American Express Company · NYSE:AXP
American Express — Q3 2024 Earnings Presentation
40 slides from American Express's earnings presentation, Oct 18, 2024
Slide 1: American Express Earnings Conference Call Q3'24
American Express Earnings Conference Call Q3'24 OCTOBER 18, 2024
Slide 2: Summary Financial Performance
Summary Financial Performance ($ in millions; except per share amounts) YoY% YTD YoY% Q3'24 Q3'23 Inc/(Dec) Inc/(Dec) Total Revenues Net of Interest Expense $16,636 $15,381 8% 9% FX-Adjusted* $15,348 8% 10% Net Income $2,507 $2,451 2% 24% Diluted EPS** $3.49 $3.30 6% 28% Adjusted EPS*** 20% Average
Slide 3: Total Billed Business
Total Billed Business % Increase/(decrease) vs. Prior year (FX-adjusted) 15% 10% 7% 7% 6% 6% 6% 5% 0% Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 G&S 6% 5% 6% 6% 6% T&E 13% 9% 8% 7% 6% All growth rates reflect FX-adjusted rates. See Annex 2 for reported billings growth rates. Billed
Slide 4: U.S. Consumer Services Billed Business
U.S. Consumer Services Billed Business % Increase/(decrease) vs. Prior year 15% 10% 9% 8% 7% G&S, 6% YoY 6% 6% T&E, 6% YoY 5% 0% Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Millennials + Q3'24 Gen-X Baby Boomer + Total Gen-Z YoY 12% 4% 0% 6% % of Total 33% 37% 30% 100% 4
Slide 5: Commercial Services Billed Business
Commercial Services Billed Business % Increase/(decrease) vs. Prior year (FX-adjusted) 15% 10% 5% G&S, 1% YoY 2% 2% T&E, 2% YoY 1% 1% 1% 0% Q3’23 Q4’23 Q1’24 Q2'24 Q3'24 Q3'24 U.S. SME U.S. Large & Global Corp. Total YoY 1% 0% 1% % of Total 83% 17% 100% SME refers to small and mid-sized businesses w
Slide 6: International Card Services Billed Business
International Card Services Billed Business % Increase/(decrease) vs. Prior year (FX-adjusted) 20% 15% 15% G&S, 14% YoY 13% 13% 13% 13% T&E, 11% YoY 10% 5% 0% Q3’23 Q4’23 Q1’24 Q2'24 Q3'24 Q3'24 Int’l Consumer Int’l SME & Large Corp. Total YoY 13% 13% 13% % of Total 65% 35% 100% All growth rates ref
Slide 7: Worldwide Total Loans and Card Member Receivables
Worldwide Total Loans and Card Member Receivables ($ in billions) $199 $202 $193 $194 $183 2% 0% Card Member 5% 4% Receivables 6% YoY Growth Total Loans 20% 17% 17% 15% 15% Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Total Loans & CM Receivables 15% 13% 12% 11% 10% YOY Growth Total Loans reflects Card Member loan
Slide 8: Credit Metrics
Credit Metrics 30+ Days Past Due Net Write-off Rates % of Card Member Loans and Receivables % of Average Card Member Loans and Receivables Pre- Pre- Pandemic Pandemic 2.2% 1.5% 2.1% 2.1% 2.0% 1.9% 1.3% 1.3% 1.3% 1.8% 1.2% 1.2% Q4'19 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'19 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 R
Slide 9: Total Provision
Total Provision ($ in millions) $1,437 $1,356 Total Provision $1,269 $1,268 $1,233 Reserve $400 $101 $264 $148 Build/(Release) $321 $1,121 $1,167 $1,092 Write-offs $1,037 $912 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 See Variance Commentary in the appendix section for an explanation of the provision variance v
Slide 10: Revenue Performance
Revenue Performance ($ in millions) YoY% YoY% Q3'24 Q3'23 Inc/(Dec) Inc/(Dec) FX-Adjusted* Discount Revenue $8,780 $8,408 4% 4% Net Card Fees $2,170 $1,846 18% 18% Service Fees and Other Revenue $1,267 $1,261 0% 1% Processed Revenue $413 $424 (3%) 1% Net Interest Income $4,006 $3,442 16% 17% Revenue
Slide 11: Discount Revenue
Discount Revenue $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted) $8.6 $8.9 $8.8 $8.4 $8.4 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 YoY Growth* 7% 5% 6% 5% 4% * Discount Revenue YoY growth rates adjusted for FX are non-GAAP measures. See Ann
Slide 12: Net Card Fees and Proprietary New Cards Acquired
Net Card Fees and Proprietary New Cards Acquired Net Card Fees Growth* Proprietary NCA % Increase/(decrease) vs. Prior year (FX-adjusted) (in millions) 30% 3.4 3.3 3.3 25% 2.9 2.9 19% 20% 18% 17% 16% 16% 15% 10% 5% 0% Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 * Net Card Fees YoY gr
