American Express : Q1 2025 Pillar 3 Disclosure
AXP
Published on 05/09/2025 at 09:59
Basel III Standardized Approach Pillar 3 Disclosures
For the Quarterly Period Ended March 31, 2025
Page Reference(s)
Disclosure
Description
Disclosure
10-Q
on Form 10-K
Scope of Application
Basis of Consolidation
4
102
Capital Surplus of Insurance Underwriting Subsidiaries
4
Restrictions on Transfer of Funds or Regulatory Capital
4
155-156
Minimum Capital Requirements
4
20-22
12-14, 64-66, 155
Capital Structure and
Regulatory Risk-Based Capital Ratios
5
21
65
Capital Adequacy
Components of Regulatory Capital
6
20-22
64-66
Risk-Weighted Assets
8
21
65
Capital Management
Capital Strategy
8
64
Stress Testing and Capital Planning
8
22,28
14, 66
Pillar 3
First Quarter 2025 Form
2024 Annual Report
Regulatory Capital Buffers
Regulatory Capital Buffer Requirements and Measurement
9 12-14
Credit Risk General Disclosures
Risk Management 9 26, 28, 70 34, 73-80
Credit Risk Exposures 10 74
Card Member Loans and Card Member Receivables
12 43-52 108-117
Risk for Derivative Contracts
Derivative Contracts Derivatives
14
59-60
139-141
Counterparty Credit Risk Mitigation
14
59
139
Types of Eligible Collateral Held
15
Collateral Management and Valuation
15
Credit Deterioration Risk
15
Credit Reserves
15
Securitization
Not applicable. No securitized assets held that meet the securitization criteria outlined in the Final Rule.
Equity Exposures not
Equity Investment Valuation Methodologies
16
53-54, 61-63
121-123, 145-146
Counterparty Credit
Counterparty Credit Risk Limits 14 139
14
Subject to the Market Risk Rules
Interest Rate Risk for Non-Trading Activities
Realized Gains (Losses) 16
Risk-Weighting Approaches 16
Nature and Types of Exposures 17 61-63
Interest Rate Risk for Non-Trading Activities 18 70 35-36, 78
Rate Shock Sensitivity Analysis 18 78
Supplementary Leverage Ratio
Summary Comparison of Accounting Assets and Total Leverage Exposure
19 21 65-66
Supplementary Leverage Ratio 20 21 13, 65-66
Glossary Glossary of Selected Terminology 21
Business Overview
American Express is a globally integrated payments company, providing customers with access to products, insights and experiences that enrich lives and build business success. Its various products and services are offered globally to consumers, small businesses, mid-sized companies and large corporations through various channels, including mobile and online applications, affiliate marketing, customer referral programs, third-party service providers and business partners, in-house sales teams, direct mail, telephone, and direct response advertising.
American Express Company and its principal operating subsidiary, American Express Travel Related Services Company, Inc., are bank holding companies under the Bank Holding Company Act of 1956, as amended, subject to supervision and examination by The Board of Governors of the Federal Reserve System (the Federal Reserve).
Throughout this report the terms "American Express," "we," "our" or "us," refer to American Express Company and its subsidiaries on a consolidated basis, unless stated or the context implies otherwise. This report should be read in conjunction with our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 (the Q1'25 Form 10-Q), our Annual Report on Form 10-K for the year ended December 31, 2024 (the 2024 Annual Report) and the Consolidated Financial Statements for Holding Companies - FR Y-9C for the quarter ended March 31, 2025 (the FR Y-9C). Some measures of exposures and other amounts disclosed in this report may not be directly comparable to our other public disclosures and may not be comparable to similar measures used by other companies. We file annual, quarterly and current reports as well as other information with the Securities and Exchange Commission (the SEC) and the Federal Reserve. SEC filings are made available to the public from the SEC's website at https://www.sec.gov and regulatory filings are made available from the Federal Financial Institutions Examination Council's website at https://http://www.ffiec.gov/nicpubweb/nicweb/NicHome.aspx.
