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AMERICAN EXPRESS COMPANY

(AXP)
  Report
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American Express : Q2 2022 Pillar 3 Disclosure

08/12/2022 | 01:25pm EDT

American Express Company

Basel III Standardized Approach Pillar 3 Disclosures

For the Quarterly Period Ended June 30, 2022

AMERICAN EXPRESS COMPANY

BASEL III STANDARDIZED APPROACH PILLAR 3 DISCLOSURES

For the Quarterly Period Ended June 30, 2022

Page

DisclosureIndex..........................................................................................................................................

2

Introduction.................................................................................................................................................

3

Scope of Application ...................................................................................................................................

4

Capital Structure and Capital Adequacy .................................................................................................

5

Capital Management ...................................................................................................................................

7

Regulatory Capital Buffers ........................................................................................................................

8

Credit Risk General Disclosures ..................................................................................................................

8

Counterparty Credit Risk for DerivativeContracts and Securities Purchased Under Agreements to

12

Resell................................................................................................................................................................

Equity Exposures not Subject to the Market Risk Rule ............................................................................

14

Interest Rate Risk for Non-Trading Activities ...........................................................................................

15

Glossary of Selected Terminology ................................................................................................................

16

1

AMERICAN EXPRESS COMPANY

BASEL III STANDARDIZED APPROACH PILLAR 3 DISCLOSURES

For the Quarterly Period Ended June 30, 2022

Disclosure Index

Page Reference(s)

Disclosure

Scope of Application

Capital Structure and Capital Adequacy

Capital Management

Regulatory Capital Buffers

Credit Risk General Disclosures

Counterparty Credit Risk for Derivative Contracts and Securities Purchased Under Agreements to Resell

Securitization

Description

Basis of Consolidation

Capital Surplus of Insurance Underwriting Subsidiaries

Restrictions on Transfer of Funds or Regulatory Minimum Capital Requirements

Regulatory Risk-Based Capital Ratios

Components of Regulatory Capital

Risk-Weighted Assets

Capital Strategy

Stress Testing and Capital Planning

Regulatory Capital Buffer Requirements and Measurement

Risk Management

Credit Risk Exposures

Card Member Loans and Card Member Receivables

Counterparty Credit Risk Limits Derivative Contracts

Derivatives and Securities Purchased Under Agreements to Resell

Counterparty Credit Risk Mitigation Types of Eligible Collateral Held Collateral Management and Valuation Credit Deterioration Risk

Credit Reserves

Not applicable. No securitized assets held that meet the securitization criteria outlined in the Final Rule.

Second

2021 Annual

Pillar 3

Quarter

2022 Form

Report on

Disclosure

10-Q

Form 10-K

4

97

4

4

146,147

4

5

23

60,61,62

5

23,39

94,138,139

7

23

61

7

60,146

7

24

13

8

8

69,70,74

9

70

11

45-50

103-110

12

70,71,130

12

60,61

130,131

13

13

13

13

13

13

Equity Exposures not

Equity Investment Valuation Methodologies

14

54,62

114,133,134

Subject to the Market

Realized Gains (Losses)

14

Risk Rules

Risk-Weighting Approaches

14

Nature and Types of Exposures

15

Interest Rate Risk for

Interest Rate Risk for Non-Trading Activities

15

71

35,69,74

Non-Trading Activities

Rate Shock Sensitivity Analysis

15

71

35,69,74

Glossary

Glossary of Selected Terminology

16

2

AMERICAN EXPRESS COMPANY

BASEL III STANDARDIZED APPROACH PILLAR 3 DISCLOSURES

For the Quarterly Period Ended June 30, 2022

Introduction

Business Overview

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.

American Express is a globally integrated payments company that provides its customers with access to products, insights and experiences that enrich lives and build business success. Its principal products and services a re credit and charge card products, along with travel and lifestyle related services, offered to consumers and businesses around theworld.