Slide 13: Net Interest Income
Net Interest Income $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted) $3.8 $3.7 $4.0 $3.4 $3.6 YOY 33% 30% 26% 20% 17% Growth* Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 WW Net Interest Yield on CM 11.7% 11.7% 12.0% 11.7% 12.0% Loans** * Net Interest Income YoY growth rates
Slide 14: 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) $16.3 $16.6 $15.4 $15.8 $15.8 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 YoY Growth* 13% 11% 11% 9% 8% * Revenue Net of Interest Expense YoY growth rates ad
Slide 15: Expense Performance
Expense Performance ($ in millions) YoY% Q3'24 Q3'23 Inc/(Dec) Card Member Rewards $4,168 $3,794 10% Business Development $1,430 $1,393 3% Card Member Services $1,179 $973 21% Q3'24 VCE % of Revenue Variable Customer Engagement Expenses $6,777 $6,160 10% 41% Marketing $1,470 $1,236 19% Operating Exp
Slide 16: Capital
Capital Common Equity Tier 1 Capital Return ($ in billions) 10.8% $2.4 10.7% 10.5% 10.6% 10.7% $2.3 $0.5 Dividends $0.5 $1.7 $1.6 $0.4 $1.4 $0.5 $0.4 Share $1.8 $1.9 Repurchases $1.3 $0.9 $1.1 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 CET1 Ratio Target: 10-11% Regulatory Minimum*:
Slide 17: 2024 Guidance
2024 Guidance Original As of Q2’24 Updated Revenue Growth: Revenue Growth: Revenue Growth: 9% - 11% 9% - 11% ~9% EPS: EPS: EPS: $12.65 - $13.15 $13.30 - $13.80 $13.75 - $14.05 (EPS Growth: 13% - 17%) (EPS Growth: 19% - 23%) (EPS Growth: 23% - 25%) Including $0.66 of Accertify Gain Including $0.66 of
Slide 18: Appendix
Appendix
Slide 19: Travel & Entertainment Billed Business
Travel & Entertainment Billed Business Q3'24 Restaurants Lodging Airlines Other Total T&E YoY Growth 7% 3% 6% 8% 6% % of Total Billed Business 7% 6% 6% 8% 27% All growth rates reflect FX-adjusted rates. See Slide 2 for an explanation of FX-adjusted information. 19
Slide 20: Q3'24 Network Volumes Growth by Customer Type
Q3'24 Network Volumes Growth by Customer Type % Increase/(decrease) vs. Prior Year (FX-adjusted) U.S. Consumer Services: Commercial Services: International Card Services: 6% 1% 13% 13% 13% 6% 1% 1% 0% % of Total U.S. U.S. U.S. Large & Int’l Int’l SME & Processed Network Volumes Consumer SME Global C
Slide 21: Card Member Credit Metrics
Card Member Credit Metrics Q4'19 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Card Member Loans Net Write-off Rate* 2.3% 1.8% 2.1% 2.3% 2.3% 2.1% Card Member Receivables Net Write-off Rates* 1.9% 1.9% 1.7% 1.7% 1.5% 1.4% Corporate Net Write-off Rates** 0.8% 0.6% 0.7% 0.5% 0.6% 0.6% Card Member Loans 30+ Days Past
Slide 22: Credit Reserve Macroeconomic Scenarios: Select Variables
Credit Reserve Macroeconomic Scenarios: Select Variables U.S. Unemployment Rate % U.S. GDP Growth* % 10% 6% 9% 5% 4% 8% 3% 7% 2% 6% 1% 5% 0% 4% (1)% 3% (2)% 2% (3)% 1% (4)% 0% (5)% Q3’25 Q4’25 Q1’26 Q2’26 Q3’26 Q4’26 Q1’24 Q2’24 Q3’24 Q4’24 Q1’25 Q2’25 Q2’24 Q4’24 Q2’25 Q2’26 Q4’25 Q4’26 Q1’24 Q3’24
Slide 23: Funding and Deposits
Funding and Deposits Funding Mix Deposit Programs ($ in billions) ($ in billions) 92% FDIC insured at $188 Q3'24 $191 $133 $134 Short-term 1% 1% Funding 1% 1% Checking 8% 9% 7% 5% Third Party Card ABS* CDs 11% 11% Third Party Unsecured 20% 19% Sweep Funding** 82% Savings and 80% Direct CDs 71% 71% D
Slide 24: 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 25% 25% 0% 0% Q3’23 Q4’23 Q1’24 Q2'24 Q3'24 Q3’23 Q4’23 Q1’24 Q2'24 Q3'24 Reported FX Adj Reported FX Adj Euro € UK £ Japan ¥ Aust
Slide 25: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis The following summary provides selected variance information for the three months ended September 30, 2024 compared to the same period in the prior year. It should be read in conjunction with the statistical tables for Q3'24, available at ir.americanexpress.
Slide 26: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis • Card Member Rewards Expense: Increased 10 percent versus Q3'23, driven by an increase in Membership Rewards and cash back rewards expenses, collectively, of $261 million and cobrand rewards expense of $112 million, all of which were primarily driven by hig
Slide 27: Annex 1
Annex 1 Adjusted EPS and Adjusted Operating Expenses, Excluding the Impact of Accertify Gain on Sale ($ in millions; except per share amounts) YoY% YTD'24 YTD'23 Inc/(Dec) GAAP Diluted EPS $10.97 $8.59 28% Accertify Gain on Sale (pretax) $0.73 — Tax Impact of Accertify Gain on Sale ($0.07) — Accerti
Slide 28: Annex 2 (1 of 2)
Annex 2 (1 of 2) Billed Business – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Billed Business Reported 8% 6% 6% 5% 6% FX-Adjusted* 7% 6% 7% 6% 6% G&S Reported 6% 5% 6% 5% 6% FX-Adjusted* 6% 5% 6% 6% 6% T&E Reported 13% 9% 8% 6% 6% FX-Adjusted* 13% 9% 8
Slide 29: Annex 2 (2 of 2)
Annex 2 (2 of 2) Billed Business – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q3'24 Q3'24 Reported FX-Adj.* Reported FX-Adj.* U.S. Large and Global Corp. 1% 0% International Consumer 14% 13% International SME & Large Corp. 13% 13% Commercial Services International Card Services Tot
Slide 30: Annex 3
Annex 3 Revenue – Reported & FX-Adjusted* ($ in billions) YoY% YoY% Q3’24 Q3’23 YTD'24 YTD'23 Inc/(Dec) Inc/(Dec) Discount Revenue $8,780 $8,408 4% Revenues Net of Interest $48,770 $44,716 9% Expense FX-Adjusted* $8,403 4% FX-Adjusted* $44,535 10% Net Card Fees $2,170 $1,846 18% FX-Adjusted* $1,841
Slide 31: Annex 4
Annex 4 Discount Revenue – Reported & FX-Adjusted* ($ in billions) Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 GAAP Discount Revenue $7.8 $8.2 $7.9 $8.5 $8.4 $8.6 $8.4 $8.9 $8.8 FX-Adjusted Discount Revenue* $7.9 $8.2 $7.9 $8.4 $8.4 YoY% Inc/(Dec) in GAAP Discount Revenue 7% 5% 5% 4% 4% Yo
Slide 32: Annex 5
Annex 5 Net Card Fees – Reported & FX-Adjusted* ($ in billions) Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 GAAP Net Card Fees $1.5 $1.6 $1.7 $1.8 $1.8 $1.9 $2.0 $2.1 $2.2 FX-Adjusted Net Card Fees* $1.6 $1.6 $1.7 $1.8 $1.8 YoY% Inc/(Dec) in GAAP Net Card Fees 20% 17% 15% 15% 18% YoY% Inc/
Slide 33: Annex 6
Annex 6 Net Interest Income – Reported & FX-Adjusted* ($ in billions) Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 GAAP Net Interest Income $2.6 $2.8 $3.0 $3.1 $3.4 $3.6 $3.8 $3.7 $4.0 FX-Adjusted Net Interest Income* $2.6 $2.8 $3.0 $3.1 $3.4 YoY% Inc/(Dec) in GAAP Net Interest Income 34% 3
Slide 34: Annex 7
Annex 7 Consolidated Net Interest Yield on Average Card Member Loans ($ in millions) Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Net interest income $3,442 $3,604 $3,769 $3,730 $4,006 Exclude: Interest expense not attributable to our Card Member loan portfolio* $770 $821 $882 $912 $940 Interest income not attribu
Slide 35: Annex 8
Annex 8 Revenues Net of Interest Expense – Reported & FX-Adjusted* ($ in billions) Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 GAAP Revenues Net of Interest Expense $13.6 $14.2 $14.3 $15.1 $15.4 $15.8 $15.8 $16.3 $16.6 FX-Adjusted Revenues Net of Interest Expense* $13.7 $14.2 $14.2 $15.0 $
Slide 36: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding 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’
Slide 37: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements • net card fees not performing consistently with expectations, which could be impacted by, among other things, a deterioration in macroeconomic conditions impacting the ability and desire of Card Members to pay card fees; higher Card Member attrit
Slide 38: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements • the actual amount the company spends on marketing in 2024 and beyond and the effectiveness and efficiency of its marketing spending, which will be based in part on continued changes in the macroeconomic and competitive environment and business p
Slide 39: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements • the company’s ability to successfully implement its dining strategy and grow its dining platform, which will depend in part on the company’s ability to grow the number of diners, restaurants and other bookable venues using the platform and trans
Slide 40: American Express
AMERICAN EXPRESS
American Express Company — Q3 2024 Earnings Presentation on 6ix