Regulatory Capital Standards and Disclosures
Since the late 1980s, federal banking regulators' capital adequacy rules have been based on accords agreed to by the Basel Committee on Banking Supervision (the Basel Committee). These frameworks include general risk-based capital rules applicable to all banking organizations based on the 1988 Capital Accord, known as Basel I, and risk-based capital rules applicable to banking organizations having $250 billion or more in total consolidated assets or
$10 billion or more in foreign exposures, known as Advanced approaches institutions, based on the advanced internal ratings-based approach for credit risk and the advanced measurement approach for operational risk in the Revised Framework for the International Convergence of Capital Measurement and Capital Standards issued by the Basel Committee in June 2006, known as Basel II.
In July 2013, federal banking regulators adopted a final rule substantially revising the general risk-based capital rules previously applicable to banking organizations (Basel I), to make them more risk sensitive while implementing the final framework for strengthening international capital and liquidity regulation, known as Basel III (the Final Rule), released by the Basel Committee in December 2010. The Final Rule became effective for all banking organizations as of January 1, 2015 and has been fully phased-in as of January 1, 2019. The Final Rule also introduced the Standardized approach, a revised measurement of risk-weighted assets effective January 1, 2015, which replaces the Basel I calculation of risk-weighted assets. We began reporting our Basel III Standardized approach capital adequacy standards and regulatory public disclosures (Pillar 3) as of March 31, 2015.
In October 2019, the U.S. federal bank regulatory agencies finalized rules that tailor the application of the enhanced prudential standards to bank holding companies and depository institutions pursuant to the amendments to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 introduced by the Economic Growth, Regulatory Relief, and Consumer Protection Act. These tailoring rules also revised the definition of Advanced approaches institution to apply only to banking organizations with greater than $700 billion in total consolidated assets or $75 billion in cross-jurisdictional activity. American Express became a Category III bank holding company in the third quarter of 2024 as a result of our total consolidated assets exceeding $250 billion, calculated based on a daily average of total consolidated assets for the four quarters ended June 30, 2024, and thus became subject to heightened capital, liquidity and prudential requirements, which in some cases phase in over applicable transition periods.
For additional information refer to the "Enhanced Prudential Standards" sections under Part I, Item 2 "Other Matters - Certain Legislative, Regulatory and Other Developments" of the Q1'25 Form 10-Q and Part I, Item 1. "Business -Supervision and Regulation" of the 2024 Annual Report.
Pillar 3 Reports and Scope of Application
This report contains the required Pillar 3 disclosures as of March 31, 2025, in accordance with the Basel III Standardized approach guidelines of the Final Rule. The disclosures in this report are based on our current understanding of the Final Rule and other factors, which may be subject to change as we receive additional clarification and implementation guidance from regulators relating to the Final Rule, and as the interpretation of the Final Rule evolves over time. This report is prepared in accordance with the Pillar 3 disclosure policy approved by the Risk Committee of our Board of Directors. The disclosure policy addresses controls and procedures associated with the preparation of this report. Certain key terms are defined in the "Glossary of Selected Terminology".
Pillar 3 disclosures are made available on our Investor Relations website at https://http://ir.americanexpress.com. These materials may be found through the "Pillar 3 Disclosures" link under the caption "Financials" on the Investor Relations website. You may also access our Investor Relations website at the bottom of our main website https://www.americanexpress.com.
The Final Rule requires Pillar 3 disclosures for top-tier banking organizations domiciled in the United States with
$50 billion or more in total consolidated assets. As a result, this report has been prepared using the consolidated financial statements of American Express Company.
Basis of Consolidation
The basis of consolidation used for regulatory reporting purposes is the same as that used under the accounting principles generally accepted in the United States of America (GAAP). For additional information on our principles of consolidation see the "Principles of Consolidation" section of the 2024 Annual Report.
