American Express Company · NYSE:AXP
American Express — Q2 2024 Earnings Presentation
42 slides from American Express's earnings presentation, Jul 19, 2024
Slide 1: American Express Earnings Conference Call Q2'24
American Express Earnings Conference Call Q2’24 JULY 19, 2024
Slide 2: Summary Financial Performance
Summary Financial Performance ($ in millions; except per share amounts) Q2’24 Q2’23 YoY% Inc/(Dec) Total Revenues Net of Interest Expense $16,333 $15,054 8% FX-Adjusted* $14,957 9% Net Income $3,015 $2,174 39% Diluted EPS - GAAP† $4.15 $2.89 44% Accertify Gain on Sale $0.66 — Adjusted Diluted EPS**
Slide 3: Total Billed Business & Network Volumes
Total Billed Business & Network Volumes ($ in billions) $427 $434 $441 Total Network Volumes $413 $420 $419 $399 Billed Business $357 $368 $366 $380 $367 $388 $346 Processed Volumes $56 $53 $59 $54 $55 $52 $52 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 % Increase/(decrease) vs. Prior Year (FX-adjuste
Slide 4: U.S. Consumer Services Billed Business
U.S. Consumer Services Billed Business ($ in billions) $160 $165 $149 $155 $154 $153 $142 $115 $114 G&S, 6% YoY $107 $106 $104 $108 $96 $41 $46 $48 $47 $45 $49 $51 T&E, 6% YoY Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Millennials + Q2’24 Gen-X Baby Boomer + Total Gen-Z YoY 13% 5% 2% 6% % of Total 33
Slide 5: Commercial Services Billed Business
Commercial Services Billed Business ($ in billions) $131 $130 $130 $131 $132 $125 $127 $106 $99 $103 $103 $105 $99 $104 G&S, 1% YoY $25 $26 $27 $27 $26 $28 $28 T&E, 3% YoY Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q2’24 U.S. SME U.S. Large & Global Corp. Total YoY 2% 0% 2% % of Total 83% 17% 100% SM
Slide 6: International Card Services Billed Business
International Card Services Billed Business ($ in billions) $88 $85 $90 $82 $83 $77 $77 $63 $58 $63 G&S, 14% YoY $57 $57 $56 $53 $21 $24 $25 $26 $25 $27 $27 T&E, 11% YoY Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q2’24 Int’l Consumer Int’l SME & Large Corp. Total YoY 13% 14% 13% % of Total 65% 35% 10
Slide 7: Worldwide Total Ending Loans and Card Member Receivables
Worldwide Total Ending Loans and Card Member Receivables ($ in billions) $193 $194 $199 $179 $183 $171 $172 4% 2% 6% 5% Card Member 8% 4% 7% Receivables YoY Growth 20% 17% 17% 15% 25% 22% Total Loans 24% Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Total Loans & CM Receivables 18% 19% 15% 15% 13% 12% 1
Slide 8: Card Member Loans and Receivables Credit Metrics
Card Member Loans and Card Member Receivables Credit Metrics 30+ Days Past Due* Net Write-off Rates* Pre- Pre- Pandemic Pandemic 1.5% 2.2% 2.1% 2.1% 1.3% 1.3% 2.0% 1.2% 1.2% 1.2% 1.2% 1.8% 1.8% 1.6% Q4'19 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q4'19 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Corporate Net Wri
Slide 9: Total Provision
Total Provision ($ in millions) $1,437 $1,269 $1,268 Total Provision $1,198 $1,233 $400 $148 $101 Reserve $1,055 Build/(Release) $327 $321 $320 $1,167 Write-offs $1,037 $1,121 $871 $912 $735 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 See Variance Commentary in the appendix section for an explanation of the
Slide 10: Total Reserves
Total Reserves Reserves as a % of Total Loans & CM Receivables 2.9% 2.8% 2.9% 2.8% 2.6% 2.7% 2.5% Q1'20 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Beginning Balance Sheet Credit Reserves ($ in billions) Total Loans & $4.3 $4.4 $4.7 $5.0 $5.4 $5.6 $5.6 CM Receivables Total Loans $4.2 $4.1 $4.5 $4.8 $5.2 $5.
