American Express Company · NYSE:AXP
American Express — Q4 2022 Earnings Presentation
45 slides from American Express's earnings presentation, Jan 27, 2023
Slide 1: American Express Earnings Conference Call Q4'22
American Express Earnings Conference Call Q4’22 JANUARY 27, 2023
Slide 2: Summary Financial Performance
Summary Financial Performance ($ in millions; except per share amounts) YoY% YoY% Q4’22 FY’22 Inc/(Dec) Inc/(Dec) Total Revenues Net of Interest Expense $14,176 17% $52,862 25% FX-Adjusted* 19% 27% Pretax Pre-Provision Income** $2,898 23% $11,767 27% Provision Expense $1,027 # $2,182 # Net Income $1
Slide 3: Total Network Volumes Growth
Total Network Volumes Growth % Increase/(decrease) vs. Prior Year: Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 FY’22 Billed Business (9%) 51% 31% 33% 35% 30% 24% 15% 25% Processed Volumes (1%) 26% 18% 15% 15% 19% 19% 17% 18% Total Network (8%) 46% 29% 30% 32% 28% 23% 16% 24% Volumes $413 $395 $3
Slide 4: Q4'22 Network Volumes Growth by Customer Type
Q4’22 Network Volumes Growth by Customer Type % Increase/(decrease) vs. Prior Year (FX-adjusted): U.S. Consumer Services: Commercial Services: International Card Services: 15% 11% 26% 32% 26% 23% 17% 15% 8% 1 % of Total US US US Large & Int’l Int’l SME & Processed Network Volumes Consumer SME Global
Slide 5: U.S. Consumer Services Billed Business
U.S. Consumer Services Billed Business G&S vs. T&E Billed Business by Age Cohort Millennials Baby Q4’22 G&S T&E Total Q4’22 Gen-X + Gen-Z Boomer + YoY 10% 28% 15% YoY 30% 14% 6% $ in Billions $ in Billions, % of Total Pre- $149 Pre- $149 $141 $140 Pandemic Pandemic $129 $123 Millennials 30% $106 $10
Slide 6: Commercial Services Billed Business
Commercial Services Billed Business G&S vs. T&E US SME vs. US Large & Global Corporate US Large & Q4’22 G&S T&E Total Q4’22 US SME Global Corp Total YoY 5% 44% 11% YoY 8% 26% 11% vs. ‘19 29% (9%) 19% vs. ‘19 28% (11%) 19% $ in Billions % of Total 84% 16% 100% Pre- % Increase/(decrease) vs. Prior Yea
Slide 7: International Card Services Billed Business
International Card Services Billed Business G&S vs. T&E Int’l Consumer vs. Int’l SME & Large Corp. Int’l Int’l SME & Q4’22 G&S T&E Total Q4’22 Consumer Large Corp. Total YoY 19% 53% 26% YoY 23% 32% 26% % of Total 64% 36% 100% $ in Billions % Increase/(decrease) vs. Prior Year (FX-adjusted): Pre- 60%
Slide 8: Worldwide Total Loans and Card Member Receivables
Worldwide Total Loans and Card Member Receivables Total Ending Loans and Card Member Receivables $ in billions Pre- Pandemic $171.0 $155.5 $159.2 $149.6 $145.1 $145.3 7% Card Member 18% 13% 3% 23% 27% Receivables YoY Growth 31% 24% 20% 27% 28% Total Loans 8% Q4'19 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Total
Slide 9: Card Member Credit Metrics
Card Member Credit Metrics Card Member Loans Net Write-off Rates* Card Member Loans 30+ Days Past Due Pre- Pre- Pandemic Pandemic 2.3% 1.5% 1.1% 1.0% 0.8% 0.8% 0.9% 0.8% 0.7% 0.7% 0.7% 0.6% Q4'19 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q4'19 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Card Member Card Member Receivables Ne
Slide 10: Total Provision
Total Provision ($ in millions) FY’20 FY’21 FY’22 Net Write-offs $3,189 $1,062 $1,565 $2,621 Reserve $1,541 ($2,481) $617 Build/(Release) Total Provision $4,730 ($1,419) $2,182 $1,703 $1,555 $628 $1,027 Total Provision $665 $778 Reserve ($111) $492 ($675) $410 $387 Build/(Release)* $918 $927 ($606)
