American Express Company · NYSE:AXP
American Express — Q1 2024 Earnings Presentation
41 slides from American Express's earnings presentation, Apr 19, 2024
Slide 1: American Express Earnings Conference Call Q1'24
American Express Earnings Conference Call Q1’24 APRIL 19, 2024
Slide 2: Summary Financial Performance
Summary Financial Performance (in millions; except per share amounts) Q1’24 Q1’23 YoY% Inc/(Dec) Total Revenues Net of Interest Expense $15,801 $14,281 11% FX-Adjusted* $14,230 11% Net Income $2,437 $1,816 34% Diluted EPS† $3.33 $2.40 39% Average Diluted Shares Outstanding 722 744 (3%) * Total Reven
Slide 3: Total Billed Business & Network Volumes
Total Billed Business & Network Volumes ($ in billions) $427 $420 $434 Total Network Volumes $413 $419 $399 $357 $368 $366 $380 $367 $346 Billed Business Processed Volumes $56 $53 $59 $54 $55 $52 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 % Increase/(decrease) vs. Prior Year (FX-adjusted): Q4’22 Q1’23 Q2’2
Slide 4: U.S. Consumer Services Billed Business
U.S. Consumer Services Billed Business ($ in billions) $155 $154 $160 $153 $149 $142 $107 $106 $115 $104 G&S, 8% YoY $108 $96 $41 $46 $48 $47 $45 $49 T&E, 8% YoY Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Millennials + Q1’24 Gen-X Baby Boomer + Total Gen-Z YoY 15% 7% 3% 8% % of Total 32% 37% 31% 100% 4 Sub
Slide 5: Commercial Services Billed Business
Commercial Services Billed Business ($ in billions) $131 $130 $130 $131 $127 $125 $106 $99 $103 $103 $105 $99 G&S, 1% YoY $25 $26 $27 $27 $26 $28 T&E, 4% YoY Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q1’24 U.S. SME U.S. Large & Global Corp. Total YoY 1% 5% 2% % of Total 81% 19% 100% SME refers to small an
Slide 6: International Card Services Billed Business
International Card Services Billed Business ($ in billions) $88 $85 $82 $83 $77 $77 $57 $57 $63 $58 G&S, 12% YoY $56 $53 $21 $24 $25 $26 $25 $27 T&E, 14% YoY Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q1’24 Int’l Consumer Int’l SME & Large Corp. Total YoY 14% 11% 13% % of Total 65% 35% 100% 6 All growth ra
Slide 7: Worldwide Total Loans and Card Member Receivables
Worldwide Total Loans and Card Member Receivables Total Ending Loans and Card Member Receivables ($ in billions) $193 $194 $179 $183 $171 $172 5% 4% Card $150 Member 4% 6% Receivables 7% 8% YoY Growth Total Loans 24% 25% 22% 20% 17% 17% Q4'19 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Total Loans & CM Rece
Slide 8: Card Member Loans and Receivables Credit Metrics
Card Member Loans and Card Member Receivables Credit Metrics 30+ Days Past Due* Net Write-off Rates* Pre- Pre- Pandemic Pandemic 2.2% 2.1% 2.0% 1.8% 1.8% 1.6% 1.5% 1.2% 1.2% 1.3% 1.3% 1.2% Q4'19 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q4'19 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Corporate Net Write- off Rates 0.8% 0.6
Slide 9: Total Provision
Total Provision ($ in millions) $1,437 $1,269 Total Provision $1,198 $1,233 $400 Reserve $148 $1,055 Build/(Release) $321 $327 $320 $1,121 Write-offs $1,037 $871 $912 $735 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 See Variance Commentary in the appendix section for an explanation of the provision variance versu
Slide 10: Total Reserves
Total Reserves Reserves as a % of Total Loans & CM Receivables ($ in billions) 2.9% 2.9% 2.7% 2.8% 2.5% 2.6% Q1'20 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Beginning Balance Sheet Credit Reserves: Total Loans & $4.3 $4.4 $4.7 $5.0 $5.4 $5.6 CM Receivables Total Loans $4.2 $4.1 $4.5 $4.8 $5.2 $5.4 CM Receivable
Slide 11: Revenue Performance
Revenue Performance ($ in millions) Q1’24 YoY% Q1’24 Q1’23 % of Total Inc/(Dec) Revenue Discount Revenue $8,380 $7,947 5% 53% Net Card Fees $1,974 $1,713 15% 12% Service Fees and Other Revenue $1,292 $1,218 6% 8% Processed Revenue $386 $420 (8%) 2% Net Interest Income $3,769 $2,983 26% 24% Revenues
Slide 12: Discount Revenue
Discount Revenue $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): $8.5 $8.4 $8.6 $8.4 $7.9 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 YoY Growth* 17% 8% 7% 5% 6% * Discount Revenue YoY growth rates adjusted for FX are non-GAAP measures. See A
