 percent, up from 34 percent from a year ago, driven by the geographic mix of earnings and the resolution ods costs of $109 million ($68 million after-tax).

In addition, fourth-quarter results were negatively affected by the impact of foreign currency translations on international operations.

The effective tax rate for the quarter was 35 percent, up from 34 percent from a year ago, driven by the geographic mix of earnings and the resolution of certain prior years’ items.

The company's return on average equity (ROE) was 29.1 percent, up from 27.8 percent a year ago.

For the full year, the company reported net income of $5.9 billion, up 10 percent from $5.4 billion a year ago. Diluted earnings per share rose 14 percent to $5.56 from $4.88 a year ago.

Revenues net of interest expense for the full year increased 4 percent (5 percent FX adjusted2) to $34.3 billion from $33.0 billion a year ago. Consolidated expenses remained unchanged from 2013 at $23.3 billion. Adjusted for foreign currency translations2, consolidated expenses were up 1 percent.

“Solid results this quarter reflected the underlying themes that have characterized our performance throughout 2014: higher Card Member spending, increased loan balances, tight control of operating expenses and a substantial return of capital to shareholders through share repurchases,” said Kenneth I. Chenault, chairman and chief executive officer.

“Fourth-quarter Card Member spending rose 6 percent (8 percent FX adjusted). Volumes for the year crossed the trillion dollar mark for the first time, reflecting the progress we’ve made in building customer loyalty, adding new cards and expanding the network of merchants who accept our products. Loan balances were up 7 percent in the U.S., continuing the progress we’ve made throughout 2014. We continue to see opportunities to grow this portfolio with existing and new customers without significantly changing the overall risk profile of the company.

“Tight controls on the cost side of the ledger continued to give us the flexibility to invest in growth opportunities. And, as in the second quarter, a substantial gain allowed us to accelerate some critical initiatives: reengineering to make American Express more efficient; renewing a key partner relationship; and making additional investments to grow our business and drive innovation in the world of payments and commerce.

“We’ve made very good progress against the backdrop of an uneven global economy and the negative impact of a strengthening U.S. dollar. We see many opportunities for growth, but at the same time, we face competitive and regulatory challenges. Our aim is to continue to capitalize on the opportunities while dealing with the challenges as we enter 2015.”

Segment Results

U.S. Card Services reported fourth-quarter net income of $665 million, down 23 percent from $864 million a year ago.

Total revenues net of interest expense increased 5 percent to $4.6 billion from $4.4 billion a year ago. The increase reflected an 8 percent rise in Card Member spending and higher net interest income.

Provisions for losses totaled $399 million, up 25 percent from $319 million a year ago. The increase primarily reflected a build in reserves this quarter compared to a reserve release last year.

Total expenses increased 13 percent to $3.1 billion from $2.8 billion a year ago. The increase reflected a substantial portion of the initiatives related to the Concur gain and were reflected in higher rewards, marketing and operating expenses3.

The effective tax rate was 39 percent compared to 33 percent a year ago, reflecting the impact of certain prior years’ tax items.

International Card Services reported fourth-quarter net income of $33 million, down 68 percent from $103 million a year ago.

Total revenues net of interest expense decreased 5 percent (up 3 percent FX adusted2) to $1.4 billion.

Provisions for losses totaled $95 million, down 14 percent from $110 million a year ago. The decrease reflected a small reserve release in the current quarter compared with a reserve build a year ago.

Total expenses increased 4 percent (10 percent FX adjusted2) to $1.3 billion. The increase primarily reflected higher operating expenses, which included a portion of the restructuring charge, partially offset by a decrease in rewards costs.

Taxes for the quarter reflected the level of pretax income in combination with recurring permanent tax benefits.

Global Commercial Services reported fourth-quarter net income of $594 million, up from $182 million a year ago. The increase reflected the previously mentioned gain on the sale of the company’s investment in Concur Technologies. Year-ago results included earnings from the company’s business travel operations, which were deconsolidated as a result of the joint venture transaction referred to above. The company’s proportional share of the joint venture’s net income is now reported in Other Revenues.

Total revenues net of interest expense increased 28 percent (32 percent FX adjusted2) to $1.6 billion from $1.2 billion. The increase primarily reflected the previously mentioned Concur gain, partially offset by business travel revenues that were in the year-ago quarter.

Provisions for losses totaled $50 million, up from $36 million a year ago.

Total expenses decreased 36 percent (34 percent FX adjusted2) to $586 million from $915 million a year ago. Excluding business travel expenses, fourth quarter adjusted expenses increased 6 percent compared to the year-ago period.4

Global Network & Merchant Services reported fourth-quarter net income of $417 million, up 5 percent from $399 million a year ago.

Total revenues net of interest expense increased 2 percent (6 percent FX adjusted2) to $1.5 billion. The increase primarily reflected higher merchant-related revenues driven by an increase in global Card Member spending.

Provisions for losses totaled $35 million, up from $14 million a year ago, reflecting a reserve build in the current period.

Total expenses decreased 4 percent to $772 million (1 percent FX adjusted2) from $801 million a year ago. The decrease reflected merchant litigation settlement expenses a year ago, partially offset by higher marketing and promotion costs in the current quarter.

Corporate and Other reported fourth-quarter net loss of $262 million, compared with net loss of $240 million in the year-ago period. The current quarter included a portion of the previously mentioned restructuring charge.