American Express Company · NYSE:AXP
American Express — Q4 2023 Earnings Presentation
42 slides from American Express's earnings presentation, Jan 26, 2024
Slide 1: American Express Earnings Conference Call Q4'23
American Express Earnings Conference Call Q4’23 JANUARY 26, 2024
Slide 2: Summary Financial Performance
Summary Financial Performance ($ in millions; except per share amounts) YoY% YoY% Q4’23 FY’23 Inc/(Dec) Inc/(Dec) Total Revenues Net of Interest Expense $15,799 11% $60,515 14% FX-Adjusted* 11% 15% Pretax Pre-Provision Income** $3,949 36% $15,436 31% Provision Expense $1,437 40% $4,923 # Net Income
Slide 3: Total Billed Business & Network Volumes
Total Billed Business & Network Volumes ($ in billions) $427 $420 $434 $413 $399 $395 $394 Total Network Volumes $350 $357 $368 $366 $380 $341 $339 $346 Billed Business $301 Processed Volumes $49 $54 $55 $56 $53 $59 $54 $55 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 % Increase/(decrease) vs. Pr
Slide 4: U.S. Consumer Services Billed Business
U.S. Consumer Services Billed Business ($ in billions) $155 $154 $160 $149 $141 $140 $142 $123 $107 $106 $115 G&S, 7% YoY $99 $98 $108 $96 $87 $42 $42 $41 $46 $48 $47 $45 T&E, 8% YoY $35 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Millennials + Q4’23 Gen-X Baby Boomer + Total Gen-Z YoY 15% 6% 2%
Slide 5: Commercial Services Billed Business
Commercial Services Billed Business ($ in billions) $128 $128 $131 $130 $130 $131 $125 $114 $103 $103 $106 $99 $103 $103 $105 G&S, 0% YoY $95 $19 $25 $25 $25 $26 $27 $27 $26 T&E, 4% YoY Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q4’23 U.S. SME U.S. Large & Global Corp Total YoY 1% (2%) 1% % of
Slide 6: International Card Services Billed Business
International Card Services Billed Business ($ in billions) $88 $82 $83 $77 $77 $71 $70 $63 $57 $57 $63 G&S, 11% YoY $56 $53 $50 $49 $47 $21 $21 $21 $24 $25 $26 $25 T&E, 16% YoY $16 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q4’23 Int’l Consumer Int’l SME & Large Corp. Total YoY 13% 13% 13% % o
Slide 7: Worldwide Total Loans and Card Member Receivables
Worldwide Total Loans and Card Member Receivables Total Ending Loans and Card Member Receivables ($ in billions) Pre- $193 $179 $183 Pandemic $171 $172 $150 5% 4% 6% 7% 8% Card Member 3% Receivables YoY Growth 24% 25% 22% 20% 17% 8% Total Loans Q4'19 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Total Loans & CM Re
Slide 8: Card Member Loans and Receivables Credit Metrics
Card Member Loans and Card Member Receivables Credit Metrics 30+ Days Past Due* Net Write-off Rates* Pre- Pre- Pandemic Pandemic 2.2% 2.0% 1.8% 1.8% 1.5% 1.6% 1.2% 1.2% 1.3% 1.1% 1.2% 1.2% Q4'19 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q4'19 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Corporate Net Write- off Rates 0.8% 0.6
Slide 9: Total Provision
Total Provision ($ in millions) $1,437 Total Provision $1,198 $1,233 Reserve $400 $1,027 $1,055 Build/(Release)* $327 $321 $778 $320 $492 $387 $410 $1,037 Write-offs $871 $912 ($33) $58 $735 $535 $352 $391 $287 ($320) Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 See Variance Commentary in the app
Slide 10: Total Reserves
Total Reserves Reserves as a % of Total Loans & CM Receivables ($ in billions) 2.9% 2.8% 2.6% 2.7% 2.4% 2.5% 2.1% 2.2% 2.0% Q1'20 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Beginning Balance Sheet Credit Reserves*: Total Loans & $4.3 $3.1 $3.2 $3.5 $4.0 $4.4 $4.7 $5.0 $5.4 CM Receivables Total
Slide 11: Revenue Performance
Revenue Performance ($ in millions) FY’23 YoY% YoY% Q4’23 FY’23 % of Total Inc/(Dec) Inc/(Dec) Revenue Discount Revenue $8,580 5% $33,416 9% 55% Net Card Fees $1,907 17% $7,255 20% 12% Service Fees and Other Revenue $1,294 10% $5,005 11% 8% Processed Revenue $414 (3%) $1,705 4% 3% Net Interest Incom
Slide 12: Discount Revenue
Discount Revenue FY’23 $B YoY* $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): Discount Revenue $33.4 9% $8.5 $8.4 $8.6 $7.9 $8.2 $7.9 $7.8 $6.8 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 YoY Growth* 38% 3