Capital Surplus of Insurance Underwriting Subsidiaries
Our insurance underwriting subsidiaries maintain minimum capital levels as prescribed by their regulators. The Final Rule requires that the prescribed minimum regulatory capital requirements of these insurance underwriting subsidiaries to be aggregated and deducted from our Total capital (50 percent of the minimum is deducted from Tier 1 capital and the remaining 50 percent is deducted from Tier 2 capital). The table presented in the "Components of Regulatory Capital" section provides additional information on the amount of minimum regulatory capital for insurance underwriting subsidiaries deducted from Tier 1 and Tier 2 capital as of March 31, 2025. The aggregate amount of capital in excess of minimum capital requirements related to our insurance underwriting subsidiaries included in Total capital as of March 31, 2025 was $278 million.
Restrictions on the Transfer of Funds or Regulatory Capital
Certain of our subsidiaries are subject to regulatory restrictions on the transfer of net assets. Procedures exist to transfer net assets between American Express and its subsidiaries, while ensuring compliance with the various contractual and regulatory constraints. For additional information on restricted net assets of subsidiaries, refer to Note 22 "Regulatory Matters and Capital Adequacy" of the 2024 Annual Report.
Minimum Capital Requirements
As implemented in the United States, the Basel III capital rules establish minimum capital adequacy standards for bank holding companies and their insured depository institution subsidiaries. As of March 31, 2025, the regulatory capital of American Express Company and AENB was above these minimum requirements.
We report our capital ratios using the Basel III capital definitions and the Basel III Standardized approach for calculating risk-weighted assets.
For more information, see the "Capital and Liquidity Regulation" section under Part I, Item 1. "Business -Supervision and Regulation" of the 2024 Annual Report.
Regulatory Risk-Based Capital Ratios and Supplementary Leverage Ratio
The following table presents Basel III Standardized approach regulatory risk-based capital ratios and supplementary leverage ratio for American Express and American Express National Bank.
Ratios as of March 31, 2025
Common Equity Tier 1
7.0
%
American Express Company
10.7 %
American Express National Bank
11.8
Tier 1
8.5
American Express Company
11.4
American Express National Bank
11.8
Total
American Express Company
10.5
13.4
American Express National Bank
13.4
Supplementary Leverage Ratio
3.0
%
American Express Company
8.5
American Express National Bank
8.0 %
(a) Represents Basel III minimum risk-based capital ratios, plus applicable regulatory buffers as defined by the federal banking regulators. The effective minimum for American Express Company reflects the inclusion of a stress capital buffer (SCB) of 2.5 percent and the effective minimum for AENB reflects inclusion of a capital conservation buffer (CCB) of 2.5 percent. Refer to the "Regulatory Capital Buffers" section for additional information. The Supplementary Leverage Ratio effective minimum as defined by the federal banking regulators is 3% for American Express Company and AENB.
We continue to include accumulated other comprehensive income (loss) in regulatory capital.
For additional information on regulatory risk-based capital ratios, including definitions, refer to the "Consolidated Capital Resources and Liquidity" section of the Q1'25 Form 10-Q and the 2024 Annual Report.
Components of Regulatory Capital
American Express maintains a range of capital instruments to meet its regulatory capital requirements and to maintain a strong capital base. These capital instruments include common stock, non-cumulative perpetual preferred stock and subordinated debt.
For additional information on regulatory capital, refer to the "Consolidated Capital Resources and Liquidity" section of the Q1'25 Form 10-Q and the 2024 Annual Report.
Common Stock
Our common stock is listed on The New York Stock Exchange under the trading symbol AXP. As of March 31, 2025, common stock plus related surplus, net of treasury stock and unearned employee stock ownership plan shares was $9.6 billion. Under the Final Rule, our common stock qualifies as Common Equity Tier 1 (CET1) capital. For additional information on our common shares refer to Note 16 "Common and Preferred Shares" of the 2024 Annual Report.