Slide 11: Total Reserves
Total Reserves Balance Sheet Credit Reserves* ($ in billions) $1.5 $5.8 ($2.4) $0.1 $0.3 ($0.2) $1.4 Card Member $4.3 ($2.2) $0.5 $4.0 Receivables $0.1 $0.4 $3.5 $3.4 ($0.3) $0.4 $0.2 $3.1 $0.1 $3.2 $0.1 $0.3 $0.2 $5.6 $0.1 $0.1 Total $4.2 Loans $3.4 $3.4 $3.8 $3.0 $3.0 Q1'20 Q4'20 Q4'21 Q1'22 Q2'22
Slide 12: Revenue Performance
Revenue Performance ($ in millions) FY’22 YoY% YoY% Q4’22 FY’22 % of Total Inc/(Dec) Inc/(Dec) Revenue Discount Revenue $8,183 14% $30,739 25% 58% Net Card Fees $1,625 21% $6,070 17% 11% Service Fees and Other Revenue $1,181 4% $4,521 36% 9% Processed Revenue $429 5% $1,637 5% 3% Net Interest Income
Slide 13: Discount Revenue
Discount Revenue Discount Revenue Growth* % Increase/(decrease) vs. Prior year (FX-adjusted): FY’22 $B YoY 70% Discount Revenue $30.7 27% 60% 57% 50% 36% 38% 40% 34% 32% 30% 26% 20% 16% 10% 0% (10%) (10%) (20%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 * Discount Revenue adjusted for FX and th
Slide 14: 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) 30% FY’22 $B YoY FY’21 FY’22 Net Card Fees $6.1 21% 25% Proprietary NCA 9.7 12.5 25% 23% 3.2 3.3 3.0 3.0 19% 20% 2.7 2.6 16% 2.4 15% 2.1 11% 10% 10% 10% 10% 10
Slide 15: Net Interest Income
Net Interest Income Net Interest Income* $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): FY’22 $B YoY Net Interest Income $9.9 28% $2.8 $2.6 $2.3 $2.4 $2.1 $2.2 YoY Growth 13% 11% 20% 31% 30% 32% Q4'19 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 WW Net Interest Yield on C
Slide 16: Total Revenue Net of Interest Expense
Total Revenue Net of Interest Expense Total Revenue Growth* % Increase/(decrease) vs. Prior year (FX-adjusted): FY’22 $B YoY Revenue $52.9 27% 45% 33% 35% 31% 31% 31% 27% 24% 25% 19% 15% 5% (5%) 10% 9% 9% 1% (28%) (20%) (18%) (13%) 29% (13%) (15%) (25%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'2
Slide 17: Expense Performance
Expense Performance ($ in millions) YoY% YoY% Q4’22 FY’22 Inc/(Dec) Inc/(Dec) Card Member Rewards $3,729 23% $14,002 27% Business Development $1,302 15% $4,943 31% Card Member Services $881 32% $2,959 48% Variable Customer Engagement $5,912 23% $21,904 31% Expenses VCE Expenses % of Revenue 42% 41%
Slide 18: Capital
Capital Common Equity Tier 1 Capital Return ($ in billions) $9.0 13.5% 10.7% 10.5% 10.3% $6.0 $4.9 $2.3 Q4'19 Q4'20 Q4'21 Q4'22 FY'19 FY'20 FY'21 FY'22 Q4 Dividend CET1 Ratio Target: 10-11% per $0.43 $0.43 $0.43 $0.52 Common Share* 18 * Dividends per Common Share reflects quarterly dividend declared
Slide 19: The Growth Plan
The Growth Plan January 2022: 2022 Guidance 2023 Expectations 2024+ Aspiration Revenue Growth: Revenue Growth: 18% - 20% Higher than long-term in excess of 10% aspirational levels of EPS: Revenue growth EPS Growth: $9.25 - $9.65 Mid-teens January 2023: 2022 Actuals 2023 Guidance 2024+ Aspiration Rev
Slide 20: Appendix
Appendix AMERICA 8XBRESS
Slide 21: Historical Network Volumes Trend
Historical Network Volumes Trend Network Volumes Indexed to 2000 COVID-19 Great Financial Recession YoY (18%) YoY 9/11 Flat YoY (9%) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 21
Slide 22: Billed Business G&S Growth
Billed Business G&S Growth G&S by Online vs. Offline % Increase/(decrease) vs. Prior Year (FX-adjusted): 50% 30% Offline Total G&S 10% Online (10%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q4’22 Online Offline Total YoY 10% 10% 10% % of Total 67% 33% 100% 22 Note: Online = Online + Card Not P
