American Express Company · NYSE:AXP
American Express — Investor Day (August 2012)
60 slides from American Express's investor day presentation, Aug 8, 2012
Slide 1: American Express Company Financial Community Meeting
American Express Company Financial Community Meeting Kenneth Chenault Chairman and Chief Executive Officer Edward Gilligan Vice Chairman August 8, 2012
Slide 2: Core Business Opportunities
Core Business Opportunities Consistent Strong Performance Robust Merchant Value Proposition Diverse Mid-term Growth Opportunities Long-term Vision to Increase Relevance 2
Slide 3: Global Volume Expansion
Global Volume Expansion AXP Global Billed Business* $ in Billions Overall CAGR, 2009-2011 Non-US U.S. $822 $713 15% 12% 15% $620 AXP MasterCard** Visa** U.S. CAGR, 2009-2011 13% 3% 8% AXP MasterCard** Visa** 2009 2010 2011 *Card billed business includes activities (including cash advances) related t
Slide 4: Global Expansion of the AXP Franchise
Global Expansion of the AXP Franchise We strengthened our business in the US… …and grew profitability internationally AXP Share of US Credit and Charge AXP Pre-Tax Margin – International** Purchase Volume* 17.5 17.7 14.4 26.3% 25.4% 10.2 23.8% 2009 2010 2011 2009 2010 2011 1H'12 *General purpose cha
Slide 5: Average Basic Cardmember Spend
Average Basic Cardmember Spend 2011 Worldwide Average Basic Cardmember Spend* $ in thousands $14.9 $11.1 $3.5 $2.9 AXP AXP Visa MasterCard Prop Total *Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (ex
Slide 6: AXP Consumer and Small Business Billed Business Acquired
AXP Consumer and Small Business Billed Business Acquired* $ volume; FX adjusted** +55%*** Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 *Includes cards acquired in the USCS and ICS segments. Billed Business Acquired (BBA) reflects the aggregate spending in the first 12 months of an acc
Slide 7: Risk Profile
Risk Profile USCS Managed Net Lending USCS Managed 30 Days Past Due Rates Write-off Rates vs. Industry vs. Industry 12% 7% 10% 6% 8% Industry (excl. AXP) 5% Industry (excl. AXP) 4% 6% 4.4% 3% 2.6% 4% AXP U.S. 2.2% 2% AXP U.S. 1.2% 2% 1% 0% 0% Q2'09 Q2'10 Q2'11 Q2'12 Q2'09 Q2'10 Q2'11 Q2'12 Managed N
Slide 8: Expansion of Co-brand and Network Partners
Expansion of Co-brand and Network Partners Co-brand Partners Network Partners 21 proprietary co-brand partners added since 29 network partners added since 2007, yielding 2007, leading to a total of 100+ proprietary and a global network of 146 partners network co-brand partners Note: The trademarks,
Slide 9: Partnerships with Innovators and Leaders
Partnerships with Innovators and Leaders 9
Slide 10: Achieved Our Objectives
Achieved Our Objectives Strengthened spend centric, Increased U.S. share of charge and premium model credit card purchases to 26.3% Increased efficiency of driving Improved first-year billed business growth acquired by 55% since 2009 Industry-leading write-off and Strengthened risk profile delinquen
Slide 11: Core Business Opportunities
Core Business Opportunities Consistent Strong Performance Robust Merchant Value Proposition Diverse Mid-term Growth Opportunities Long-term Vision to Increase Relevance 11
Slide 12: Global New Merchant Signings and Activity
Global New Merchant Signings and Activity Leveraging an Array of Channel Partners Recent Signings Proprietary and Aggregators Non-proprietary Averaged 2M+ new locations annually* during last 2 years *GMS and GNS new locations. Merchants acquired by aggregators not included. 12
Slide 13: Bradesco / Cielo Partnership
Bradesco / Cielo Partnership Value to Merchant Performance Active AXP Locations** in Brazil Provides access to three Indexed to Q1'10 networks (previously exclusive to Visa*) 428 Delivers common POS terminal and consolidated statement across networks Ease of merchant acceptance of American Exp
Slide 14: Suite of Value-Added Merchant Services
Suite of Value-Added Merchant Services Marketing Cashflow Online business management Merchant Financing 14
Slide 15: Small Business Saturday
Small Business Saturday 2010 2011 2012 Create the day Build awareness Make it their own On Small Business Saturday in 2011: 100MM+ shopped small Public awareness reached 65% Amex card transactions at small businesses increased 23% 15
Slide 16: Core Business Opportunities
