American Express Company · NYSE:AXP
American Express — Q1 2022 Earnings Presentation
48 slides from American Express's earnings presentation, Apr 22, 2022
Slide 1: American Express Earnings Conference Call Q1'22
American Express Earnings Conference Call Q1’22 APRIL 22, 2022
Slide 2: Summary Financial Performance
Summary Financial Performance ($ in millions; except per share amounts) YoY% Q1’22 Q1’21 Inc/(Dec) Total Revenues Net of Interest Expense $11,735 $9,064 29% FX-Adjusted* $8,970 31% Pretax Pre-Provision Income** $2,679 $2,318 16% Provision Expense ($33) ($675) 95% Net Income $2,099 $2,235 (6%) Dilute
Slide 3: Total Network Volumes Growth
Total Network Volumes Growth % Increase/(decrease) vs. Prior Year: % of Q3’21 Q4’21 Q1’22 Total Billed Business 31% 33% 35% 86% Processed 18% 15% 15% 14% Volumes Total Netw ork 29% 30% 32% 100% Volum es 60% 50% 40% Billed Business 30% Total Network Volumes 20% Processed Volumes 10% 0% (10%) (20%) Q1
Slide 4: Billed Business Volumes Mix
Billed Business Volumes Mix Billed Business Mix by Spend Type Billed Business Mix by Customer Type Q1'19 Q1'22 Q1'19 Q1'22 Consumer + SME: 87% Consumer + SME: 93% 23% 13% 7% 32% 51% 38% 68% 77% 36% 55% G&S T&E SME Consumer L&G Note: G&S = Goods & Services spending. SME refers to small and mid-sized
Slide 5: 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 Online 10% (10%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q1’22 Online Offline Total YoY 17% 29% 21% % of Total 68% 32% 100% 5 Note: Online = Online + Card Not Present. All growth
Slide 6: Billed Business T&E Growth
Billed Business T&E Growth T&E by Customer Type % Increase/(decrease) vs. 2019 (FX-adjusted): % of ‘19 Jan’22 Feb’22 Mar’22 40% Total T&E 75% 89% 99% Q1’22 % of Q1’19 20% US Consumer 120% 0% Total SME 88% (20%) Total T&E 88% Intl Consumer 87% (40%) (60%) Large & Global 38% Corporate (80%) (100%) Q1'
Slide 7: Global Consumer Billed Business
Global Consumer Billed Business Billed Business Growth by Age Cohort G&S vs. T&E % Increase/(decrease) vs. Prior Year (FX-adjusted): $ in Billions 80% Pre-Pandemic Millennials $164 60% + Gen-Z Total $128 Consumer $119 40% Gen-X $117 G&S Baby 20% Boomer + $85 $98 0% $43 $47 T&E $22 (20%) Q1'21 Q2'21
Slide 8: Global Commercial Billed Business
Global Commercial Billed Business SME by US vs. International SME vs. Large & Global Corporate % Increase/(decrease) vs. Prior Year (FX-adjusted): $ in Billions 50% Pre-Pandemic $136 International $123 SME 30% Total SME $104 US SME SME $91 $115 10% $89 $32 $21 L&G $15 (10%) Q1'21 Q2'21 Q3'21 Q4'21 Q
Slide 9: Worldwide Total Loans and Card Member Receivables
Worldwide Total Loans and Card Member Receivables Total Ending Loans Total Ending CM Receivables ($ in billions) ($ in billions) $92.2 $91.5 $92.1 23% $77.8 $79.4 $72.4 $57.4 $53.6 $53.2 $47.6 $48.8 $42.0 YoY 3% (6%) 27% 19% 23% 27% 8% (13%) 4% 9% 20% 27% Growth 2% 3% (28%) 19% Q4'19 Q1'21 Q2'21 Q3'
Slide 10: Card Member Credit Metrics
Card Member Credit Metrics Card Member Loans Net Write-off Rates Card Member Receivables Net Write-off Rates (excluding GCP) 1.4% 1.0% 0.8% 0.6% 0.6% 0.6% 0.5% 0.3% 0.2% 0.3% Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 30+ Days 30+ Days Past Due 0.9% 0.6% 0.7% 0.7% 0.7% Past Due* 0.6
Slide 11: Total Provision
Total Provision ($ in millions) $2,621 $1,703 $1,555 $628 $665 ($111) ($675) Total Provision $918 $927 ($606) ($191) $53 ($33) $781 $563 $379 Write-offs $260 $202 $221 $287 ($116) ($168) ($393) ($320) Reserve ($674) ($866) ($1,054) Build/(Release)* Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'
Slide 12: Total Reserves
Total Reserves Balance Sheet Credit Reserves* ($ in billions) $1.5 $5.8 ($2.4) $0.1 $0.3 ($0.2) $1.4 $4.3 Card Member ($2.2) Receivables $0.1 $3.4 ($0.3) $3.1 $0.1 $5.6 $0.1 Total $4.2 Loans $3.4 $3.0 Q1'20 Q4'20 Ending Q4'21 Ending Q1'22 Ending Beginning Reserves Reserves Reserves Reserves Reserves
Slide 13: Revenue Reporting Changes
Revenue Reporting Changes Reported FY 2021 Recast FY 2021 ($ in millions) ($ in millions) Discount Revenue $25,727 Discount Revenue $24,563 Net Card Fees $5,195 Net Card Fees $5,195 Other Fees & Commissions $2,392 Service Fees and Other Revenue $3,316 Other Revenue $1,316 Processed Revenue* $1,556 N
Slide 14: Revenue Performance
Revenue Performance ($ in millions) Q1’22 YoY% Q1’22 Q1’21 % of Total Inc/(Dec) Revenue Discount Revenue $6,835 $5,001 37% 58% Net Card Fees $1,423 $1,253 14% 12% Service Fees and Other Revenue $906 $638 42% 8% Processed Revenue $372 $342 9% 3% Net Interest Income $2,199 $1,830 20% 19% Revenues Net
Slide 15: Discount Revenue
Discount Revenue Discount Revenue Growth* % Increase/(decrease) vs. Prior year (FX-adjusted): 70% 60% 57% 50% 36% 38% 40% 34% 30% 20% 10% 0% (10%) (10%) (20%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 * Discount Revenue adjusted for FX and the related growth rates are non-GAAP measures. See Annex 3 for Discount
Slide 16: 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) 20% 3.0 2.7 2.6 16% 2.4 15% 2.1 11% 10% 10% 10% 10% 5% 10% 10% 10% 11% 14% 0% Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Note: Effective Q2’21
Slide 17: Net Interest Income
Net Interest Income Net Interest Income* $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): $2.1 $2.2 $2.1 $2.0 $1.8 $1.8 YoY 13% (22%) (5%) 6% 11% 20% Change Q1'19 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 WW Net Interest Yield on CM 11.1% 11.3% 10.6% 10.8% 10.3% 10.5% Lo
Slide 18: Total Revenue Net of Interest Expense
Total Revenue Net of Interest Expense Total Revenue Growth* % Increase/(decrease) vs. Prior year (FX-adjusted): 45% 35% 31% 31% 31% 24% 25% 15% 5% (5%) 10% 9% 9% 1% (28%) (20%) (18%) (13%) 29% (15%) (13%) (25%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 * Total Revenue Net of Interest Expense adjusted for FX and
Slide 19: Expense Performance
Expense Performance ($ in millions) YoY% Q1’22 Q1’21 Inc/(Dec) Card Member Rewards $3,111 $2,243 39% Business Development $1,043 $802 30% Card Member Services $626 $317 97% Variable CM Engagement Expenses $4,780 $3,362 42% Marketing $1,224 $964 27% Operating Expenses* $3,052 $2,420 26% Total Expense
Slide 20: Capital
Capital Common Equity Tier 1 Capital Return ($ in billions) $3.6 14.8% 14.2% $3.4 12.6% 10.5% 10.4% $1.9 $1.3 $0.7 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 CET1 Ratio Target: 10-11% 20
Slide 21: The Growth Plan
The Growth Plan 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 - $9.65 Mid-teens Pandemic Recovery Tailwinds (2022-2023) Steady State Macro Environment 21
Slide 22: Appendix
Appendix
Slide 23: Q1'22 Network Volumes Growth by Customer Type
Q1’22 Network Volumes Growth by Customer Type % of Total US Int’l US Int’l Large & Global Processed Network Consumer Consumer* SME SME* Corporate* Volumes* Volumes 35% 12% 27% 5% 6% 14% % Increase/(decrease) vs. Prior Year (FX-adjusted): 38% 43% 42% 35% 29% 15% Consumer Commercial 23 1 Annex 2 for r
Slide 24: Travel & Entertainment Billed Business
Travel & Entertainment Billed Business T&E by Industry % Increase/(decrease) vs. 2019 (FX-adjusted): 40% 20% Restaurants Other 0% Total T&E (20%) Lodging (40%) Airlines (60%) (80%) (100%) (120%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q1’22 Restaurants Lodging Airlines Other Total vs. ‘19 19% (22%) (34%) 2% (
Slide 25: Worldwide Total Loans and Card Member Receivables Mix
Worldwide Total Loans and Card Member Receivables Mix Q1’22 Total Loan Mix Q1’22 Card Member Receivables Mix Intl. Small Business Small Business Consumer 14% 21% 34% Intl. U.S. 25% Consumer 12% Consumer 67% U.S. Consumer 27% Corporate Card 25 Note: Total Loans reflect Card Member loans and Other loa
Slide 26: Delinquent and Financial Relief Program Balances
Delinquent and Financial Relief Program Balances ($ in billions) $11.5 $8.5* Customer Pandemic Relief $4.0 (CPR) Program Enrolled** $2.8 $0.0 Financial Relief $2.3 $2.2 $2.2 $0.7 $0.9 $3.0 Programs (FRP) $0.0 $0.0 $0.0 Enrolled *** $2.1 $2.0 $1.5 $1.3 $1.2 $1.0 $1.0 Delinquent $0.8 $0.9 Dec'19 Apr'2
Slide 27: Global Corporate Payments Card Member Credit Metrics
Global Corporate Payments Card Member Credit Metrics GCP Card Member Receivables Client Bankruptcy Recovery Impact to Net Write-Offs Adjusted Net Write-off rates* Increase/(Decrease) Q2’21 Net Write-Off ($37M) Amount/(Recovery) Credit Insurance Claim (Proceeds)/Repayment within Other, net $33M 0.4%
Slide 28: Credit Reserve Build Macroeconomic Assumptions
Credit Reserve Build Macroeconomic Assumptions US Unemployment Rate % US GDP Growth* % 18% 8% 16% 6% 14% 4% 12% 10% 2% 8% 0% 6% (2%) 4% (4%) 2% 0% (6%) Q2'21 Q3'21 Q4'21 Q1'23 Q2'23 Q3'23 Q4'20 Q1'21 Q1'22 Q2'22 Q3'22 Q4'22 Q4'23 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'2
Slide 29: Funding Mix
Funding Mix Funding Mix ($ in billions) $134 $133 $132 2% 1% 2% Short-term Funding 54% 67% 69% Deposits 15% 10% 9% Card ABS* 30% Unsecured 22% 21% Term** Q1'19 Q1'21 Q1'22 Note: % of total may not foot due to rounding. * Reflects face amount of Card ABS, net of securities retained by the Company. In
Slide 30: 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: 50% 50% (15%) (15%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Reported FX Adj. Reported FX Adj. Euro € UK £ Japan ¥ Australia $ Canada $ Mexico $ Ap
Slide 31: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis The following summary provides selected variance information for the three months ended March 31, 2022 compared to the same period in the prior year. It should be read in conjunction with the statistical tables for Q1’22, available at ir.americanexpress.com.
Slide 32: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis • Card Member Rew ards Expense: Increased 39% versus Q1’21, pr imarily driven by increases in Membership Rew ards, cash back rew ards and cobrand rew ards expenses, all of w hich w ere primar ily dr iven by higher billed business. The increase in Membership
Slide 33: Annex 1: Pretax Pre-Provision Income
Annex 1 Pretax Pre-Provision Income ($ in millions) YoY% Q1’22 Q1’21 Inc/(Dec) Pretax income $2,712 $2,993 (9%) Provisions for credit losses ($33) ($675) 95% Pretax pre-provision income $2,679 $2,318 16% 33
Slide 34: Annex 2 (1 of 2): Network Volumes Reported & FX-Adjusted
Annex 2 (1 of 2) Network Volumes – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Int’l Consumer Reported (10%) 59% 27% 28% 36% FX-Adjusted (17%) 46% 24% 32% 43% Global Consumer Reported (4%) 62% 34% 34% 37% FX-Adjusted (6%) 58% 34% 35% 39% Global Commer
Slide 35: Annex 2 (2 of 2): Network Volumes Reported & FX-Adjusted
Annex 2 (2 of 2) Network Volumes – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q1’22 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 vs Q1’19 Large & Global Corporate Reported (43%) 37% 26% 34% 41% (34%) FX-Adjusted (44%) 34% 25% 34% 42% (34%) Int’l SME Reported (1%) 50% 28% 27% 27% 25% FX-Adjusted
Slide 36: Annex 3: Discount Revenue Reported & FX-Adjusted
Annex 3 Discount Revenue – Reported & FX-Adjusted* ($ in billions) Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 GAAP Discount Revenue $5.6 $3.8 $4.8 $5.3 $5.0 $6.0 $6.4 $7.1 $6.8 FX-Adjusted Discount Revenue* $5.6 $3.8 $4.8 $5.3 $5.0 YoY% Inc/(Dec) in GAAP Discount (10%) 58% 34% 35% 37% R
Slide 37: Annex 4: Net Card Fees Reported & FX-Adjusted
Annex 4 Net Card Fees – Reported & FX-Adjusted* ($ in billions) Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 GAAP Net Card Fees $1.1 $1.1 $1.2 $1.2 $1.3 $1.3 $1.3 $1.3 $1.4 FX-Adjusted Net Card Fees* $1.1 $1.2 $1.2 $1.2 $1.2 YoY% Inc/(Dec) in GAAP Net Card Fees 13% 13% 10% 10% 14% YoY% In
Slide 38: Annex 5: Net Interest Income Reported & FX-Adjusted
Annex 5 Net Interest Income – Reported & FX-Adjusted* ($ in billions) Q1’18 Q1’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 GAAP Net Interest Income $1.8 $2.1 $2.3 $1.9 $1.9 $1.9 $1.8 $1.8 $2.0 $2.1 $2.2 FX-Adjusted Net Interest Income* $1.8 $2.3 $1.9 $1.9 $1.9 $1.8 YoY% Inc/(Dec) in G
Slide 39: Annex 6: Net Interest Yield on Average Card Member Loans
Annex 6 Consolidated Net Interest Yield on Average Card Member Loans ($ in millions, except percentages and where indicated) Q1’19 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Net interest incom e $2,059 $1,830 $1,818 $1,994 $2,107 $2,199 Exclude: Interest expense not attributable to our Card Member loan portfol
Slide 40: Annex 7: Revenues Net of Interest Expense Reported & FX-Adjusted
Annex 7 Revenues Net of Interest Expense – Reported & FX-Adjusted* ($ in billions) Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 GAAP Rev enues Net of Interest Expense $10.3 $7.7 $8.8 $9.4 $9.1 $10.2 $10.9 $12.1 $11.7 FX-Adjusted Revenues Net of Interest* $10.5 $7.8 $8.8 $9.3 $9.0 YoY% Inc
Slide 41: Annex 8: Troubled Debt Restructurings Balance
Annex 8 Troubled Debt Restructurings (TDR) Balance ($ in billions) Dec’19 Apr’20 Dec’20 Jun’21 Sep’21 Dec’21 Mar’22 In-Program TDR Balance $0.8 $1.0 $3.1 $1.9 $1.5 $1.3 $1.3 Delinquent Financial Relief Programs (FRP) balance 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Non-delinquent FRP balance $0.7 $0.9 $3.0 $1.
Slide 42: Annex 9: GCP Card Member Receivables Net Write-Off Rates
Annex 9 GCP Card Member Receivables Net Write-Off rates ($ in millions) Q2’21 GCP Net Write-Offs - Principal and Fees* ($24) Client Bankruptcy Recovery Impact $37 Adjusted Net Write-Offs $13 GCP Average Card Mem ber Receivables $11,087 Reported Net Write-Off rates (0.9%) Adjusted Net Write-Off rat
Slide 43: Forward Looking Statements
Forward Looking Statements This presentation includes forw ard-looking statements w ithin the meaning of the Private Securities Litigation Reform Act of 1995, w hich are subject to risks and uncertainties. The forw ard-looking statements, w hich address American Express Company’s current expectation
Slide 44: Forward Looking Statements
Forward Looking Statements • the company’s ability to achieve its 2022 revenue grow th outlook, its revenue grow th expectations for 2023 and its revenue gr ow th aspirations for 2024 and beyond, w hich could be impacted by, among other things, the factors identified above and in the subsequent para
Slide 45: Forward Looking Statements
Forward Looking Statements • the actual amount the company spends on marketing in 2022 and beyond, w hich w ill be based in part on continued changes in the macroeconomic and competitive environment and business performance; the effectiveness of management’s investment optimization process, manageme
Slide 46: Forward Looking Statements
Forward Looking Statements • changes affecting the company’s plans regarding the return of capital to shareholders, w hich w ill depend on factors such as c apital levels and regulatory capital ratios; changes in the stress testing and capital planning process and new guidance from the Federal Reser
Slide 47: Forward Looking Statements
Forward Looking Statements • factors beyond the company’s control such as a further escalation of the military conflict betw een Russia and Ukraine, future w aves of COVID-19 cases, the severity and contagiousness of new variants, severe w eather conditions, natural disasters, pow er loss, disruptio
Slide 48: American Express
AMERICAN EXPRESS
American Express Company — Q1 2022 Earnings Presentation on 6ix