Slide 23: Billed Business T&E Growth
Billed Business T&E Growth T&E by Customer Type % Increase/(decrease) vs. 2019 (FX-adjusted): 60% Q4’22 % of Q4’19 40% US Consumer 139% US SME 114% 20% Total T&E 112% 0% International Card 107% (20%) Services US Large & Global 66% (40%) Corporate (60%) (80%) (100%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'2
Slide 24: Travel & Entertainment Billed Business
Travel & Entertainment Billed Business T&E by Industry % Increase/(decrease) vs. 2019 (FX-adjusted): 60% 40% Restaurants 20% Other Total T&E 0% Lodging (20%) Airlines (40%) (60%) (80%) (100%) (120%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q4’22 Restaurants Lodging Airlines Other Total vs. ‘1
Slide 25: Credit Reserve Macroeconomic Scenarios: Select Variables
Credit Reserve Macroeconomic Scenarios: Select Variables US Unemployment Rate % US GDP Growth* % 10% 8% 9% 6% 8% 4% 7% 2% 6% 5% 0% 4% (2%) 3% (4%) 2% 1% (6%) 0% (8%) Q1'23 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q2'23 Q3'23 Q4'23 Q2'22 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q3'22 Q4'22 Q1
Slide 26: Funding Mix
Funding Mix Funding Mix ($ in billions) $155 Short-term $138 1% Funding 4% $126 2% 53% 71% Deposits 67% 14% 8% Card ABS* 11% 28% 20% Unsecured 20% Term** Q4'19 Q4'21 Q4'22 Note: % of total may not foot due to rounding. * Reflects face amount of Card ABS, net of securities retained by the Company. In
Slide 27: FX Impact on Network Volumes and Revenue Growth
FX Impact on Network Volumes and Revenue Growth Network Volumes Revenue Net of Interest Expense % Increase/(decrease) vs. Prior year: % Increase/(decrease) vs. Prior year: 50% 50% (15%) (15%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Reported FX
Slide 28: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis The following summary provides selected variance information for the three months ended December 31, 2022 compared to the same period in the prior year. It should be read in conjunction with the statistical tables for Q4’22, available at ir.americanexpress.c
Slide 29: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis • Card Member Rewards Expense: Increased 23% versus Q4’21, driven by increases in Membership Rewards, cash back rewards and cobrand rewards expenses, all of which were primarily driven by higher billed business. The increase in Membership Rewards expense was
Slide 30: Annex 1: Pretax Pre-Provision Income
Annex 1 Pretax Pre-Provision Income ($ in millions) YoY% YoY% Q4’22 Q4’21 FY’22 FY’21 Inc/(Dec) Inc/(Dec) Pretax income $1,871 $2,306 (19%) 9,585 10,689 (10%) Provisions for credit losses $1,027 $53 # 2,182 (1,419) # Pretax pre-provision income $2,898 $2,359 23% 11,767 9,270 27% 30 Note: # Denotes
Slide 31: Annex 2 (1 of 3): Network Volumes
Annex 2 (1 of 3) Network Volumes – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 FY’22 Billed Business Reported (7%) 53% 31% 32% 34% 27% 21% 13% 23% FX-Adjusted (9%) 51% 31% 33% 35% 30% 24% 15% 25% Processed Volumes Reported 3% 33% 20%
Slide 32: Annex 2 (2 of 3): Billed Business
Annex 2 (2 of 3) Billed Business – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q4’22 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 vs FY’22 Q4’19 US Large and Global Corp Reported (41%) 38% 26% 34% 41% 53% 42% 25% (13%) 39% FX-Adjusted (41%) 36% 26% 34% 42% 55% 43% 26% (11%) 40%
Slide 33: Annex 2 (3 of 3): Billed Business
Annex 2 (3 of 3) Billed Business – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 FY’22 International Consumer Reported (10%) 59% 27% 28% 36% 28% 18% 12% 22% FX-Adjusted (17%) 46% 24% 32% 43% 42% 34% 23% 35% International SME & Large Co
Slide 34: Annex 3: Discount Revenue
Annex 3 Discount Revenue – Reported & FX-Adjusted* ($ in billions) Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 FY’22 GAAP Discount Revenue $5.6 $3.8 $4.8 $5.3 $5.0 $6.0 $6.4 $7.1 $6.8 $7.9 $7.8 $8.2 $30.7 FX-Adjusted Discount $5.6 $3.8 $4.8 $5.3 $5.0 $6.0 $6.2 $7.0 Reve
Slide 35: Annex 4: Net Card Fees
Annex 4 Net Card Fees – Reported & FX-Adjusted* ($ in billions) Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 FY’22 GAAP Net Card Fees $1.1 $1.1 $1.2 $1.2 $1.3 $1.3 $1.3 $1.3 $1.4 $1.5 $1.5 $1.6 $6.1 FX-Adjusted Net Card Fees* $1.1 $1.2 $1.2 $1.2 $1.2 $1.2 $1.3 $1.3 YoY%
Slide 36: Annex 5: Net Interest Income
Annex 5 Net Interest Income – Reported & FX-Adjusted* ($ in billions) Q4’18 Q4’19 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 FY’22 GAAP Net Interest Income $2.0 $2.3 $1.9 $1.8 $1.8 $2.0 $2.1 $2.2 $2.4 $2.6 $2.8 $9.9 FX-Adjusted Net Interest Income* $2.0 $2.3 $1.9 $1.8 $1.8 $2.0 $2.1 YoY
Slide 37: Annex 6: Net Interest Yield on Card Member Loans
Annex 6 Consolidated Net Interest Yield on Average Card Member Loans ($ in millions, except percentages and where indicated) Q4’19 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 FY’22 Net interest income $2,284 $2,108 $2,199 $2,360 $2,578 $2,758 $9,895 Exclude: Interest expense not attributable to our Card Member
Slide 38: Annex 7: Revenues Net of Interest Expense
Annex 7 Revenues Net of Interest Expense – Reported & FX-Adjusted* ($ in billions) Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 FY’22 GAAP Revenues Net of $10.3 $7.7 $8.8 $9.4 $9.1 $10.2 $10.9 $12.1 $11.7 $13.4 $13.6 $14.2 $52.9 Interest Expense FX-Adjusted Revenues Net
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 American Express Company’s current expectations reg
Slide 40: Forward Looking Statements
Forward Looking Statements • the company’s ability to achieve its 2023 revenue growth outlook and its revenue growth aspirations for 2024 and beyond, and the sustainability of the company’s future growth, which could be impacted by, among other things, the factors identified above and in the subsequ
Slide 41: 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 42: Forward Looking Statements
Forward Looking Statements • the company’s ability to control operating expenses and the actual amount spent on operating expenses in 2023 and beyond, which could be impacted by, among other things, salary and benefit expenses to attract and retain talent, including with respect to an increased coll
Slide 43: Forward Looking Statements
Forward Looking Statements • the company’s ability to expand its leadership in the premium consumer space, which will be impacted in part by competition, brand perceptions (including perceptions related to merchant coverage) and reputation, and the company’s ability to develop and market new benefit
Slide 44: Forward Looking Statements
Forward Looking Statements • a failure in or breach of the company’s operational or security systems, processes or infrastructure, or those of third parties, including as a result of cyberattacks, which could compromise the confidentiality, integrity, privacy and/or security of data, disrupt the com
Slide 45: American Express
AMERICAN EXPRESS
American Express Company — Q4 2022 Earnings Presentation on 6ix