Core Business Opportunities Consistent Strong Performance Robust Merchant Value Proposition Diverse Mid-term Growth Opportunities Long-term Vision to Increase Relevance 16
Slide 17: Dynamic Environment
Dynamic Environment Uncertain macroeconomic Developed markets experiencing slow growth and high environment unemployment Traditional competitors pursuing U.S. affluent and small businesses aggressively Intense competition New, non-traditional competitors emerging Visa and MasterCard attempti
Slide 18: Diverse Investment Opportunities Across the Franchise
Diverse Investment Opportunities Across the Franchise Premium consumer Emerging markets Online/mobile Digital marketing B2B Merchant coverage Pre-paid Small Business Fee-based services Corporate T&E Merchant value Loyalty Middle market Service Data and analytics Brand Partnerships 18
Slide 19: Our Investment Focus Aligns with Six Global Trends
Our Investment Focus Aligns with Six Global Trends Premium Consumers Small Business B2B U.S. affluent household 2012- $275B U.S. small business $2T plastic global spending 2015 forecast CAGR*: credit credit card spending in in 2011 forecast to grow at 8% card spend at 8%, credit card 2011*** forecas
Slide 20: AXP Estimated Share of U.S. Premium Card Spend
AXP Estimated Share of U.S. Premium Card Spend* Cardmembers and prospects AXP Competitors *“Premium card spend” is defined as total credit, charge and debit spend of individuals who meet American Express credit approval criteria and who have a credit and debit wallet greater than $60k per year based
Slide 21: Mercedes-Benz and Morgan Stanley Partnerships
Mercedes-Benz and Morgan Stanley Partnerships Leverage dealership channel for Leverage financial advisor client distribution relationships 21
Slide 22: Spend Lift from Card Upgrade
Spend Lift from Card Upgrade Average Spend per Cardmember Indexed 125 100 Before Upgrade After Upgrade Based on measuring 12 months pre-and post-upgrade for the 3 most recent vintages for which 12 months of performance is available (i.e., April'11-June'11 upgrades). An “upgrade” is from one card to
Slide 23: AXP Estimated Share of Premium U.S. Credit Card Lending
AXP Estimated Share of Premium U.S. Credit Card Lending* AXP Share of U.S. Prospect and Cardmember Lending FY2011 AXP Competitors *“Premium lending” is an internally developed term to define the lending opportunity for a stable, low-risk prospect pool based on specific FICO, spend velocity and paydo
Slide 24: U.S. Ending Loans vs. Peers
U.S. Ending Loans vs. Peers $ in billions (1%) Q2 2011 Q2 2012 (4%) $125.5 $124.7 (10%) $113.3 $109.3 $104.7 $94.3 (1%) +5% +4% $49.9 $52.5 $54.0 $53.2 $45.0 $46.6 AXP JPM* Citi** BofA*** CapitalOne† Discover†† SOURCE: Company filed reports. Loans reflect end of period balance. *Excludes Commercial
Slide 25: Example: Blue Cash Preferred Launch
Example: Blue Cash Preferred Launch Product Performance* Premium lend product Average annual spend $25k launched in April'11 34% of cardmembers new Attractive rewards program to AXP with multiple redemption 21% revolvers options Average balance for $75 annual fee revolvers $11k * Based
Slide 26: Proprietary and Network Airline Co-brand Partners
Proprietary and Network Airline Co-brand Partners Proprietary Airline Partners Network-based Airline Partners Co-brand partnerships with 17 airlines Network partnerships with 39 airlines 26
Slide 27: International Premium Consumer Opportunities
International Premium Consumer Opportunities Premium Spend Premium Lend Platinum Cashback Credit Card David Jones American Express Card Platinum Credit Card Refreshed premium products and repriced fees Platinum in 7 proprietary markets Credit Card 27
Slide 28: American Express OPEN Billed Business
American Express OPEN Billed Business Indexed to 2009 Indexed to 1H 2011 +12% CAGR 126 114 111 100 100 2009 2010 2011 1H'11 1H'12 % of BB on charge 76% 77% 77% Overall U.S. Small business credit card spend grew at 8%* *2009-2011 CAGR. SOURCE: McKinsey Global Payments Map and AXP internal data. 28
Slide 29: OPEN Spend per Account
OPEN Spend per Account 2011 Small Business AXP Small Business Spend Per Spend Per Cardmember Cardmember Indexed Indexed to 2009 2.6 135 118 +16% 100 CAGR 1 Industry AXP** 2009 2010 2011 (Excluding AXP)* *Source: Argus Information and Advisory Services and internal American Express analysis. “Industr
