American Express Company · NYSE:AXP
American Express — Investor Day (February 2012)
52 slides from American Express's investor day presentation, Feb 8, 2012
Slide 1: American Express Company Financial Community Meeting
American Express Company Financial Community Meeting Kenneth Chenault Chairman and Chief Executive Officer Stephen J. Squeri Group President, Global Corporate Services February 8, 2012 1
Slide 2: Agenda
Agenda Financial Performance Progress Against Growth Priorities Balancing Expenses with Future Expansion Global Services Q&A 2
Slide 3: Financial Performance
Financial Performance ($ in billions) Q1'11 Q2'11 Q3'11 Q4'11 2010 2011 Total Revenues Net of Interest $7.0 $7.6 $7.6 $7.7 $27.6 $30.0 Expense Growth vs. Prior Year 7% 12% 9% 7% 9% Income from Continuing $1.2 $1.3 $1.2 $1.2 $4.1 $4.9 Operations* Diluted EPS from Continuing $3.35 $4.09 $0.97 $1.07 $1
Slide 4: Metric Trends
Metric Trends % increase/(decrease) vs. prior year: Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Billed Business* 15% 17% 18% 16% 11% Billed Business FX Adjusted** 14% 15% 15% 13% 11% Total Cards In Force*** 4% 5% 6% 8% 7% Avg. Basic Cardmember Spending † 13% 14% 15% 12% 8% Cardmember Loans (1%) 0% 2% 2% 3% Worldw
Slide 5: AXP Lending Net Write-off Rates versus Competitors
AXP Lending Net Write-off Rates versus Competitors 9.1% 7.9% 7.8% 7.0% 7.2% 5.6% 5.2% 4.3% 4.3% 4.3% 3.2% 2.3% Q4'10 Q4'11 AXP* Discover** JPMorgan*** Cap One † Bank of America †† Citi ††† *Rates include principal only. See Slide 4 for net write-off rates including interest and/or fees. **Fiscal yea
Slide 6: Billed Business Growth by Region
Billed Business Growth by Region % increase/(decrease) vs. prior year: 25% 20% 15% 10% 5% 0% Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 US EMEA (FX Adj)* JAPA (FX Adj)* LACC (FX Adj)* Total (FX Adj)* *See Annex 1 for reported billings growth rates. 6
Slide 7: Billings Growth – U.S. Credit and Charge
Billings Growth – U.S. Credit and Charge % increase/(decrease) vs. prior year: 20% 15% 10% 5% 0% (5%) (10%) (15%) (20%) Q4'08 Q2'09 Q4'09 Q2'10 Q4'10 Q2'11 Q4'11 AXP MasterCard-Credit & Charge Volume Visa-Credit & Charge Volume Includes credit and charge only, but excludes debit and cash. Source: Co
Slide 8: AXP Share of U.S. Purchase Volume
AXP Share of U.S. Purchase Volume 26.2% 25.4% 23.7% 24.0% 23.8% 23.0% 22.2% 21.2% 20.6% 20.4% 19.9% 19.9% 19.5% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Q3'11 General Purpose Charge and Credit* Source: The Nilson Report. *Excludes cash advances. 8
Slide 9: Billings Growth – Global Credit and Charge
Billings Growth – Global Credit and Charge FX adjusted† % increase/(decrease) vs. prior year: 20% 15% 10% 5% 0% (5%) (10%) (15%) Q4'08 Q2'09 Q4'09 Q2'10 Q4'10 Q2'11 Q4'11 AXP MasterCard - Credit & Charge Volume Visa - Credit & Charge Volume †FX adjusted information assumes a constant exchange rate b
Slide 10: Full Year 2011 Relative Performance
Full Year 2011 Relative Performance Total Billed Business Average Loans ($ in billions) ($ in billions) $822 $152 $129 $105 $358 $344 $62 $59 $45 $192 $135 $100 AXP Citi* JPM** BofA*** Cap One† Discover†† Citi* JPM** BofA*** Cap One † AXP Discover †† Growth Growth vs. PY 15% 5% 10% 3% 26% 8% vs. PY
Slide 11: AXP Revenue Drivers Versus Issuing Competitors
AXP Revenue Drivers Versus Issuing Competitors 2011 % increase/(decrease) vs. prior year: 15% 9% AXP Discover* CapitalOne** Citi*** JPMorgan †† B of A‡ Billings Revenue NOTE: Calculated based on Company filed quarterly data. *Fiscal year ends November 30. Billed business is credit card sales volume;
Slide 12: AXP Revenue Drivers Versus Issuing Competitors