Preferred Stock
As of March 31, 2025, we had outstanding $1.6 billion of non-cumulative perpetual preferred shares (the Series D Preferred Shares). For additional information on our preferred shares refer to Note 16 "Common and Preferred Shares" of the 2024 Annual Report.
Subordinated Debt
As of March 31, 2025, we had $1.75 billion of eligible subordinated notes which includes $500 million subordinated debt issued in April 2024, $500 million subordinated debt issued in July 2023, and $750 million subordinated debt issued in May 2022.
The following table presents a reconciliation of total common shareholders' equity (included in Total shareholders' equity in our Consolidated Balance Sheets) to regulatory Total capital as of March 31, 2025.
(Millions)
March 31, 2025
Common stock and related surplus (a)
$
9,593
Retained earnings
23,391
Accumulated other comprehensive income (loss)
(3,366)
Total common shareholders' equity
29,618
Less: Goodwill net of associated deferred tax liabilities (DTLs)
3,806
Intangible assets, net of associated DTLs
101
Ineligible deferred tax assets (DTAs)
87
Other adjustments
-
CET1 capital
25,624
Additional Tier 1 capital before deductions (b)
1,644
Less: Tier 1 deductions (c)
8
Tier 1 capital
27,260
Tier 2 capital before deductions (d)
4,782
Less: Tier 2 deductions (c)
8
Tier 2 capital
4,774
Total capital
$
32,034
Amount is composed of $11,177 million of Common Stock and related surplus reported on our Consolidated Balance Sheets, less $1,584 million of Preferred Stock and related surplus, net of issuance costs which is considered as Tier 1 capital under the Final Rule.
Amount is composed of $1,584 million of Preferred Stock including related surplus, net of issuance costs and $60 million of Minority Interest.
Represents capital deduction for 50 percent of the minimum regulatory capital of insurance underwriting subsidiaries.
Amount is composed of $3,032 million of adjusted allowance for credit losses and $1,750 million of Subordinated Notes recognized in regulatory capital.
Risk-Weighted Assets
Our assets and some of our specified off-balance sheet commitments and obligations are assigned to various risk categories for purposes of calculating the required regulatory risk-based capital ratios. The following table presents the Basel III Standardized approach risk-weighted assets by exposure type, as relevant to us, as of March 31, 2025.
(Millions)
March 31, 2025
Consumer and small business loans and receivables
$ 186,463
Consumer and small business loans, held for sale
777
Corporate exposures(a)
24,629
Equity exposures(b)
4,108
Exposures to depository institutions, foreign banks, and credit unions
2,969
Loans and receivables greater than 90 days past due or on non-accrual(c)
2,114
Exposures to sovereign entities
313
Exposures to public sector entities(d)
50
Other(e)
18,139
Total risk-weighted assets
$ 239,562
Primarily composed of loans and receivables due from corporate Card Members.
Refer to the "Equities Not Subject to the Market Risk Rule" section for details on the composition of our equity exposures.
Primarily composed of loans and receivables due from consumer and small business Card Members greater than 90 days past due.
Primarily composed of investments in municipal and state bonds, Community Reinvestment Act (CRA) investments and loans due from public sector Card Members.
Primarily composed of DTAs, Other receivables, Prepaid assets, and Premises & equipment.
We are required to comply with the applicable capital adequacy rules established by federal banking regulators. These rules are intended to ensure that bank holding companies and banks (collectively, banking organizations) have adequate capital given the level of assets and off-balance sheet obligations, and to minimize disincentives for holding liquid assets.
Capital Strategy
For information on our capital strategy, refer to the "Capital Strategy" section under "Consolidated Capital Resources and Liquidity" section of the 2024 Annual Report.
Stress Testing and Capital Planning
We are subject to an annual supervisory stress test conducted by the Federal Reserve. We submitted our annual capital plan to the Federal Reserve in April 2025. Our current SCB of 2.5 percent is effective until September 30, 2025. The Federal Reserve is expected to notify us in the second quarter of 2025 of the SCB that will be effective October 1, 2025 to September 30, 2026, subject to final confirmation.
