American Express Company · NYSE:AXP
American Express — American Securitization Forum, Inc. (ASF) Presentation (January 2013)
41 slides from American Express's conference presentation, Jan 28, 2013
Slide 1: American Express Company ABS Investor Presentation
American Express Company ABS Investor Presentation January 2013
Slide 2: Table of Contents
Table of Contents • AXP Overview and Performance • Capital and Liquidity • ABS Overview 2
Slide 3: AXP Franchise
Overview & Performance 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
Slide 4: Company Overview
Overview & Performance Company Overview ($ in millions) AMERICAN EXPRESS COMPANY 2011 2012 Revenues Net of Interest Exp. $29,962 $31,582 Income from Continuing Operations $4,899 $4,482 Net Income $4,935 $4,482 Return on Average Equity* 27.7% 23.1% U.S. Card Services International Card Global Commerc
Slide 5: Payments Landscape
Overview & Performance Payments Landscape Note: The trademarks, logos and service marks used on this slide and throughout this presentation are the property of their respective owners. 5
Slide 6: Spend-Centric Model
Overview & Performance Spend-Centric Model The AXP spend-centric business model focuses primarily on generating revenues by driving spending on our cards, and secondarily finance charges and fees, allowing us to grow market share in the payments industry. Investments in Premium Value Attractive Prem
Slide 7: Q4'12 Summary Financial Performance
Overview & Performance Q4’12 Summary Financial Performance ($ in millions, except per share amounts) Q4’12 Q4’11 % Inc/(Dec) Total Revenues Net of Interest Expense $8,141 $7,742 5% FX Adjusted † $7,749 5% Net Income $637 $1,192 (47%) Diluted EPS* $0.56 $1.01 (45%) Adj. Diluted EPS* $1.09 Return on A
Slide 8: Q4'12 Metric Performance
Overview & Performance Q4’12 Metric Performance Q4’12 Q4’11 % Inc/Dec FX Adj.* Billed Business ($ in B)** $235.5 $219.0 8% 7% Total Cards In Force (MM) 102.4 97.4 5% Avg. Basic Cardmember Spending (Dollars)† $4,113 $3,933 5% 4% Cardmember Loans ($ in B) $65.2 $62.6†† 4% 4% *FX adjusted information ,
Slide 9: Metric Trends
Overview & Performance Metric Trends % increase/(decrease) vs. prior year Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Billed Business* 11% 12% 7% 6% 8% Billed Business FX Adjusted** 11% 13% 9% 8% 7% Total Cards In Force 7% 7% 6% 6% 5% Cardmember Loans 3% 4% 4% 6% 4% Worldwide Lending Write- 2.3% 2.3% 2.2% 1.9% 2.
Slide 10: Full Year 2012 Relative Performance
Overview & Performance Full Year 2012 Relative Performance Total Billed Business Ending Loans ($ in billions) ($ in billions) $888 $150 $128 $95 $92 $381 $363 $65 $50 $194 $181 $105 AXP JPM** Citi* BofA*** Cap One† Discover †† Citi* JPM** BofA*** Cap One† AXP Discover† † Growth Growth vs. PY 8% 11%
Slide 11: Charge Card Credit Performance
Overview & Performance Charge Card Credit Performance USCS Net Write-off Rate ICS/GCS Net Loss Ratio 2.3% 0.11% 1.9% 2.0% 0.10% 0.10% 0.10% 1.8% 0.09% 1.6% Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Note: USCS Net write-off rates above include Principal only. See Statistical tables
Slide 12: AXP Lending Net Write-off Rates versus Competitors
Overview & Performance AXP Lending Net Write-off Rates versus Competitors 5.6% 5.7% 4.3% 4.3% 4.3% 4.5% 4.2% 3.5% 3.2% 2.3% 2.3% 2.0% Q4'11 Q4'12 †† AXP* Discover** JPMorgan*** Cap One† Bank of America Citi ††† *Rates include principal only. See Statistical tables in Q4’12 Earnings Release for net w
Slide 13: AXP Lending 30 Days Past Due Rates versus Competitors
Overview & Performance AXP Lending 30 Days Past Due Rates versus Competitors 3.9% 3.6% 3.7% 3.7% 2.9% 3.1% 2.8% 2.4% 2.1% 1.9% 1.5% 1.2% Q4'11 Q4'12 AXP Discover* JPMorgan** Cap One*** Bank of America† Citi †† *Fiscal year ends November 30. US Card. **Results exclude Commercial Card. ***Global Card.