AXP Revenue Drivers Versus Issuing Competitors 2011 % increase/(decrease) vs. prior year: 26% 15% 9% 8% 6% 10% 5% 3% (2%) (6%) (7%) (19%) AXP Discover* CapitalOne** Citi*** JPMorgan †† B of A‡ Billings Revenue NOTE: Calculated based on Company filed quarterly data. *Fiscal year ends November 30. Bil
Slide 13: AXP Revenue Drivers Versus Issuing Competitors
AXP Revenue Drivers Versus Issuing Competitors 2011 % increase/(decrease) vs. prior year: 26% 15% 9% 8% 6% 10% 5% 3% 1% (1%) (2%) (1%) (6%) (6%) (7%) (11%) (11%) (19%) AXP Discover* CapitalOne** Citi*** JPMorgan †† B of A‡ Billings Revenue Average Loans NOTE: Calculated based on Company filed quarte
Slide 14: 2011 Worldwide Revenue
2011 Worldwide Revenue Revenue Mix AXP Bank of Discover † JPMorgan †† Capital America* One ‡ Discount Revenue and Fees Net Interest Income *Card Services Segment. †Fiscal year ends November 30. ††Card Services; results include Washington Mutual portfolio ‡Global Cards. 14
Slide 15: U.S. Revolving Credit
U.S. Revolving Credit ($ in billions) $1,200 15% $1,000 10% $800 5% $600 0% $400 -5% $200 -10% $0 -15% Q1'06 Q4'06 Q3'07 Q2'08 Q1'09 Q4'09 Q3'10 Q2'11 Total U.S. Revolving Credit, SA YoY Growth Rate Source: Federal Reserve 15
Slide 16: Competitive Advantage
Competitive Advantage Merchant Acquirer Payment Issuer American Express Business Model Assets Capabilities Relationships ■ Brand ■ Marketing / Sales ■ Premium Positioning ■ Risk Management ■ Affluent Customers ■ Channels ■ Info Management ■ Merchants ■ Closed Loop Data ■ Servicing ■ Corporate Client
Slide 17: Agenda
Agenda Financial Performance Progress Against Growth Priorities Balancing Expenses with Future Expansion Global Services Q&A 17
Slide 18: 2011 Performance: Customer Acquisition
2011 Performance: Customer Acquisition New Cards Acquired by Product Type New First Year Spend* by Product Type YOY Growth YOY Growth 55% 23% 20% (1%) 6% 19% 2010 2011 Cards Acquired in 2010 Cards Acquired in 2011 Charge Co-Brand Prop Lending Includes cards acquired in the USCS, ICS, and GCS segment
Slide 19: 2011 Performance: Merchant Services
2011 Performance: Merchant Services Expanding Acceptance and Growing Spend New Merchant Locations in Force Global 2011 vs. 2010 New Signings New Booked Charge Volume 2010 2011 19
Slide 20: Progress Against Growth Priorities
Progress Against Growth Priorities Increase share of online spend and enhance digital experience Drive greater value to merchant base Accelerate International Growth across businesses Achieve significant progress within Enterprise Growth Broaden our customer base 20
Slide 21: Online Commerce – AXP Global Online Spend
Online Commerce – AXP Global Online Spend* Estimated Spending: Full Year Online Spend $130B+ 2010 2011 *Primarily includes spending at pure online merchants and spending through known online channels for merchants with both online and offline presence. Also includes an estimate of online spend for m
Slide 22: Enhance Digital Experience
Enhance Digital Experience OpenTable / MR Partnership National ‘Big Break for foursquare Groupon / MR Link, Like, Love: CM Partnership Small Business Small Businesses’ Rollout Offers on Facebook Return Saturday Protection Refresh of americanexpress.com South by AMEX eGift Card Southwest Feb'11 Mar'1
Slide 23: Progress Against Growth Priorities
Progress Against Growth Priorities Increase share of online spend and enhance digital experience Drive greater value to merchant base Accelerate International Growth across businesses Achieve significant progress within Enterprise Growth Broaden our customer base 23
Slide 24: Drive Greater Value to the Merchant Base