Slide 13: Net Card Fees and New Cards Acquired
Net Card Fees and New Cards Acquired Net Card Fees Growth* Proprietary NCA % Increase/(decrease) vs. Prior year (FX-adjusted): (in millions) 30% 3.4 3.4 25% 23% 22% 3.0 2.9 2.9 19% 20% 17% 16% 15% 10% 10% 10% 10% 11% 14% 5% 0% Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 * Net Card Fe
Slide 14: Net Interest Income
Net Interest Income Net Interest Income $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): $3.6 $3.8 $3.1 $3.4 $3.0 $2.3 YoY 36% 32% 33% 30% 26% Growth* Q4'19 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 WW Net Interest Yield on CM 11.3% 11.2% 11.7% 11.7% 12.0% Loans** * Net
Slide 15: Total Revenue Net of Interest Expense
Total Revenue Net of Interest Expense $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): $15.4 $15.8 $15.8 $15.1 $14.3 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 YoY Growth* 23% 13% 13% 11% 11% * Revenue Net of Interest Expense YoY growth rates
Slide 16: Expense Performance
Expense Performance ($ in millions) YoY% Q1’24 Q1’23 Inc/(Dec) Card Member Rewards $3,774 $3,766 0% Business Development $1,392 $1,393 0% Card Member Services $1,171 $983 19% Q1’24 VCE % of Revenue Variable Customer Engagement $6,337 $6,142 3% 40% Expenses Marketing $1,476 $1,341 10% Operating Expen
Slide 17: Capital
Capital Common Equity Tier 1 Capital Return ($ in billions) 10.6% 10.6% 10.7% 10.5% 10.6% $1.6 $1.7 $1.6 $1.4 $0.6 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 CET1 Ratio Target: 10-11% Regulatory Minimum*: 7% * Inclusive of Stress Capital Buffer 17
Slide 18: 2024 Guidance
2024 Guidance 2024 Guidance Revenue Growth: 9% - 11% EPS: $12.65 - $13.15 (EPS Growth: 13% - 17%) Subject to contingencies. 18
Slide 19: Appendix
Appendix AMERICA 8XBRESS
Slide 20: Travel & Entertainment Billed Business
Travel & Entertainment Billed Business Q1’24 Restaurants Lodging Airlines Other Total T&E YoY Growth 8% 5% 9% 11% 8% % of Total Billed Business 7% 6% 8% 8% 28% 20 All growth rates reflect FX-adjusted rates. See Slide 2 for an explanation of FX-adjusted information.
Slide 21: Q1'24 Network Volumes Growth by Customer Type
Q1’24 Network Volumes Growth by Customer Type % Increase/(decrease) vs. Prior Year (FX-adjusted): U.S. Consumer Services: Commercial Services: International Card Services: 8% 2% 13% 14% 11% 8% 5% 1% 2% % of Total U.S. U.S. U.S. Large & 1 Int’l Int’l SME & Processed Network Volumes Consumer SME Globa
Slide 22: Card Member Credit Metrics
Card Member Credit Metrics Q4’19 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Card Member Loans Net Write-off Rate* 2.3% 1.5% 1.7% 1.8% 2.1% 2.3% Card Member Receivables Net Write-off Rates* 1.9% 1.9% 1.9% 1.9% 1.7% 1.7% Corporate Net Write-off Rates ** 0.8% 0.6% 0.6% 0.6% 0.7% 0.5% Card Member Loans 30+ Days Past
Slide 23: Credit Reserve Macroeconomic Scenarios: Select Variables
Credit Reserve Macroeconomic Scenarios: Select Variables U.S. Unemployment Rate % U.S. GDP Growth* % 10% 6% 9% 5% 8% 4% 3% 7% 2% 6% 1% 5% 0% 4% (1%) 3% (2%) 2% (3%) 1% (4%) 0% (5%) Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Q2'25 Q3'25 Q4'25 Q2'23 Q1'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24
Slide 24: Funding and Deposits
Funding and Deposits Funding Mix Retail Deposit Program ($ in billions) ($ in billions) $179 $186 Short-term $128 $133 92% FDIC 1% 1% insured at Funding Q1’24 Deposits Direct 72% 72% 77% 80% Deposits*** Third Party 8% 7% Card ABS* CDs 10% 8% Unsecured Third Party 20% 19% Term** 12% 12% Sweep Q4'23 Q
Slide 25: FX Impact on Network Volumes and Revenue Growth
FX Impact on Network Volumes and Revenue Growth Network Volumes Revenue Net of Interest Expense % Increase/(decrease) vs. Prior year: % Increase/(decrease) vs. Prior year: 50% 50% (15%) (15%) Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Reported FX Adj. Reported FX Adj. Euro € UK £ Ja
Slide 26: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis The following summary provides selected variance information for the three months ended March 31, 2024 compared to the same period in the prior year. It should be read in conjunction with the statistical tables for Q1’24, available at ir.americanexpress.com.