Slide 14: Peer Comparison - Trust FICO Distributions
Overview & Performance Peer Comparison - Trust FICO Distributions* FICO <660 (“Sub-prime”)** FICO >720 (“Super-prime”) 25% 76% 76% 63% 60% 55% 54% 53% 52% 16% 17% 45% 14% 14% 15% 11% 7% 8% AXP AXP AXP JP Citi Bank of Barclays Discover Cap One AXP AXP AXP JP Citi Barclays Bank of Discover Cap One Cha
Slide 15: Table of Contents
Table of Contents • AXP Overview and Performance • Capital and Liquidity • ABS Overview 15
Slide 16: Capital Management
Capital & Liquidity Capital Management (Regulatory Ratios, Debt Investor Expectations, Acquisition Capacity, CCAR) (Business growth, dividends, repurchases, and capital-raising) 16
Slide 17: Capital Ratios
Capital & Liquidity Capital Ratios (Preliminary) Q4'12 Q3'12 Tier 1 Common Risk-Based* 11.9% 12.7% Tier 1 Leverage 10.2% 10.8% Tier 1 Risk-Based Capital 11.9% 12.7% Total Risk-Based Capital 13.8% 14.7% Tangible Common Equity to Risk- Weighted Assets (“TCE/RWA”)** 11.7% 12.6% Note: These ratios repre
Slide 18: Funding & Liquidity
Capital & 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 dep
Slide 19: Funding & Liquidity Sources
Capital & Liquidity Funding & Liquidity Sources Funding Sources Contingent Sources ■ Deposits ■ Cash & Readily Marketable Securities (including ■ ABS securities held as collateral) ■ Unsecured Term Debt ■ Discount Window ■ Term Bank Facility ■ Committed Bank Credit ■ Commercial Paper Facilities ■ Se
Slide 20: 2012 Capital Market Issuance Volume
Capital & Liquidity 2012 Capital Market Issuance Volume ($ in billions) $5.6 $5.2 1.3 Additional Q4’12 transaction: 1.8 Q4'12 Exchanged $1.1B (of existing $1.75B) 8.125% 10- 0.8 year notes maturing on May 20, 2019 and $0.8B Q3'12 (of existing $1.0B) 8.15% 30-year notes maturing on March 19, 2038 for
Slide 21: US Retail Deposit Programs
Capital & Liquidity US Retail Deposit Programs ($ in billions) Third Party Third Party Total Direct * CDs Sweep Deposits September 30, 2012 Balance $17.7 $9.0 $10.3 $37.0 Maturities - (0.8) - (0.8) Amount Raised 1.7 0.7 1.1 3.5 December 31, 2012 Balance $19.4 $8.9 $11.4 $39.7 Weighted Avg., Retail C
Slide 22: Q4'12 Liquidity Snapshot
Capital & Liquidity Q4'12 Liquidity Snapshot ($ in billions) Resources Funding Maturities Cash* $15.8 Q1'13 0.8 Securities Held as Q2'13 6.3 0.3 Collateral** Q3'13 5.7 Q4'13 3.8 Twelve Month Excess Cash & Securities $16.1 Maturities $16.6*** * Includes $22.3B classified as Cash and Cash Equivalents,
Slide 23: Outstanding Funding Composition
Capital & Liquidity Outstanding Funding Composition (Preliminary; $ in billions) $105.4 $102.3 2.3 $98.9 $100.9 3.6 4.3 3.3 26.3 Short-term Debt* 29.7 37.9 39.8 Deposits 30.0 23.3 19.3 20.9 Card ABS** † 46.8 42.3 39.9 37.8 Unsecured Term† 12/31/09 12/31/10 12/31/11 12/31/12 *In Q1’12, the Company re
Slide 24: Term Maturity Profile – Debt and LT CDs
Capital & Liquidity Term Maturity Profile – Debt and LT CDs (Preliminary; $ in billions) 12/31/12 $16.6 $17.5 4.9 2.6 $12.8 7.0 0.7 $7.6 $7.4 Long-term CDs* 4.1 5.4 $6.8 0.4 0.2 Card ABS** 0.7 1.6 1.2 7.6 7.9 6.7 Unsecured** 6.1 5.6 6.0 2013 2014 2015 2016 2017 Thereafter 12/31/11 $19.5 $14.3 4.8 $1
Slide 25: ABS & Unsecured Debt Issuances
Capital & Liquidity ABS & Unsecured Debt Issuances ($ in billions) Card ABS* Unsecured** $3-9 $5 $2 $4-10 $1 $6 $4 $2 2010 2011 2012 2013 (Estimated Range) *ABS issuances are presented net of securities that have been retained by the Company; excludes drawn amounts on borrowings through secured fina
Slide 26: Table of Contents
Table of Contents • AXP Overview and Performance • Capital and Liquidity • ABS Overview 26
Slide 27: American Express Primary Issuance Structure
ABS Overview American Express Primary Issuance Structure (Preliminary) American Express Company (AXP) Total Assets: $152.9B Outstanding Long-Term Debt: $10.3B Credit Ratings†† : A3/BBB+/A+/A(High) Regulated By FRB; SEC Registrant American Express American Express Issuance Trust (AEIT) Travel Related
Slide 28: American Express ABS Trusts
ABS Overview American Express ABS Trusts American Express American Express American Express Credit Account Master Issuance Trust II (AEIT II) Issuance Trust (AEIT) Trust (AMXCA) Trust Established •1996 •2005 •2012 Eligible loans and • US Consumer and Small Business • US Consumer, Small Business and
Slide 29: Credit Account Master Trust - Performance Trend
ABS Overview Credit Account Master Trust - Performance Trend Days Delinquencies 4% Past Due Rate vs. Default Rate $300 MM 3% $200 MM 2% $100 MM 1% $ MM 12/11 1/12 2/12 3/12 4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 0% 12/11 1/12 2/12 3/12 4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 31-60 6
Slide 30: Issuance Trust - Performance Trend
ABS Overview Issuance Trust - Performance Trend Days Delinquencies Past Due vs. Default Rate 2.0% $60 MM 1.5% $40 MM 1.0% $20 MM 0.5% $ MM 12/11 1/12 2/12 3/12 4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 0.0% 12/11 1/12 2/12 3/12 4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 31-60 61-90 90+ An
Slide 31: Slide 31
Slide 32: Annex 1
Annex 1 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, 2012 Tie
Slide 33: Annex 2
Annex 2 The following table presents a comparison of the Company's Tier 1 and Tier 1 common risk-based capital under Basel I rules to its estimated Tier 1 and Tier 1 common risk-based capital under Basel III rules, for purposes of calculating the estimated Tier 1 and Tier 1, common capital ratios an
Slide 34: Trust Structures: Lending Charge
Annex 3 Trust Structures Lending Charge AECB AEFSB AECB AEFSB (Originator) (Originator) (Originator) (Originator) Receivables Receivables Cash Receivables Cash Receivables Cash Cash RFC III RFC IV TRS (Transferor) (Transferor) (Originator) Cash / Cash / Receivables Receivables Receivables Receivable
Slide 35: Annex 4 2012 Summary Financial Performance
Annex 4 2012 Summary Financial Performance ($ in millions, except per share amounts) 2012 2011 % Inc/(Dec) Total Revenues Net of Interest Expense $31,582 $29,962 5% FX Adjusted † $29,667 6% Net Income $4,482 $4,935 (9%) Diluted EPS* $3.89 $4.09 (5%) Adjusted Diluted EPS* $4.40 Average Diluted Shares
Slide 36: Annex 5 Total Payout Ratio
Annex 5 Total Payout Ratio Percentage of Capital Generated Returned to Shareholders 172% 132% 98% 94% 56% 35% 29% 30% 32% ($ in billions) 2008 2009* 2010 2011 2012 Q1'12 Q2'12 Q3'12 Q4'12 Share Repurchases $0.2 - $0.6 $2.3 $4.0 $0.2 $1.8 $1.0 $1.0 Note: Payout Ratio is calculated by dividing the tot
Slide 37: Annex 6 Adjusted Return on Average Equity 2012
Annex 6 Adjusted Return on Average Equity 2012 ($ in millions) GAAP Net Income $ 4,482 (A) Adjustments for Q4'12 Charges (After-Tax) Restructuring Charges $ 287 Membership Rewards Estimation Process Enhancement Expense $ 212 Cardmember Reimbursements $ 95 Adjusted Net Income $ 5,076 (B) GAAP Average
Slide 38: AEIT II Registration Statement on File
AEIT II Registration Statement on File American Express Receivables Financing Corporation VIII LLC, as depositor to the American Express Issuance Trust II, as issuer, has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before
Slide 39: 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 40: Forward Looking Statements
Forward Looking Statements •the actual amount to be spent by the Company on investments in the business, including on marketing, promotion, rewards and cardmember services and certain operating expenses, as well as the actual amount of resources arising from the restructuring plan the Company decide
Slide 41: Forward Looking Statements
Forward Looking Statements •the ability of the Company to maintain and expand its presence in the digital payments space, including online and mobile channels, which will depend on the Company’s success in evolving its business models and processes for the digital environment, building partnerships