Drive Greater Value to the Merchant Base Sources of Value High Spending Insights and Cardmembers Information Services to Services to Drive Merchant Improve Merchant Revenues Efficiencies 24
Slide 25: Merchant Value – High Spending Cardmembers
Merchant Value – High Spending Cardmembers Q3'11 Trailing 12 Months – Worldwide Average Cardmember Spend $16,000 $14,576 $14,000 $12,000 $11,020 $10,000 $8,000 $6,000 $4,000 $3,459 $2,927 $2,000 $0 AXP - Proprietary AXP - Total Visa MasterCard Cards Note: Calculated using a five point average of wor
Slide 26: Smart Offer API
Drive Greater Value to the Merchant Base Smart Offer API 26
Slide 27: Drive Greater Value to the Merchant Base
Drive Greater Value to the Merchant Base Sources of Value High Spending Insights and Cardmembers Information Services to Services to Drive Merchant Improve Merchant Revenues Efficiencies 27
Slide 28: Progress Against Growth Priorities
Progress Against Growth Priorities Increase share of online spend and enhance digital experience Drive greater value to merchant base Accelerate International Growth across businesses Achieve significant progress within Enterprise Growth Broaden our customer base 28
Slide 29: International Business Operations Performance
International Business Operations* Performance Billed Business Pre-Tax Income Fx adjusted % increase/(decrease) vs. prior year % increase/(decrease) vs. prior year ($ in billions) ($ in billions) $247 $279 $1.6 $1.2 2010 2011 2010 2011 *International represents the sum of the Europe, Middle East and
Slide 30: Accelerate International Growth Across Businesses
Accelerate International Growth Across Businesses Global Network Services Billed Business CAGR 1999-2011: ($ in billions) $120 $100 $80 $60 $40 $20 $0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 30
Slide 31: Progress Against Growth Priorities
Progress Against Growth Priorities Increase share of online spend and enhance digital experience Drive greater value to merchant base Accelerate International Growth across businesses Achieve significant progress within Enterprise Growth Broaden our customer base 31
Slide 32: Loyalty Partner
Loyalty Partner vA LOYALTY PARTNER 32
Slide 33: Progress Against Growth Priorities
Progress Against Growth Priorities Increase share of online spend and enhance digital experience Drive greater value to merchant base Accelerate International Growth across businesses Achieve significant progress within Enterprise Growth Broaden our customer base 33
Slide 34: Progress Against Growth Priorities
Progress Against Growth Priorities Increase share of online spend and enhance digital experience Drive greater value to merchant base Accelerate International Growth across businesses Achieve significant progress within Enterprise Growth Broaden our customer base 34
Slide 35: Enterprise Growth Progress
Enterprise Growth Progress Global Prepaid Fee Services Online/Mobile Payments Strategic Investments 35
Slide 36: Progress Against Growth Priorities
Progress Against Growth Priorities Increase share of online spend and enhance digital experience Drive greater value to merchant base Accelerate International Growth across businesses Achieve significant progress within Enterprise Growth Broaden our customer base 36
Slide 37: Agenda
Agenda Financial Performance Progress Against Growth Priorities Balancing Expenses with Future Expansion Global Services Q&A 37
Slide 38: Investment Process
Investment Process As we exit 2011 and into 2012….. Revenues – New Initiatives Brand Partnerships Revenues – Core Businesses OPEX Control Technology Acquisition Development Reserve Releases New Business Loyalty Initiatives MasterCard & Visa Settlement Proceeds 12-15% EPS Target 38
Slide 39: Investment Process