Slide 11: Revenue Performance
Revenue Performance ($ in millions) Q2’24 YoY% Q2’24 Q2’23 % of Total Inc/(Dec) Revenue Discount Revenue $8,855 $8,481 4% 54% Net Card Fees $2,060 $1,789 15% 13% Service Fees and Other Revenue $1,280 $1,232 4% 8% Processed Revenue $408 $447 (9%) 2% Net Interest Income $3,730 $3,105 20% 23% Revenues
Slide 12: Discount Revenue
Discount Revenue $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted) $8.5 $8.6 $8.9 $8.4 $8.4 $7.9 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 YoY Growth* 17% 8% 7% 5% 6% 5% * Discount Revenue YoY growth rates adjusted for FX are non-G
Slide 13: 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 3.4 3.3 3.0 2.9 2.9 25% 23% 22% 19% 20% 17% 16% 16% 15% 10% 5% 0% Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 *
Slide 14: Net Interest Income
Net Interest Income $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted) $3.6 $3.8 $3.7 $3.4 $3.0 $3.1 YOY 26% 36% 32% 33% 30% 20% Growth* Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 WW Net Interest Yield 11.3% 11.2% 11.7% 11.7% 12.0% 11.7% on CM Loans** * Net Interest In
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) $15.8 $15.8 $16.3 $15.1 $15.4 $14.3 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 YoY Growth* 23% 13% 13% 11% 11% 9% * Revenue Net of Interest Expe
Slide 16: Expense Performance
Expense Performance ($ in millions) YoY% Q2’24 Q2’23 Inc/(Dec) Card Member Rewards $4,227 $3,956 7% Business Development $1,427 $1,388 3% Q2’24 VCE Card Member Services $1,154 $949 22% % of Revenue Variable Customer Engagement Expenses $6,808 $6,293 8% 42% Marketing $1,480 $1,408 5% Q2’24 Accertify
Slide 17: Capital
Capital Common Equity Tier 1 Capital Return ($ in billions) $2.3 10.6% 10.6% 10.7% 10.5% 10.6% 10.8% $1.7 $1.6 $1.6 $1.4 $0.6 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 CET1 Ratio Target: 10 – 11% Regulatory Minimum*: 7% * Inclusive of Stress Capital Buffer 17
Slide 18: 2024 Guidance
2024 Guidance Original Updated Revenue Growth: Revenue Growth: 9% - 11% 9% - 11% EPS: EPS: $12.65 - $13.15 $13.30 - $13.80 (EPS Growth: 13% - 17%) (EPS Growth: 19% - 23%) Including $0.66 of Accertify Gain Subject to contingencies. 18
Slide 19: Appendix
Appendix AMERICA EXBRESS
Slide 20: Travel & Entertainment Billed Business
Travel & Entertainment Billed Business Q2’24 Restaurants Lodging Airlines Other Total T&E YoY Growth 8% 3% 5% 9% 7% % of Total Billed Business 7% 6% 6% 8% 28% All growth rates reflect FX-adjusted rates. See Slide 2 for an explanation of FX-adjusted information. 20
Slide 21: Q2'24 Network Volumes Growth by Customer Type
Q2’24 Network Volumes Growth by Customer Type % Increase/(decrease) vs. Prior Year (FX-adjusted) U.S. Consumer Services Commercial Services International Card Services 6% 2% 13% 13% 14% 6% 2% 0% (7%) % of Total U.S. U.S. U.S. Large & Int’l Int’l SME & Processed Network Volumes Consumer SME Global Co
Slide 22: Card Member Credit Metrics
Card Member Credit Metrics Q4’19 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 Card Member Loans Net Write-off Rates* 2.3% 1.5% 1.7% 1.8% 2.1% 2.3% 2.3% Card Member Receivables Net Write-off Rates* 1.9% 1.9% 1.9% 1.9% 1.7% 1.7% 1.5% Corporate Net Write-off Rates ** 0.8% 0.6% 0.6% 0.6% 0.7% 0.5% 0.6% Card Memb
Slide 23: Credit Reserve Macroeconomic Scenarios: Select Variables
Credit Reserve Macroeconomic Scenarios: Select Variables U.S. Unemployment Rate % U.S. GDP Growth* % 10% 6% 9% 5% 8% 4% 7% 3% 2% 6% 1% 5% 0% 4% (1%) 3% (2%) 2% (3%) 1% (4%) 0% (5%) Q2'23 Q2'25 Q1'23 Q1'24 Q2'24 Q1'25 Q3'23 Q4'23 Q4'24 Q3'25 Q4'25 Q3'24 Q2'24 Q1'23 Q2'23 Q1'25 Q2'25 Q1'24 Q4'23 Q3'25
Slide 24: Funding and Deposits
Funding and Deposits Funding Mix Deposit Programs 92% FDIC ($ in billions) ($ in billions) insured at Q2’24 $186 $188 Short-term $133 $133 1% 1% funding 1% 1% Checking 7% 8% Card ABS* Third Party 12% 11% CDs 19% 20% Unsecured 8% 7% Third Party Funding** Sweep Savings and 79% 80% 72% 71% Deposits Dir
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 25% 25% 0% 0% Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Reported FX Adj. Reported FX Adj. Euro € UK
Slide 26: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis The following summary provides selected variance information for the three months ended June 30, 2024 compared to the same period in the prior year. It should be read in conjunction with the statistical tables for Q2'24, available at ir.americanexpress.com.