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) FY’23 $B YoY FY’22 FY’23 Net Card Fees $7.3 20% Proprietary NCA 12.5 12.2 30% 25% 3.3 3.4 3.2 25% 23% 23% 22% 3.0 3.0 3.0 2.9 2.9 19% 19% 20% 17% 16% 15% 10% 1
Slide 14: Net Interest Income
Net Interest Income Net Interest Income $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): FY’23 $B YoY* Net Interest Income $13.1 33% $3.4 $3.6 $2.8 $3.0 $3.1 $2.3 YoY 13% 32% 36% 32% 33% 30% Growth* Q4'19 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 WW Net Interest Yield on
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): FY’23 $B YoY* Total Revenue Net $60.5 15% of Interest Expense $15.1 $15.4 $15.8 $14.2 $14.3 $13.4 $13.6 $11.7 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1’22 Q2’22 Q3
Slide 16: Expense Performance
Expense Performance ($ in millions) YoY% YoY% Q4’23 FY’23 Inc/(Dec) Inc/(Dec) Card Member Rewards $3,851 3% $15,367 10% Business Development $1,483 14% $5,657 14% Card Member Services $1,063 21% $3,968 34% Variable Customer Engagement $6,397 8% $24,992 14% Expenses VCE Expenses % of Revenue 40% 41%
Slide 17: Capital
Capital Common Equity Tier 1 Capital Return ($ in billions) $9.0 10.3% 10.6% 10.6% 10.7% 10.5% $6.0 $4.9 $5.3 $2.3 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 FY'19 FY'20 FY'21 FY'22 FY'23 Q4 Dividend CET1 Ratio Target: 10-11% per $0.43 $0.43 $0.43 $0.52 $0.60 Regulatory Minimum*: 7% Common Share** * Inclusive of
Slide 18: Long-Term Aspiration & 2024 Guidance
Long-Term Aspiration & 2024 Guidance Long-Term Aspiration 2024 Guidance Revenue Growth: Revenue Growth: In excess of 10% 9% - 11% EPS Growth: EPS: Mid-teens $12.65 - $13.15 (EPS Growth: 13% - 17%) Our ability to achieve our long-term aspirations in any given period is subject to contingencies and fa
Slide 19: Appendix
Appendix AMERICA EXBRESS
Slide 20: Travel & Entertainment Billed Business
Travel & Entertainment Billed Business Q4’23 Restaurants Lodging Airlines Other Total T&E YoY Growth 11% 6% 6% 12% 9% % of Total Billed Business 7% 5% 6% 7% 25% 20 Note: All growth rates reflect FX-adjusted rates. See Slide 2 for an explanation of FX-adjusted information.
Slide 21: Q4'23 Network Volumes Growth by Customer Type
Q4’23 Network Volumes Growth by Customer Type % Increase/(decrease) vs. Prior Year (FX-adjusted): U.S. Consumer Services: Commercial Services: International Card Services: 7% 1% 13% 13% 13% 7% 1% (2%) (1%) % of Total U.S. U.S. U.S. Large & 1 Int’l Int’l SME & Processed Network Volumes Consumer SME G
Slide 22: Card Member Credit Metrics
Card Member Credit Metrics Q4’19 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Card Member Loans Net Write-off Rate* 2.3% 0.8% 0.8% 1.1% 1.5% 1.7% 1.8% 2.1% Card Member Receivables Net Write-off Rates* 1.9% 0.8% 1.0% 1.4% 1.9% 1.9% 1.9% 1.7% Corporate Net Write-off Rates** 0.8% 0.3% 0.4% 0.6% 0.6% 0.6%
Slide 23: Credit Reserve Macroeconomic Scenarios: Select Variables
Credit Reserve Macroeconomic Scenarios: Select Variables U.S. Unemployment Rate % U.S. GDP Growth* % 10% 6% 9% 5% 8% 4% 3% 7% 2% 6% 1% 5% 0% 4% (1%) 3% (2%) 2% (3%) 1% (4%) 0% (5%) Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q2'22 Q1'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23
Slide 24: Funding and Deposits
Funding and Deposits Funding Mix Retail Deposit Program ($ in billions) ($ in billions) $173 $179 Short-term $124 $128 92% FDIC 1% 1% insured at Funding Q4’23 Deposits Direct 72% 72% 77% 77% Deposits*** Third Party 8% 8% Card ABS* CDs 11% 10% Unsecured Third Party 20% 20% Term** 12% 12% Sweep Q3'23
Slide 25: FX Impact on Network Volumes and Revenue Growth
FX Impact on Network Volumes and Revenue Growth Network Volumes Revenue Net of Interest Expense % Increase/(decrease) vs. Prior year: % Increase/(decrease) vs. Prior year: 50% 50% (15%) (15%) Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Reported FX
Slide 26: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis The following summary provides selected variance information for the three months ended December 31, 2023 compared to the same period in the prior year. It should be read in conjunction with the statistical tables for Q4'23, available at ir.americanexpress.c