Investment Process On an ongoing basis….. Brand Partnerships Revenues – New Initiatives Technology Revenues – Core Businesses Acquisition Development OPEX Control New Business Loyalty Initiatives 12-15% EPS Target 39
Slide 40: Revenue Mix
Revenue Mix Growth Prospects Discount Revenue Volume and Share Gains & Premium Position 56% Discount Revenue Online Spend Footprint & Growth International & B2B Plastic Penetration Prepaid & Serve Other Non-Interest Income Loyalty Partner 29% Other Non-Interest Income Assurance Products
Slide 41: Global Opportunity in Payments Industry
Global Opportunity in Payments Industry 2011 Global Payments Volume ($ in trillions) Total = $34 Trillion ACH $4.9 $28 T Credit / Cash and Charge Checks global payments $5.8 $17.3 volume in Debit payments outside $5.2 of credit / charge Source: Euromonitor January 2012, excludes ATM withdrawals. 41
Slide 42: Investment Process
Investment Process On an ongoing basis….. Brand Partnerships Revenues – New Initiatives Technology Revenues – Core Businesses Acquisition Development OPEX Control New Business Loyalty Initiatives 12-15% EPS Target 42
Slide 43: Will we be able to manage our expenses while investing in growth?
Will we be able to manage our expenses even while investing in growth and succeeding at our digital transformation? 43
Slide 44: Marketing and Promotion Expense
Marketing and Promotion Expense ($ in billions) Marketing & Promotion Expenses % of Managed Revenue* $3.1 $3.0 11% 10% $2.6 $2.5 9% 8% $2.0 7% 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Note: Beginning in 2011, the Company reclassified certain contractual payments to partners as either contra
Slide 45: Cardmember Rewards and Services Expense
Cardmember Rewards and Services Expense Cardmember Rewards % of Proprietary Cardmember Rewards & Services Billed Business ($ in billions) $6.9 88bps 80bps 80bps $5.6 73bps $5.3 71bps $4.9 $4.5 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Cardmember Services Cardmember Rewards 45
Slide 46: Expense Balance
Expense Balance Adjusted Total Expense as a % of Managed Revenue* 74% 75% 67% 64% 11% 10% Marketing & 64% 9% 8% 7% Promotion 20% 23% 19% 16% 17% Cardmember Rewards & Services 39% 40% 40% 43% 42% Adjusted Opex* 2007 2008 2009 2010 2011 *Adjusted total expenses as a % of total managed revenues net of
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Slide 48: Annex 1
Annex 1 Billed Business - Reported & FX Adjusted* % increase/(decrease) vs. prior year: Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 U.S. (8%) (15%) (15%) (11%) 2% 11% 14% 13% 14% 15% 14% 13% 11% International Reported (12%) (19%) (19%) (9%) 21% 27% 19% 17% 16% 20% 2
Slide 49: Annex 2
Annex 2 ($ in millions) 2007 2008 2009 2010 2011 GAAP Total Revenues Net of Interest Expense $27,462 $28,227 $24,336 $27,582 $29,962 Securitization Adjustments: Discount revenue, net card fees and other 310 400 331 NA NA Interest income 3,130 3,512 3,097 NA NA Securitization income, net (1,507) (1,0
Slide 50: Annex 3
Annex 3 ($ in millions) 2007 2008 2009 2010 2011 GAAP Total Revenues Net of Interest Expense $27,462 $28,227 $24,336 $27,582 $29,962 Securitization Adjustments: Discount revenue, net card fees and other 310 400 331 NA NA Interest income 3,130 3,512 3,097 NA NA Securitization income, net (1,507) (1,0
Slide 51: Annex 4
Annex 4 2-Year CAGR 3-Year CAGR FX Adjusted** GAAP Basis FX Adjusted** GAAP Basis Total Operating Expense 7%* 12% 1%* 2% Salaries & Benefits 9% 11% 1% 1% Professional Services 10% 11% 7% 7% Occupancy & Equipment, 1%* 14% (2%)* (2%) Communications and Other, Net Global Services Group (2%) (1%) (2%) (
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