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 (theFederal Reserve).

For further information on our business, refer to the section "Business" in Part I, Item 1 of the 2021 Annual Report.

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, a nd risk - based capital rules applicable to banking organizations having $250 billion or more in total consolidated a ssets 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 theInternational Convergence of Capital Measurement and Capital Standards issued by the Basel Committee in June2006, known as Basel II.

In July 2013, federal banking regulators adopted a final rule substantially revising the general risk -ba sed 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 Fina l 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 Ja nuary 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 theenhanced prudential standards to bank holding companies and depository institutions (the Tailoring Rules) 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. American Express and its depository institution subsidiary, American Express National Bank (AENB) are subject to Category IV standards. Because a firm's categorization under the Tailoring Rules is determined by, and can change over time dependent upon, how the firm measures against the risk-based indicator thresholds, we are required to monitor and periodically report these risk - based indicators and there can be no assurance that we will continueto be a Category IV firm in the future.

Pillar 3 Reports and AdditionalInformation

This report contains the required Pillar 3 disclosures as of June 30, 2022, 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 theinterpretation of the Final Rule evolves over time. This report is prepared in accordancewith the Pillar 3 disclosure policy approved by the Risk Committee of our Board of Directors. The disclosure policy addresses controls and procedures a ssociated with the preparation of this report. Certain key terms are defined in the "Glossary of Selected Terminology".

3

AMERICAN EXPRESS COMPANY

BASEL III STANDARDIZED APPROACH PILLAR 3 DISCLOSURES

For the Quarterly Period Ended June 30, 2022

Pillar 3 disclosures should be read in conjunction with the Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 (theQ2'22 Form 10-Q), the Annual Report on Form 10-K for theyear ended December 31, 2021 (the 2021 Annual Report) and theConsolidated Financial Statements for Holding Companies - FR Y-9C for the quarter ended June 30, 2022 (theFR 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 theSecurities and Exchange Commission (theSEC) and the Federal Reserve. SEC filings are made available to thepublic from the SEC's website at www.sec.gov and regulatory filings are made available from the Federal Financial Institutions Examination Council's website at http://www.ffiec.gov/nicpubweb/nicweb/NicHome.aspx.

Pillar 3 disclosures are made available on our Investor Relations websiteat http://ir.americanexpress.com. To access these materials, click on the "Pillar 3 Disclosures" link under the caption "Financials" on the Investor Rela tions homepage. Our Investor Relations website is also accessible through the main websiteat www.americanexpress.com by clicking on the "Investor Relations" link, which is located at the bottom of our homepage.

Scope of Application

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 2021 Annual Report.

Capital Surplus of Insurance Underwriting Subsidiaries

Our insurance underwriting subsidiaries maintain minimum capital levels as prescribed by their regula tors. The Final Rule requires that theprescribed 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 theremaining 50 percent is deducted from Tier 2 capital). The table presented in the "Components of Regulatory Capital" section provides additional information on theamount of minimum regula tory capital for insurance underwriting subsidiaries deducted from Tier 1 and Tier 2 capital as of June 30, 2022. The aggregate amount of capital in excess of minimum capital requirements related to our insurance underwriting subsidiaries included in Total capital as of June 30, 2022 was $239 million.

Restrictions on the Transferof Funds or Regulatory Capital

Certain of our subsidiaries are subject to regulatory restrictions on thetransfer of net assets. Procedures exist to transfer net assets between American Express and its subsidiaries, while ensuring complia nce 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 2021 Annual Report.

Minimum CapitalRequirements

As implemented in the United States, theBasel III capital rules establish minimum capital adequacy standards for bank holding companies and their insured depository institution subsidiaries. As of June30, 2022, the regulatory capital of American Express Company and AENB was abovethese minimum requirements.

4

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

American Express Company published this content on 10 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 August 2022 17:24:04 UTC.


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Stephen J. Squeri Chairman & Chief Executive Officer
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