Slide 27: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis • Card Member Rewards Expense: Increased 3 percent versus Q4'22, primarily driven by increases in cobrand rewards and Membership Rewards expenses, all of which were primarily driven by higher billed business, partially offset by lower redemption costs. • Bus
Slide 28: Annex 1: Pretax Pre-Provision Income
Annex 1 Pretax Pre-Provision Income ($ in millions) YoY% YoY% Q4’23 Q4’22 FY’23 FY’22 Inc/(Dec) Inc/(Dec) Pretax income $2,512 $1,871 34% $10,513 $9,585 10% Provisions for credit losses $1,437 $1,027 40% $4,923 $2,182 # Pretax pre-provision income $3,949 $2,898 36% $15,436 $11,767 31% 28 # Denotes
Slide 29: Annex 2 (1 of 2): Billed Business Reported & FX-Adjusted
Annex 2 (1 of 2) Billed Business – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 FY’23 Billed Business Reported 34% 27% 21% 13% 15% 8% 8% 6% 9% FX-Adjusted* 35% 30% 24% 15% 16% 8% 7% 6% 9% G&S Reported 19% 15% 13% 7% 8% 6% 6% 5% 6% FX-
Slide 30: Annex 2 (2 of 2): Billed Business Reported & FX-Adjusted
Annex 2 (2 of 2) Billed Business – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q4’23 Q4’23 Reported FX-Adj.* Reported FX-Adj.* U.S. Large and Global Corp. (1%) (2%) International Consumer 15% 13% Commercial Services International SME & Large Corp. 13% 13% Total Billed Business 1%
Slide 31: Annex 3: Discount Revenue Reported & FX-Adjusted
Annex 3 Discount Revenue – Reported & FX-Adjusted* ($ in billions) Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 FY’22 Q1’23 Q2’23 Q3’23 Q4’23 FY’23 GAAP Discount Revenue $5.0 $6.0 $6.4 $7.1 $6.8 $7.9 $7.8 $8.2 $30.7 $7.9 $8.5 $8.4 $8.6 $33.4 FX-Adjusted Discount Revenue* $5.0 $6.0 $6.2 $7.0 $6.
Slide 32: Annex 4: Net Card Fees Reported & FX-Adjusted
Annex 4 Net Card Fees – Reported & FX-Adjusted* ($ in billions) Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 FY’22 Q1’23 Q2’23 Q3’23 Q4’23 FY’23 GAAP Net Card Fees $1.3 $1.3 $1.3 $1.3 $1.4 $1.5 $1.5 $1.6 $6.1 $1.7 $1.8 $1.8 $1.9 $7.3 FX-Adjusted Net Card Fees* $1.2 $1.2 $1.3 $1.3 $1.4 $1.5 $1.6
Slide 33: Annex 5: Net Interest Income Reported & FX-Adjusted
Annex 5 Net Interest Income – Reported & FX-Adjusted* ($ in billions) Q4’18 Q4’19 Q4’21 Q1’22 Q2’22 Q4’22 FY’22 Q1’23 Q2’23 Q3’23 Q4’23 FY’23 GAAP Net Interest Income $2.0 $2.3 $2.1 $2.2 $2.4 $2.8 $9.9 $3.0 $3.1 $3.4 $3.6 $13.1 FX-Adjusted Net Interest Income* $2.0 $2.3 $2.1 $2.2 $2.4 $2.8 $9.9 Yo
Slide 34: Annex 6: Net Interest Yield on Average Card Member Loans
Annex 6 Consolidated Net Interest Yield on Average Card Member Loans ($ in millions, except percentages and where indicated) Q4’19 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Net interest income $2,284 $2,758 $2,983 $3,105 $3,442 $3,604 Exclude: Interest expense not attributable to our Card Member loan portfoli
Slide 35: Annex 7: Revenues Net of Interest Expense Reported & FX-Adjusted
Annex 7 Revenues Net of Interest Expense – Reported & FX-Adjusted* ($ in billions) Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 FY’22 Q1’23 Q2’23 Q3’23 Q4’23 FY’23 GAAP Revenues Net of $9.1 $10.2 $10.9 $12.1 $11.7 $13.4 $13.6 $14.2 $52.9 $14.3 $15.1 $15.4 $15.8 $60.5 Interest Expense FX-Adjuste
Slide 36: 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 37: 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 38: 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 39: 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 40: Forward Looking Statements
Forward Looking Statements • changes in the substantial and increasing worldwide competition in the payments industry, including competitive pressure that may materially impact the prices charged to merchants that accept American Express cards, the desirability of the company’s premium card products
Slide 41: Forward Looking Statements
Forward Looking Statements • factors beyond the company’s control such as global economic and business conditions, consumer and business spending generally, unemployment rates, geopolitical conditions, including further escalations of ongoing military conflicts, adverse developments affecting third
Slide 42: American Express
AMERICAN EXPRESS
American Express Company — Q4 2023 Earnings Presentation on 6ix