American Express Company · NYSE:AXP
American Express — Debt Investor Presentation (February 2012)
46 slides from American Express's debt investor presentation, February 2012
Slide 1: American Express Fixed Investor Presentation
American Express Fixed Investor Presentation February 2012
Slide 2: Agenda
Agenda ■ AXP Overview ■ Performance ■ AXP Capital & Funding Management 2
Slide 3: AXP Franchise
AXP Franchise • American Express is a global service company that provides customers with access to products, insights and experiences that enrich lives and build business success. • Our principal products are charge and credit cards, focusing on the premium market sector. We are the world's largest
Slide 4: Company Overview
Company Overview ($ in millions) AMERICAN EXPRESS COMPANY 2010 2011 Total Revenues Net of Interest Expense $27,582 $29,962 Income from Continuing Operations $4,057 $4,899 Net Income $4,057 $4,935 Return on Average Equity* 27.5% 27.7% U.S. Card Services International Card Global Commercial Global Net
Slide 5: Payments Landscape
Payments Landscape Note: The trademarks, logos and service marks used on this slide and throughout this presentation are the property of their respective owners. 5
Slide 6: Spend-Centric Model
Spend-Centric Model The AXP spend-centric business model focuses primarily on generating revenues by driving spending on our cards, and secondarily finance charges and fees, allowing us to grow market share in the payments industry. Investments in Premium Value Attractive Premium Customer Base Econo
Slide 7: Agenda
Agenda ■ AXP Overview ■ Performance ■ AXP Capital & Funding Management 7
Slide 8: Q4'11 Summary Financial Performance
Q4'11 Summary Financial Performance ($ in millions, except per share amounts) Q4'11 Q4'10 % Inc/(Dec) Total Revenues Net of Interest Expense $7,742 $7,244 7% FX Adjusted † $7,225 7% Net Income $1,192 $1,062 12% Diluted EPS* $1.01 $0.88 15% Return on Average Equity 28% 27% Average Diluted Shares Outs
Slide 9: Q4'11 Metric Performance
Q4'11 Metric Performance 1Q'10 Q4'11 1Q'09 Q4'10 % Inc/Dec FX Adj.* Billed Business ($ in B)** $219.0 $197.7 11% 11% Total Cards In Force (MM) 97.4 91.0 7% Avg. Basic Cardmember $3,933 $3,629 8% 9% Spending (Dollars)† Cardmember Loans ($ in B) $62.6 $60.9†† 3% 3% WW Travel Sales ($ in B) $5.9 $5.6 5
Slide 10: Historical Metric Trends
Historical Metric Trends % increase/(decrease) vs. prior year: Billed Business* Billed Business FX Adjusted** 14% 15% 15% 13% 11% Total Cards In Force*** Avg. Basic Cardmember Spending† Cardmember Loans Worldwide Lending Write- off Rate †† *Card billed business includes activities (including cash ad
Slide 11: Charge Card Billed Business vs. Receivables Growth
Charge Card Billed Business vs. Receivables Growth $ in billions; % increase/(decrease) vs. prior year: 25% 15% 5% (5%) Proprietary Charge Card Billed Business* (15%) Total Ending Cardmember Receivables (25%) Q4'08 Q2'09 Q4'09 Q2'10 Q4'10 Q2'11 Q4'11 Ending Receivables $33.0 $31.4 $33.7 $34.6 $37.3
Slide 12: Lending Billed Business vs. Managed Loan Growth
Lending Billed Business vs. Managed Loan Growth % increase/(decrease) vs. prior year, Managed: 25% 15% 5% (5%) (15%) (25%) Q4'08 Q2'09 Q4'09 Q2'10 Q4'10 Q2'11 Q4'11 Proprietary Credit Card Billed Business* Ending Loans - Managed** Ending Loans Managed** $72.0 $62.9 $61.8 $57.3 $60.9 $58.7 $62.6 *Inc
Slide 13: USCS Net Interest Yield Managed Cardmember Loans
USCS Net Interest Yield Managed Cardmember Loans $ in billions; Total Cardmember Loans, Managed $51.6 $49.2 $49.9 $49.9 $53.7 9.1% 9.1% 9.0% 8.9% 8.7% Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 See Annex 2 for reconciliation of net interest income divided by average loans, a GAAP measure, and net interest yield,
Slide 14: Full Year 2011 Relative Performance
Full Year 2011 Relative Performance ($ in billions) ($ in billions) $822 $156 $132 $121 $358 $344 $65 $63 $192 $47 $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 (3%) (4%) (12%) 6% 3% 3% NOTE: AXP “Bi
Slide 15: Charge Card Credit Performance
Charge Card Credit Performance USCS Net Write-off Rate ICS/GCS Net Loss Ratio* 1.9% 1.8% 1.7% 1.5% 1.4% 0.09% 0.09% 0.09% 0.10% 0.10% Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Note: USCS Net write-off rates above include Principal only. See Statistical tables in Q4’11/Full Year 201
Slide 16: AXP Lending Net Write-off Rates versus Competitors
AXP Lending Net Write-off Rates versus Competitors 9.1% 7.9% 7.8% 7.2% 7.0% 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 Statistical tables in Q4’11/Full Year 2011 Earnings Release for net write-off r
Slide 17: AXP Lending 30 Days Past Due Rates versus Competitors
AXP Lending 30 Days Past Due Rates versus Competitors 5.2% 4.3% 4.2% 4.1% 4.1% 3.9% 3.7% 3.1% 2.8% 2.4% 2.1% 1.5% Q4‘10 Q4'11 AXP Discover * JPMorgan ** Cap One*** Bank of † Citi †† America *Fiscal year ends November 30. US Card. ** Includes the impact of the Washington Mutual acquisition. ***Global
Slide 18: USCS Managed Lending Roll Rates and Bankruptcy Filings
USCS Managed Lending Roll Rates and Bankruptcy Filings Current to 30 Days Past Due Number of Bankruptcy Filings 1.5% USCS Customers, x000 73 71 69 1.0% 65 63 58 54 50 0.5% 46 Jan'10 Jul'10 Jan'11 Jun'11 Dec'11 30 Days Past Due to Write-off 50% 20% Jan'10 Jul'10 Jan'11 Jun'11 Dec'11 Q4'09 Q2'10 Q4'10
Slide 19: Peer Comparison Trust FICO Distributions
Peer Comparison Trust FICO Distributions* FICO <660 (“Sub-prime”)** FICO >720 (“Super-prime”) 76% 26% 63% 63% 54% 51% 51% 45% 18% 18% 15% 16% 12% 8% AXP AXP JP Morgan Citi Bank of Discover Cap One AXP AXP JP Morgan Citi Discover Bank of Cap One Charge Lending America Charge Lending America Trust† Tr
Slide 20: Agenda
Agenda ■ AXP Overview ■ Performance ■ AXP Capital & Funding Management 20
Slide 21: Capital Management
Capital Management (Regulatory Ratios, Debt Investor Expectations, Acquisition Capacity) (Organic growth and acquisition, dividends, repurchases, and capital-raising) 21
Slide 22: Capital Ratios
Capital Ratios Q4'11 Q3'11 Tier 1 Common Risk-Based* 12.3% 12.3% Tier 1 Leverage 10.2% 9.8% Tier 1 Risk-Based Capital 12.3% 12.3% Total Risk-Based Capital 14.3% 14.3% Tangible Common Equity to Risk- 12.0% 12.0% Weighted Assets (“TCE/RWA”)** *The Tier 1 Common Risk-Based Capital Ratio is calculated a
Slide 23: Funding & Liquidity
Funding & Liquidity • Our liquidity strategy is to target holding sufficient cash and readily marketable securities to meet all maturing funding obligations for the next 12 months, without having to access the unsecured or secured debt capital markets, or raise further retail deposits. • We continue
Slide 24: Funding & Liquidity Sources
Funding & Liquidity Sources Funding Sources Contingent Sources ■ Deposits ■ Cash & Readily Marketable Securities ■ ABS ■ Discount Window ■ Unsecured Term Debt ■ Committed Bank ■ Term Bank Facility Credit Facilities ■ Commercial Paper ■ Secured Borrowing through Conduit Facility* *Drawn balance of th
Slide 25: Q4'11 Liquidity Snapshot
Q4'11 Liquidity Snapshot ($ in billions) Resources Funding Maturities Cash* $18 Q1‘12 3 Readily Marketable 1 Q2'12 4 Securities Liquidity Portfolio 19 Q3'12 4 CP and Short-Term 3 (1) Q4‘12 Deposits Outstanding Twelve Month Excess Cash & Securities $18 Maturities $14** *Includes $24.9B classified as
Slide 26: US Retail Deposit Programs
US Retail Deposit Programs ($ in billions) Third Party Third Party Total Direct * CDs Sweep Deposits September 30, 2011 Balance $14.1 $9.2 $9.2 $32.5 Maturities (0.2) (1.1) - (1.3) Amount Raised 1.6 2.7 1.8 6.1 December 31, 2011 Balance $ 15.5 $10.8 $11.0 $37.3 Weighted Avg., Retail CD 22 Months Rem
Slide 27: American Express Primary Issuance Structure
American Express Primary Issuance Structure American Express Company (AXP) Total Assets1: $148.7B Credit Ratings3: A3/BBB+/A+/A(High) Regulated By: FRB & SEC American Express Travel Related Services (TRS) American Express Total Assets1: $146.5B Issuance Trust (AEIT) Credit Ratings3: A2/BBB+/A+/A(Hig
Slide 28: AXP & TRS
AXP & TRS AXP and TRS are Bank and Financial Holding Companies American Express • Leading global payments and travel company Company (AXP) • Sources of funding: Credit Ratings1: A3/BBB+/A+/A(High) • Dividends from subsidiaries • Unsecured long-term notes • Issues corporate charge cards and prepaid p
Slide 29: Credco
Credco • Funds the following products: American Express • US and Non-US charge cards Travel Related Services (TRS) • Non-US revolving cards • Sources of funding: • Issuance of US and non-US unsecured long term debt • Asset backed securities (ABS) issued by American Express Issuance Trust • Borrowing
Slide 30: US Banks
US Banks American Express Travel Related Services (TRS) American Express American Express Centurion Bank (AECB) Bank, Federal Savings Bank (AEFSB) 100% owned by TRS 100% owned by TRS Credit Ratings1: A2/BBB+/A+/A(High) Credit Ratings1: A2/BBB+/A+/A(High) • Incorporated in 1987 • Incorporated in 2000
Slide 31: Outstanding Funding Composition
Outstanding Funding Composition ($ in Billions) $111.1 $105.4 9.0 2.3 $98.7 $100.0 3.4 3.4 15.5 26.3 Short-term Debt* 29.7 37.9 32.5 Deposits** 30.0 23.3 20.9 Card ABS*** † 54.1 Unsecured Term† 46.8 42.3 37.8 12/31/08 12/31/09 12/31/10 12/31/11 *Short-term Debt as of 12/31/11 includes $0.6B of Comme
Slide 32: Term Maturity Profile – Debt and LT CDs
Term Maturity Profile – Debt and LT CDs ($ in Billions) 12/31/11 $19.5 $14.3 4.8 $14.1 3.2 2.4 $11.0 Long term CDs* 7.1 0.2 3.9 $6.6 1.2 Card ABS** 6.8 $4.7 0.6 Unsecured** 7.8 0.3 9.6 7.6 1.9 6.0 4.3 2.5 2012 2013 2014 2015 2016 Thereafter 12/31/10 $19.8 $18.1 5.6 2.9 $15.3 2.3 $11.8 Long term CDs*
Slide 33: ABS & Unsecured Debt Issuances
ABS & Unsecured Debt Issuances ($ in Billions) Card ABS* Unsecured** $2 $1-6 $2 $3-9 $7 $1 $4 $2 2009 2010 2011 2012 (Estimated Range) *All ABS debt is presented net of securities that have been retained by the Company; excludes drawn amounts on the secured borrowing through the conduit facility. **
Slide 34: American Express ABS Trusts
American Express ABS Trusts American Express American Express Credit Account Master Trust Issuance Trust (AEIT) (AMXCA) Trust Established • 1996 • 2005 Eligible loans and receivables • All US Consumer and Small Business • All US Consumer, Small Business and cardmember loans Corporate cardmember rece
Slide 35: Credit Account Master Trust Performance Trend
Credit Account Master Trust Performance Trend Days Delinquencies Past Due Rate vs. Default Rate $500 MM 7% 6% $400 MM 5% $300 MM 4% $200 MM 3% 2% $100 MM 1% $ MM 0% 1/11 2/11 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/11 11/11 12/11 1/12 1/11 2/11 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/11 11/11 12/11 1/12
Slide 36: Issuance Trust Performance Trend
Issuance Trust Performance Trend Days Delinquencies Past Due vs. Default Rate $80 MM 2.5% $60 MM 2.0% 1.5% $40 MM 1.0% $20 MM 0.5% $ MM 1/11 2/11 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/11 11/11 12/1 1/12 0.0% 1/11 2/11 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/11 11/11 12/11 1/12 31-60 61-90 90+ Annualiz
Slide 37: 37
37
Slide 38: Annex 1
Annex 1 Worldwide Cardmember Lending ($ in billions, except percentages) Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Total Worldwide Ending Loans GAAP $ 42.2 $ 36.7 $ 32.5 $31.5 $32.8 Growth vs PY (22%) (26%) (34%) (31%) (22%) Managed $ 72.0 $ 65.0 $ 62.9 $60.7 $61.8 Growth vs PY (7%) (13%) (18%) (20%) (14%) For
Slide 39: Annex 2
Annex 2 ($ in millions, except percentages) 12/31/10 3/31/11 6/30/11 9/30/11 12/31/11 USCS - Net Interest Yield on Cardmember Loans Net interest income $1,122 $1,091 $1,063 $1,128 $1,141 Average loans (billions) $49.8 $49.6 $49.7 $50.2 $51.4 Adjusted net interest income (A) $1,143 $1,112 $1,080 $1,1
Slide 40: Annex 3
Annex 3 The Tier 1 Common Risk-Based Capital Ratio is calculated as Tier 1 Common Equity, a non-GAAP measure, divided by Risk-weighted assets. Tier 1 Common Equity is calculated by reference to Total Shareholders’ Equity as shown below: Tier 1 Common Equity Reconciliation as of December 31, 2011 ($
Slide 41: Annex 4 2011 Summary Financial Performance
Annex 4 2011 Summary Financial Performance ($ in millions, except per share amounts) 2011 2010 % Inc/(Dec) Total Revenues Net of Interest Expense $29,962 $27,582 9% FX Adjusted † $28,043 7% Net Income $4,935 $4,057 22% Diluted EPS* $4.09 $3.35 22% Return on Average Equity 28% 27% Average Diluted Sha
Slide 42: Annex 5 2011 Metric Performance
Annex 5 2011 Metric Performance 1Q'10 2011 1Q'09 2010 % Inc/Dec FX Adj.* Billed Business ($ in B)** $822.2 $713.3 15% 13% Total Cards In Force (MM) 97.4 91.0 7% Avg. Basic Cardmember $14,881 $13,259 12% 11% Spending (Dollars) † Cardmember Loans ($ in B) $62.6 $60.9†† 3% 3% WW Travel Sales ($ in B) $
Slide 43: Annex 6 Payout Ratio
Annex 6 Payout Ratio 105% 88% 61% 56% 43% 35% 30% 29% 16% 2007 2008 2009* 2010 2011 Q1'11 Q2'11 Q3'11 Q4'11 ($ Billions) $3.6 $0.2 - $0.6 $2.3 - $0.8 $1.2 $0.3 Note: Payout Ratio is calculated by dividing the total amount returned to shareholders through dividends and share repurchases during the re
Slide 44: 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 the Company’s expected business and financial perfo
Slide 45: Forward-Looking Statements
Forward-Looking Statements • the Company's net interest yield on U.S. cardmember loans not remaining at historical levels, which will be influenced by, among other things, the effects of the CARD Act (including the regulations requiring the Company to periodically reevaluate APR increases), interest
Slide 46: Forward-Looking Statements
Forward-Looking Statements • changes affecting the success of the Company's reengineering and other cost control initiatives, such as the ability to execute plans during the year with respect to certain of the Company's facilities, which may result in the Company not realizing all or a significant p
American Express Company — Debt Investor Presentation (February 2012) on 6ix