Slide 27: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis • Card Member Rewards Expense: Was relatively flat compared to Q1’23, driven by an increase in cobrand rewards expense of $137 million, largely offset by a decrease in Membership Rewards and cash back rewards expenses, collectively, of $129 million. The incr
Slide 28: Annex 1 (1 of 2)
Annex 1 (1 of 2) Billed Business – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Billed Business Reported 13% 15% 8% 8% 6% 6% FX-Adjusted* 15% 16% 8% 7% 6% 7% G&S Reported 7% 8% 6% 6% 5% 6% FX-Adjusted* 10% 9% 6% 6% 5% 6% T&E Reported 34% 37% 14%
Slide 29: Annex 1 (2 of 2)
Annex 1 (2 of 2) Billed Business – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q1’24 Q1’24 Reported FX-Adj.* Reported FX-Adj.* U.S. Large and Global Corp. 6% 5% International Consumer 13% 14% Commercial Services International SME & Large Corp. 8% 11% Total Billed Business 2% 2% In
Slide 30: Annex 2
Annex 2 Discount Revenue – Reported & FX-Adjusted* ($ in billions) Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 GAAP Discount Revenue $6.8 $7.9 $7.8 $8.2 $7.9 $8.5 $8.4 $8.6 $8.4 FX-Adjusted Discount Revenue* $6.8 $7.9 $7.9 $8.2 $7.9 YoY% Inc/(Dec) in GAAP Discount Revenue 16% 8% 7% 5% 5%
Slide 31: Annex 3
Annex 3 Net Card Fees – Reported & FX-Adjusted* ($ in billions) Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 GAAP Net Card Fees $1.4 $1.5 $1.5 $1.6 $1.7 $1.8 $1.8 $1.9 $2.0 FX-Adjusted Net Card Fees* $1.4 $1.5 $1.6 $1.6 $1.7 YoY% Inc/(Dec) in GAAP Net Card Fees 20% 21% 20% 17% 15% YoY% In
Slide 32: Annex 4
Annex 4 Net Interest Income – Reported & FX-Adjusted* ($ in billions) Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 GAAP Net Interest Income $2.2 $2.4 $2.6 $2.8 $3.0 $3.1 $3.4 $3.6 $3.8 FX-Adjusted Net Interest Income* $2.2 $2.4 $2.6 $2.8 $3.0 YoY% Inc/(Dec) in GAAP Net Interest Income 36%
Slide 33: Annex 5
Annex 5 Consolidated Net Interest Yield on Average Card Member Loans ($ in millions, except percentages and where indicated) Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Net interest income $2,983 $3,105 $3,442 $3,604 $3,769 Exclude: Interest expense not attributable to our Card Member loan portfolio* $624 $728
Slide 34: Annex 6
Annex 6 Revenues Net of Interest Expense – Reported & FX-Adjusted* ($ in billions) Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 GAAP Revenues Net of Interest Expense $11.7 $13.4 $13.6 $14.2 $14.3 $15.1 $15.4 $15.8 $15.8 FX-Adjusted Revenues Net of Interest* $11.6 $13.4 $13.7 $14.2 $14.2 Y
Slide 35: Forward Looking Statements
Forward Looking Statements This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. The forward-looking statements, which address American Express Company’s current expectations reg
Slide 36: Forward Looking Statements
Forward Looking Statements • the company’s ability to achieve its 2024 revenue growth outlook and grow revenues net of interest expense in the future consistent with the company’s growth aspiration, which could be impacted by, among other things, the factors identified above and in the subsequent pa
Slide 37: Forward Looking Statements
Forward Looking Statements • future credit performance, the level of future delinquency, reserve and write-off rates and the amount and timing of future reserve builds and releases, which will depend in part on macroeconomic factors such as unemployment rates, GDP and the volume of bankruptcies; the
Slide 38: Forward Looking Statements
Forward Looking Statements • the company’s ability to control operating expenses, including relative to future revenue growth, and the actual amount spent on operating expenses in 2024 and beyond, which could be impacted by, among other things, salary and benefit expenses to attract and retain talen
Slide 39: Forward Looking Statements
Forward Looking Statements • changes in the substantial and increasing worldwide competition in the payments industry, including competitive pressure and competitor settlements and mergers that may materially impact the prices charged to merchants that accept American Express cards and surcharging b
Slide 40: Forward Looking Statements
Forward Looking Statements • legal and regulatory developments, which could affect the profitability of the company’s business activities; limit the company’s ability to pursue business opportunities or conduct business in certain jurisdictions; require changes to business practices or governance, o
Slide 41: American Express
AMERICAN EXPRESS
American Express Company — Q1 2024 Earnings Presentation on 6ix