For additional information on Stress Testing and Capital Planning, refer to the "Stress Testing and Capital Planning" section under Part I, Item 1. "Business - Supervision and Regulation" of the 2024 Annual Report.
The CCB and SCB requirements were established by the federal banking regulators to improve capital conservation and encourage banking institutions to hold sufficient capital to reduce the risk that their capital levels would fall below regulatory minimums during periods of financial stress.
Regulatory Capital Buffer Requirements and Measurement
American Express and AENB must each maintain CET1 capital, Tier 1 capital and Total capital ratios of at least 4.5 percent, 6.0 percent and 8.0 percent, respectively. On top of these minimum capital ratios, American Express is subject to the SCB composed entirely of CET1 capital with a floor of 2.5 percent and AENB is subject to a static 2.5 percent CCB. The SCB equals (i) the difference between a bank holding company's starting and minimum projected CET1 capital ratios under the supervisory severely adverse scenario under the Federal Reserve's stress tests plus (ii) one year of planned common stock dividends as a percentage of risk-weighted assets.
A bank holding company's SCB requirement is effective on October 1 of each year and will remain in effect through September 30 of the following year. As a result, the effective minimum ratios for American Express (taking into account the SCB requirement) and AENB (taking into account the CCB requirement) are 7.0 percent, 8.5 percent and 10.5 percent for the CET1 capital, Tier 1 capital and Total capital ratios, respectively. Banking organizations whose ratios of CET1 capital, Tier 1 capital or Total capital to risk-weighted assets are below these effective minimum ratios face constraints on discretionary distributions such as dividends, repurchases and redemptions of capital securities, and executive compensation.
On April 17, 2025, the Federal Reserve issued a notice of proposed rulemaking that would make certain changes to the SCB calculation for Category I-III firms such as American Express, including (i) using the average of the maximum CET1 declines projected in each of the two most recent annual supervisory stress tests to determine a firm's SCB, while retaining the 2.5 percent floor; and (ii) extending the effective date of the stress capital buffer requirement in a given year from October 1 to January 1.
In addition to the SCB, the Federal Reserve imposes a countercyclical capital buffer (CCyB) on all Category I-III firms. The CCyB has been set at zero since its inception but, if adjusted, could range up to an additional 2.5 percent of risk-weighted assets. Accordingly, as a Category III firm, the required minimum capital ratios for the Company may be further increased by the CCyB if adjusted upwards by the Federal Reserve, which must be held in the form of CET1 capital. For additional information on Regulatory Capital Buffer Requirements, refer to the "Supervision and Regulation - Capital and Liquidity Regulation" section of the 2024 Annual Report.
As of March 31, 2025, all of our regulatory capital ratios were above the required thresholds and as a result we are not subject to restrictions or limitations on capital distributions and discretionary bonus payments to executive officers as of March 31, 2025. For details of our minimum ratio requirements as compared to our current regulatory capital ratios refer to 'Regulatory Risk-Based Capital and Leverage Ratios' within the 'Consolidated Capital Resources and Liquidity' section of the Q1'25 Form 10-Q and the 2024 Annual Report.
We define credit risk as loss due to default or changes in the credit quality of a customer, obligor or security. Our credit risks are divided into two broad categories: individual and institutional. Individual credit risk arises from the consumer and small business charge cards, credit cards, and term loans. Institutional credit risk arises principally within our Commercial Services, International Card Services and Global Merchant and Network Services businesses, as well as investment and liquidity management activities.
Risk Management
The "Risk Management" section of the 2024 Annual Report includes additional information on our overall risk management policies and objectives. For a discussion on our risk management processes relating to credit risk, counterparty credit risk and interest rate risk refer to the "Governance", "Credit Risk Management Process" and "Market Risk Management Process" sections of the 2024 Annual Report.
Disclaimer
American Express Company published this content on May 09, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 09, 2025 at 13:55 UTC.