Slide 27: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis • Card Member Rewards Expense: Increased 7 percent versus Q2'23, driven by an increase in Membership Rewards and cash back rewards expenses, collectively, of $148 million and cobrand rewards expense of $122 million, all of which were primarily driven by high
Slide 28: Annex 1
Annex 1 Adjusted EPS and Adjusted Operating Expenses, Excluding the Impact of Accertify Gain on Sale ($ in millions; except per share amounts) YoY% Q2’24 Q2’23 Inc/(Dec) GAAP Diluted EPS $4.15 $2.89 44% Accertify Gain on Sale (pretax) $0.73 — Tax Impact of Accertify Gain on Sale ($0.07) — Accertif
Slide 29: Annex 2 (1 of 2)
Annex 2 (1 of 2) Billed Business – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 Billed Business Reported 13% 15% 8% 8% 6% 6% 5% FX-Adjusted* 15% 16% 8% 7% 6% 7% 6% G&S Reported 7% 8% 6% 6% 5% 6% 5% FX-Adjusted* 10% 9% 6% 6% 5% 6% 6% T&E Rep
Slide 30: Annex 2 (2 of 2)
Annex 2 (2 of 2) Billed Business – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q2’24 Q2’24 Reported FX-Adj.* Reported FX-Adj.* U.S. Large and Global Corp. 2% 0% International Consumer 10% 13% Commercial Services International SME & Large Corp. 10% 14% Total Billed Business 2% 2% I
Slide 31: Annex 3
Annex 3 Discount Revenue – Reported & FX-Adjusted* ($ in billions) Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 GAAP Discount Revenue $6.8 $7.9 $7.8 $8.2 $7.9 $8.5 $8.4 $8.6 $8.4 $8.9 FX-Adjusted Discount Revenue* $6.8 $7.9 $7.9 $8.2 $7.9 $8.4 YoY% Inc/(Dec) in GAAP Discount Revenue
Slide 32: Annex 4
Annex 4 Net Card Fees – Reported & FX-Adjusted* ($ in billions) Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 GAAP Net Card Fees $1.4 $1.5 $1.5 $1.6 $1.7 $1.8 $1.8 $1.9 $2.0 $2.1 FX-Adjusted Net Card Fees* $1.4 $1.5 $1.6 $1.6 $1.7 $1.8 YoY% Inc/(Dec) in GAAP Net Card Fees 20% 21% 20%
Slide 33: Annex 5
Annex 5 Net Interest Income – Reported & FX-Adjusted* ($ in billions) Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 GAAP Net Interest Income $2.2 $2.4 $2.6 $2.8 $3.0 $3.1 $3.4 $3.6 $3.8 $3.7 FX-Adjusted Net Interest Income* $2.2 $2.4 $2.6 $2.8 $3.0 $3.1 YoY% Inc/(Dec) in GAAP Net Int
Slide 34: Annex 6
Annex 6 Consolidated Net Interest Yield on Average Card Member Loans ($ in millions) Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 Net interest income $2,983 $3,105 $3,442 $3,604 $3,769 $3,730 Exclude: Interest expense not attributable to our Card Member loan portfolio* $624 $728 $770 $821 $882 $912 Interes
Slide 35: Annex 7
Annex 7 Revenues Net of Interest Expense – Reported & FX-Adjusted* ($ in billions) Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 GAAP Revenues Net of Interest Expense $11.7 $13.4 $13.6 $14.2 $14.3 $15.1 $15.4 $15.8 $15.8 $16.3 FX-Adjusted Revenues Net of Interest Expense* $11.6 $13.4
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 • the company’s ability to achieve its 2024 revenue growth outlook and grow revenues net of interest expense in the future, which could be impacted by, among other things, the factors identified above and in the subsequent paragraphs, as well as t
Slide 38: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding 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 v
Slide 39: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements • the company’s ability to control operating expenses, including relative to 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 attra
Slide 40: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements • the parties’ ability to satisfy the closing conditions for the acquisitions of Tock and Rooam, including receipt of regulatory approvals, and to consummate the transactions; the underlying assumptions related to the transactions proving to be in
Slide 41: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding 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 or widening of ongoing military conflicts
Slide 42: American Express
AMERICAN EXPRESS
American Express Company — Q2 2024 Earnings Presentation on 6ix