XML 28 R18.htm IDEA: XBRL DOCUMENT
v3.23.1

Derivatives and Hedging Activities | 3 Months Ended
--- | ---
Mar. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Hedging Activities | Derivatives and Hedging Activities We use derivative financial instruments to manage exposures to various market risks. These instruments derive their value from an underlying variable or multiple variables, including interest rates and foreign exchange rates, and are carried at fair value on the Consolidated Balance Sheets. These instruments enable end users to increase, reduce or alter exposure to various market risks and, for that reason, are an integral component of our market risk management. We do not transact in derivatives for trading purposes. A majority of our derivative assets and liabilities as of March 31, 2023 and December 31, 2022 are subject to master netting agreements with our derivative counterparties. Accordingly, where appropriate, we have elected to present derivative assets and liabilities with the same counterparty on a net basis in the Consolidated Balance Sheets. In relation to our credit risk, certain of our bilateral derivative agreements include provisions that allow our counterparties to terminate the relevant agreement in the event of a downgrade of our debt credit rating below investment grade and settle the outstanding net liability position. As of March 31, 2023, these derivatives were not in a material net liability position. Based on our assessment of the credit risk of our derivative counterparties and our own credit risk as of March 31, 2023 and December 31, 2022, no credit risk adjustment to the derivative portfolio was required. The following table summarizes the total fair value, excluding interest accruals, of derivative assets and liabilities as of March 31, 2023 and December 31, 2022:
|  | Other Assets Fair Value |  | Other Liabilities Fair Value
(Millions) |  | 2023 |  | 2022 |  | 2023 |  | 2022
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |
Fair value hedges - Interest rate contracts (a) |  | $ | — |  |  | $ | — |  |  | $ | 163 |  |  | $ | 211 |
Net investment hedges - Foreign exchange contracts |  | 145 |  |  | 350 |  |  | 218 |  |  | 251 |
Total derivatives designated as hedging instruments |  | 145 |  |  | 350 |  |  | 381 |  |  | 462 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |
Foreign exchange contracts and other |  | 162 |  |  | 171 |  |  | 179 |  |  | 339 |
Total derivatives, gross |  | 307 |  |  | 521 |  |  | 560 |  |  | 801 |
Derivative asset and derivative liability netting (b) |  | (179) |  |  | (257) |  |  | (179) |  |  | (257) |
Cash collateral netting (c) |  | — |  |  | (11) |  |  | (170) |  |  | (212) |
Total derivatives, net |  | $ | 128 |  |  | $ | 253 |  |  | $ | 211 |  |  | $ | 332 |
(a)For our centrally cleared derivatives, variation margin payments are legally characterized as settlement payments as opposed to collateral. (b)Represents the amount of netting of derivative assets and derivative liabilities executed with the same counterparty under an enforceable master netting arrangement. (c)Represents the offsetting of the fair value of bilateral interest rate contracts and certain foreign exchange contracts with the right to cash collateral held from the counterparty or cash collateral posted with the counterparty. We posted $8 million as of both March 31, 2023 and December 31, 2022, as initial margin on our centrally cleared interest rate swaps; such amounts are recorded within Other assets on the Consolidated Balance Sheets and are not netted against the derivative balances. Fair Value Hedges We are exposed to interest rate risk associated with our fixed-rate debt obligations. At the time of issuance, certain fixed-rate long-term debt obligations are designated in fair value hedging relationships, using interest rate swaps, to economically convert the fixed interest rate to a floating interest rate. We had $6.5 billion and $8.1 billion of fixed-rate debt obligations designated in fair value hedging relationships as of March 31, 2023 and December 31, 2022, respectively. The following table presents the gains and losses recognized in Interest expense on the Consolidated Statements of Income associated with the fair value hedges of our fixed-rate long-term debt for the three months ended March 31:
|  | Gains (losses)
|  | Three Months Ended March 31, |  |
(Millions) |  | 2023 |  | 2022 |  |  |  |
Fixed-rate long-term debt |  | $ | (53) |  |  | $ | 258 |  |  |  |  |
Derivatives designated as hedging instruments |  | 53 |  |  | (261) |  |  |  |  |
Total |  | $ | — |  |  | $ | (3) |  |  |  |  |
The carrying values of the hedged liabilities, recorded within Long-term debt on the Consolidated Balance Sheets, were $6.3 billion and $7.8 billion as of March 31, 2023 and December 31, 2022, respectively, including the cumulative amount of fair value hedging adjustments of $(183) million and $(236) million for the respective periods. We recognized in Interest expense on Long-term debt a net increase of $39 million and a net decrease of $57 million for the three months ended March 31, 2023 and 2022, respectively, primarily related to the net settlements including interest accruals on our interest rate derivatives designated as fair value hedges. Net Investment Hedges We primarily designate foreign currency derivatives as net investment hedges to reduce our exposure to changes in currency exchange rates on our investments in non-U.S. subsidiaries. We had notional amounts of approximately $12.6 billion and $12.5 billion of foreign currency derivatives designated as net investment hedges as of March 31, 2023 and December 31, 2022, respectively. The gain or loss on net investment hedges, net of taxes, recorded in Accumulated other comprehensive income (loss) (AOCI) as part of the cumulative translation adjustment, were losses of $198 million and $85 million for the three months ended March 31, 2023 and 2022, respectively. Net investment hedge reclassifications out of AOCI into the Consolidated Statements of Income were not significant for both the three months ended March 31, 2023 and 2022. Derivatives Not Designated as Hedges The changes in the fair value of derivatives that are not designated as hedges are intended to offset the related foreign exchange gains or losses of the underlying foreign currency exposures. We had notional amounts of approximately $21.9 billion and $21.7 billion as of March 31, 2023 and December 31, 2022, respectively. The changes in the fair value of the derivatives and the related underlying foreign currency exposures resulted in a net gain of $5 million and a net loss of $12 million for the three months ended March 31, 2023 and 2022, respectively, that are recognized in Other, net expenses in the Consolidated Statements of Income. We recorded an embedded derivative in the second quarter of 2022, related to seller earnout shares granted to us upon the completion of a business combination between our equity method investee, American Express Global Business Travel, and Apollo Strategic Growth Capital. This embedded derivative had a notional amount of $78 million as of both March 31, 2023 and December 31, 2022. The changes in the fair value of the embedded derivative resulted in losses of $4 million for the three months ended March 31, 2023, which were recognized in Service fees and other revenue in the Consolidated Statements of Income.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration