American Express Company · NYSE:AXP
American Express — Q2 2021 Earnings Presentation
48 slides from American Express's earnings presentation, Jul 23, 2021
Slide 1: American Express Earnings Conference Call Q2'21
American Express Earnings Conference Call Q2’21 JULY 23, 2021
Slide 2: Summary Financial Performance
Summary Financial Performance ($ in millions; except per share amounts) YoY% Q2’21 Q2’20 Inc/(Dec) Total Revenues Net of Interest Expense $10,243 $7,675 33% FX-Adjusted* $7,811 31% Net Income $2,280 $257 # Diluted EPS† $2.80 $0.29 # Average Diluted Shares Outstanding 802 805 (0%) * Total Revenues Ne
Slide 3: Total Network Volumes Growth
Total Network Volumes Growth Q1’21 Q2’21 % of Total Billed vs. ’19 % (12%) (2%) 85% Business YoY% (9%) 51% % Increase/(decrease) vs. 2019: vs. ’19 % (9%) (2%) Processed 15% 20% Volumes YoY% (1%) 26% Total vs. ’19 % (11%) (2%) 10% Network 100% Volumes YoY% (8%) 46% 0% Processed Volumes Total Network
Slide 4: Billed Business Growth
Billed Business Growth Q1’21 Q2’21 % of Total vs. ’19 % 11% 16% G&S 82% YoY% 6% 31% vs. ’19 % (60%) (42%) T&E 18% YoY% (50%) 340% % Increase/(decrease) vs. 2019: vs. ’19 % (12%) (2%) 40% Total 100% YoY% (9%) 51% 20% G&S 0% Billed Business (20%) (40%) T&E (60%) (80%) (100%) Q1'20 Q2'20 Q3'20 Q4'20 Q1
Slide 5: Billed Business Growth by Region
Billed Business Growth by Region US vs. International G&S vs. T&E by Region % Increase/(decrease) vs. 2019 (FX-adjusted): % Increase/(decrease) vs. 2019 (FX-adjusted): 40% 40% 20% 20% US G&S US Intl G&S 0% 0% (20%) Intl (20%) US T&E (40%) (40%) (60%) (60%) Intl T&E (80%) (80%) (100%) (100%) Q1'20 Q2
Slide 6: Global Consumer Billed Business Growth
Global Consumer Billed Business Growth G&S vs. T&E G&S: Online vs. Offline % Increase/(decrease) vs. 2019 (FX-adjusted): % Increase/(decrease) vs. 2019 (FX-adjusted): 40% 40% Online 20% G&S G&S 20% Total 0% 0% Offline Consumer (20%) (20%) T&E (40%) (40%) (60%) (60%) (80%) (80%) (100%) (100%) Q1'20 Q
Slide 7: Global SME Billed Business Growth
Global SME Billed Business Growth SME G&S vs. T&E US SME vs Intl SME % Increase/(decrease) vs. 2019 (FX-adjusted): % Increase/(decrease) vs. 2019 (FX-adjusted): 40% 40% G&S Intl G&S 20% Total 20% US G&S SME US SME 0% 0% Intl SME (20%) (20%) (40%) T&E (40%) US T&E (60%) (60%) Intl T&E (80%) (80%) (10
Slide 8: Global Commercial Billed Business Growth
Global Commercial Billed Business Growth SME vs. Large & Global Corporate G&S vs. T&E % Increase/(decrease) vs. 2019 (FX-adjusted): % Increase/(decrease) vs. 2019 (FX-adjusted): 20% 20% SME G&S 0% 0% Total Total GCS GCS (20%) (20%) Large & (40%) Global (40%) Corporate (60%) (60%) T&E (80%) (80%) (10
Slide 9: Billed Business T&E Growth Trends by Customer Type
Billed Business T&E Growth Trends by Customer Type % Increase/(decrease) vs. 2019 (FX-adjusted): 0% Jun’21 % of Jun’19 (10%) US Consumer 98% (20%) (30%) US SME 73% (40%) Total T&E 67% (50%) Intl Consumer 56% (60%) Intl SME 48% (70%) (80%) Large & Global Corporate 22% (90%) (100%) Q1'20 Q2'20 Q3'20 Q
Slide 10: Worldwide Total Loans and Card Member Receivables
Worldwide Total Loans and Card Member Receivables Total Ending Loans (Q1-Q2) Total Ending CM Receivables (Q1-Q2) ($ in billions) ($ in billions) 2019 2020 2021 2019 2020 2021 $85.1 $87.4 $82.9 $77.8 $74.6 $72.4 $56.8 $58.7 $47.6 $44.7 $42.0 $37.6 12% 11% (3%) (15%) (13%) 4% YoY 5% 7% (21%) (36%) (6%
Slide 11: Card Member Credit Metrics
Card Member Credit Metrics Card Member Loans Net Write-off Rates Card Member Receivables Net Write-off Rates (excluding GCP) 2.8% 2.5% 2.5% 2.5% 2.1% 2.0% 1.9% 1.4% 1.0% 1.0% 0.5% 0.3% Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 30+ Days 30+ Days Past Due 1.7% 1.6% 1.2% 1
Slide 12: Total Provision
Total Provision ($ in millions) $2,621 $1,703 $1,555 $628 $665 ($111) ($675) ($606) Total Provision $918 $927 $781 $563 $379 Write-offs $260 ($116) ($674) Reserve ($1,054) ($866) Build/(Release)* Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 See Variance Commentary in the appendix section for an explanation o
Slide 13: Delinquent and Financial Relief Program Balances
Delinquent and Financial Relief Program Balances ($ in billions) $11.5 $8.5* Customer Pandemic Relief $4.0 (CPR) Program $3.6 $0.0 Enrolled ** $2.8 $0.0 $2.5 Financial Relief $0.7 $0.9 $3.0 $2.8 $0.0 Programs (FRP) $1.8 Enrolled *** $2.1 $2.0 $1.0 $0.8 $0.7 Delinquent Dec'19 Apr'20 Dec'20 Mar'21 Jun
Slide 14: Total Reserves
Total Reserves Balance Sheet Credit Reserves* ($ in billions) $1.5 $5.8 ($1.0) $0.1 $0.3 ($0.1) Card Member ($1.0) $1.4 $4.8 ($0.8) Receivables $4.3 $0.2 ($0.1) $5.6 ($0.7) $4.0 $0.1 Total $0.1 Loans $4.6 $4.2 $3.9 Q1'20 Q4'20 Ending Q1'21 Ending Q2'21 Ending Beginning Reserves Reserves Reserves Res
Slide 15: Marketing Investments and New Cards Acquired
Marketing Investments and New Cards Acquired Marketing Proprietary New Cards Acquired ($ in billions) (in millions) Value Injection 2.5 $1.3 2.4 2.1 $1.1 $1.0 $1.0 1.7 $0.8 1.4 $0.7 1.0 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 15
Slide 16: Revenue Performance
Revenue Performance ($ in millions) Q2’21 YoY% Q2’21 Q2’20 % of Total Inc/(Dec) Revenue Discount Revenue $6,327 $4,015 58% 62% Net Card Fees $1,286 $1,141 13% 13% Other Fees & Commissions $560 $449 25% 5% Other Revenue $252 $186 35% 2% Net Interest Income $1,818 $1,884 (4%) 18% Revenues Net of Inter
Slide 17: Discount Revenue
Discount Revenue Discount Revenue* (Q1-Q2) Average Discount Rate (Q1-Q2) $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): 2019 2020 2021 2019 2020 2021 $6.6 2.37% 2.37% 2.34% $6.2 $6.3 2.30% $5.8 2.26% 2.23% $5.2 $4.0 7% 7% (5%) (38%) (11%) 56% YoY 0 bps 0 bp
Slide 18: Net Card Fees
Net Card Fees Net Card Fees* $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): $1.3 $1.3 $1.2 $1.2 $1.1 $1.1 $1.1 $1.0 $1.0 $0.9 YoY Change 17% 19% 20% 20% 19% 17% 15% 12% 10% 10% Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Note: Effective Q2’2
Slide 19: Net Interest Income and Net Interest Yield
Net Interest Income and Net Interest Yield Net Interest Income* (Q1-Q2) WW Net Interest Yield on CM Loans** (Q1-Q2) $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): 2019 2020 2021 2019 2020 2021 11.9% $2.3 11.6% 11.3% 11.1% $2.1 $2.1 10.9% 10.6% $1.9 $1.8 $1.
Slide 20: Total Revenue Net of Interest Expense
Total Revenue Net of Interest Expense Total Revenue Growth FX-Adjusted* % inc/(dec) YoY 45% % inc/(dec) vs. 2019 35% 31% 25% 15% 9% 10% 9% 9% 5% 1% (5%) (6%) (13%) (15%) (20%) (18%) 10% 9% 9% 1% (28%) (28%)(20%) (18%) (13%) 29% (25%) (35%) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21
Slide 21: Expense Performance
Expense Performance ($ in millions) YoY% Q2’21 Q2’20 Inc/(Dec) Card Member Rewards $2,712 $1,349 101% Card Member Services $432 $208 108% Business Development $888 $617 44% Variable CM Engagement Expenses $4,032 $2,174 85% Marketing $1,331 $745 79% Operating Expenses* $2,546 $2,579 (1%) Total Expens
Slide 22: Capital
Capital Common Equity Tier 1 Capital Return ($ in billions) 14.8% 14.2% 13.6% 13.9% 13.5% $1.3 $1.2 11.9% $0.7 $0.3 $0.3 $0.3 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Payout Ratio 409% 111% 31% 23% 35% 54% Note: Payout Ratio is calculated by dividing the total amount r
Slide 23: 2021 Scenarios
2021 Scenarios 2021 Scenarios Scenario 1 Scenario 2 Macro Environment (vs. Q2’21 reserve assumptions) Provision & Credit (vs. Q2’21 reserve assumptions) EPS ~$7.50 ~$8.75 2022+ Goal Within the high end of the range of original EPS expectations we had for 2020 in 2022, and resuming our financial grow
Slide 24: Appendix
Appendix AMERICA 8XBRESS
Slide 25: Q2'21 Network Volumes Growth by Customer Type
Q2’21 Network Volumes Growth by Customer Type % of Total US US Int’l Int’l Large & Global Processed Network Consumer SME Consumer* SME* Corporate* Volumes* Volumes 35% 28% 11% 5% 5% 15% % Increase/(decrease) vs. 2019 (FX-adjusted): 10% 7% 1% (2%) (11%) (51%) 1 YoY% 63% 45% 46% 38% 34% 26% US Consume
Slide 26: Billed Business T&E Growth Trends
Billed Business T&E Growth Trends Global T&E by Industry Q2’21 Restaurants Other Lodging Airlines* Total T&E vs. ’19 (10%) (35%) (50%) (63%) (42%) % Increase/(decrease) vs. 2019 (FX-adjusted) YoY 152% 467% 299% ## 340% 0% Restaurants (20%) Other (40%) Total T&E Lodging (60%) Airlines (80%) (100%) (1
Slide 27: Global Corporate Payments Card Member Credit Metrics
Global Corporate Payments Card Member Credit Metrics GCP Card Member Receivables Client Bankruptcy Recovery Impact to Net Write-Offs Adjusted Net Write-off rates* Increase/(Decrease) Q2’20 Q2’21 Net Write-Off $53M ($37M) Amount/(Recovery) 2.4% Credit Insurance Claim 2.0% (Proceeds)/Repayment ($47M)
Slide 28: Credit Reserve Build Macroeconomic Assumptions
Credit Reserve Build Macroeconomic Assumptions US Unemployment Rate % US GDP Growth* % 18% 40% 16% 35% 14% 30% 25% 12% 20% 10% 15% 8% 10% 6% 5% 4% 0% 2% (5%) 0% (10%) Q3'23 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q4'23 Q1'21 Q3'20 Q4'20 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q
Slide 29: Worldwide Total Loans and Card Member Receivables Mix
Worldwide Total Loans and Card Member Receivables Mix Q2’21 Total Loan Mix Q2’21 Card Member Receivables Mix Intl. Small Business Small Business Consumer 21% 15% 33% Intl. U.S. Consumer 11% 27% Consumer 68% U.S. Consumer 25% Corporate Card 29 Note: Total Loans reflects Card Member loans and Other lo
Slide 30: 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: 50% 50% (15%) (15%) Q1'21 Q2'21 Q1'21 Q2'21 Reported FX Adj. Reported FX Adj. Euro € UK £ Japan ¥ Australia $ Canada $ Mexico $ Approximate Q2’21 Network Volumes as a
Slide 31: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis The following summary provides selected variance information for the three months ended June 30, 2021 compared to the same period in the prior year. It should be read in conjunction with the statistical tables for Q2’21, available at ir.americanexpress.com.
Slide 32: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis • Marketing and Business Development: Increased 63% versus Q2’20, primarily due to increases in marketing investments to continue building growth momentum and higher partner payments driven by higher spending volumes. • Card Member Rewards Expense: Increased
Slide 33: Annex 1 (1 of 2)
Annex 1 (1 of 2) Network Volumes – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q1’21 vs Q2’21 vs Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q1’19 Q2’19 Int’l Consumer Reported 8% 10% 10% 11% (6%) (41%) (21%) (17%) (10%) 59% (16%) (6%) FX-Adjusted 16% 15% 14% 11% (
Slide 34: Annex 1 (2 of 2)
Annex 1 (2 of 2) Network Volumes – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q1’21 vs Q2’21 vs Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q1’19 Q2’19 Large & Global Corporate Reported (20%) (64%) (54%) (50%) (43%) 37% (54%) (51%) FX-Adjusted (19%) (64%) (54%) (51%) (44%) 34% (54%) (51%
Slide 35: Annex 2
Annex 2 Troubled Debt Restructurings (TDR) Balance ($ in billions) Dec’19 Apr’20 Dec’20 Mar’21 Jun’21 In-Program TDR Balance $0.8 $1.0 $3.1 $2.9 $1.9 Delinquent Financial Relief Programs (FRP) balance 0.1 0.1 0.1 0.1 0.1 Non-delinquent FRP balance $0.7 $0.9 $3.0 $2.8 $1.8 35
Slide 36: Annex 3
Annex 3 Discount Revenue – Reported & FX-Adjusted* ($ in billions) 2018 2019 2020 2021 Q1’18 Q2’18 Q1’19 Q2’19 Q1’20 Q2’20 Q1’21 Q2’21 GAAP Discount Revenue $5.9 $6.2 $6.2 $6.6 $5.8 $4.0 $5.2 $6.3 FX-Adjusted Discount Revenue* $5.8 $6.1 $6.1 $6.5 $5.9 $4.1 YoY% Inc/(Dec) in GAAP Discount Revenue 5
Slide 37: Annex 4
Annex 4 Net Card Fees – Reported & FX-Adjusted* ($ in billions) Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 GAAP Revenues Net Card Fees $0.8 $0.8 $0.9 $0.9 $0.9 $1.0 $1.0 $1.1 $1.1 $1.1 $1.2 $1.2 $1.3 $1.3 FX-Adjusted Net Card Fees* $0.8 $0.8 $0.9 $0.9 $0.9
Slide 38: Annex 5
Annex 5 Net Interest Income – Reported & FX-Adjusted* ($ in billions) 2018 2019 2020 2021 Q1’18 Q2’18 Q1’19 Q2’19 Q1’20 Q2’20 Q1’21 Q2’21 GAAP Net Interest Income $1.8 $1.8 $2.1 $2.1 $2.3 $1.9 $1.8 $1.8 FX-Adjusted Net Interest Income* $1.8 $1.8 $2.0 $2.1 $2.3 $1.9 YoY% Inc/(Dec) in GAAP Net Inter
Slide 39: Annex 6
Annex 6 Consolidated Net Interest Yield on Average Card Member Loans ($ in millions, except percentages and where indicated) 2019 2020 2021 Q1’19 Q2’19 Q1’20 Q2’20 Q1’21 Q2’21 Net interest income $2,059 $2,074 $2,330 $1,884 $1,830 $1,818 Exclude: Interest expense not attributable to our Card Membe
Slide 40: Annex 7 (1 of 2)
Annex 7 (1 of 2) Revenues Net of Interest Expense – Reported & FX-Adjusted* ($ in billions) Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 GAAP Revenues Net of $9.7 $10.0 $10.1 $10.5 $10.3 $10.8 $11.0 $11.4 $10.3 $7.7 $8.8 $9.4 $9.1 $10.2 Interest Expense FX-Ad
Slide 41: Annex 7 (2 of 2)
Annex 7 (2 of 2) Revenues Net of Interest Expense comparison to 2019 – Reported & FX-Adjusted* ($ in billions) Q1’19 Q2’19 Q1’21 Q2’21 GAAP Revenues Net of Interest $10.3 $10.8 $9.1 $10.2 Expense FX-Adjusted Revenues Net of $10.4 $10.9 Interest* 2021 vs. 2019 YoY% Inc/(Dec) in GAAP (13%) (5%) Reve
Slide 42: Annex 8
Annex 8 GCP Card Member Receivables Net Write-Off rates ($ in millions) Q2’20 Q2’21 GCP Net Write-Offs - Principal and $105 ($24) Fees* Client Bankruptcy Recovery Impact ($53) $37 Adjusted Net Write-Offs $52 $13 GCP Average Card Member $10,481 $11,087 Receivables Reported Net Write-Off rates 4.0%
Slide 43: 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 44: Forward Looking Statements
Forward Looking Statements • future credit performance, the level of future write-off rates and the amount and timing of future credit reserve builds and releases, which will depend in part on changes in consumer behavior that affect loan and receivable balances (such as paydown and revolve rates) a
Slide 45: Forward Looking Statements
Forward Looking Statements • the ability of the company to control its operating expenses and the actual amount the company spends on operating expenses in 2021 and beyond, which could be impacted by, among other things, management’s decision to increase or decrease spending in such areas as technol
Slide 46: Forward Looking Statements
Forward Looking Statements • changes affecting the company’s plans regarding the return of capital to shareholders, including the level of share repurchases over the next several quarters, which will depend on factors such as capital levels and regulatory capital ratios; changes in the stress testin
Slide 47: 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 alter the com
Slide 48: American Express
AMERICAN EXPRESS
American Express Company — Q2 2021 Earnings Presentation on 6ix