Slide 30: Business Gold Rewards
Business Gold Rewards Performance After Business Centric Features Product Redesign Business oriented rewards 41% Spend per account** 40% Card acquisition** Bundled pricing for employee cards* *No annual fee for first year. Thereafter, $175 annual fee for primary Card and $50 annual fee for first
Slide 31: AXP International Small Business Billed Business
AXP International Small Business Billed Business Indexed to 2009, FX adjusted* Indexed to 1H 2011, FX adjusted* +12% CAGR 125 112 112 100 100 2009 2010 2011 1H'11 1H'12 Spend per Cardmember 100 121 143 *F/X adjusted assumes a constant exchange rate between the periods being compared for purposes of
Slide 32: B2B Quarterly Global Billed Business
B2B Quarterly Global Billed Business* Indexed to Q1'09, FX adjusted** CAGR 1H 2009-2011 2012 Y-o-Y Total 24% 31% U.S. 23% 31% Int’l 29% 32% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2009 2010 2011 2012 * Includes vPayment, Buyer-Initiated Payments (BIP), Procurement Card (P-Card). ** F/X adjusted as
Slide 33: Our Digital Wallet for Corporate Payments: PAYVE
Our Digital Wallet for Corporate Payments: PAYVE Ability to process Spend analytics and Supplier insights service, Enablement team multiple payment Spend IQ, can help can guide suppliers types: ACH, BIP, businesses manage through the process International Wire their working capital of migrating to a
Slide 34: Our International Market Models
Our International Market Models Proprietary Model Network Model Market 22 markets, largely 159 markets, many Coverage* established emerging AXP partners with Business AXP is both the issuer local issuers and Structure and the acquirer acquirers *Coverage overlaps in 16 markets. 34
Slide 35: International Billed Business
International Billed Business $ in Billions, FX adjusted* +17% CAGR CAGR, 2009-2011 $279 $247 20% +11% $203 Emerging $145 $130 18% Developed** 16% 8% 2009 2010 2011 1H'11 1H'12 *F/X adjusted assumes a constant exchange rate between the periods being compared for purposes of currency translation into
Slide 36: American Express Presence in Emerging Markets
American Express Presence in Emerging Markets Emerging Markets Market Billings Growth* AXP Billings Growth* 09-11 09-11 Brazil 17% 17% Russia 42% 78% India -1% 35% China 41% 34% Turkey 11% 1% Indonesia 21% 4% Mexico 12% 14% S. Korea 12% 32% *Credit and charge billings based on where the cardmember i
Slide 37: AXP Worldwide Prepaid Plastic Sales
AXP Worldwide Prepaid Plastic Sales Indexed to 2009 Indexed to 1H 2011 +30% CAGR 169 140 126 100 100 2009 2010 2011 1H'11 1H'12 37
Slide 38: Global Prepaid Expansion
Global Prepaid Expansion Gift Card Global Travel Card U.S.: General Purpose Reloadable 45%+ of AXP GPR users are under 35 38
Slide 39: AXP Online Billed Business
AXP Online Billed Business* $ in Billions CAGR, 2009-2011 +23% CAGR $130+ $100+ 36% Non-US 20% U.S. 2009 2010 2011 *AXP estimated Online Spend includes spending at pure online merchants and spending through known online channels for merchants with both online and offline presence. Also includes an e
Slide 40: AXP's Recent Online Spend Performance
AXP’s Recent Online Spend* Performance $ in Billions Y.o.y., AXP online spend skews +13%+ Y.o.y 1H 2011-2012 towards the U.S. $70+ $60+ 19% Slight share gain** in the Non-U.S. U.S. by Q1'2012 ‒ Travel: steady U.S. 11% ‒ Retail: gaining share 1H 2011 1H 2012 *AXP estimated Online Spend includes s
Slide 41: AXP's Online Strengths
AXP’s Online Strengths Strong consumer value proposition based on privacy, security and customer service Robust merchant coverage with acceptance at 95%+ of top U.S. sites online* Innovative capabilities such as Pay with Points and Digital Closed Loop Ecosystem * SOURCE: Top 500 e-commerce sit
Slide 42: AXP Online Highlights
AXP Online Highlights Cumulative AXP Mobile Pay with Points redeemed: App downloads: 138B in 2011 3.7M as of June'12 77B in 1H 2012 Registered Card Share of U.S. AXP card enrollments: applications approved 1.9M CM enrollments online in 1H 2012: for our digital marketing offers in the last 4 quarters
Slide 43: Set Up for Growth
Set Up for Growth Premium Consumers Emerging Markets Small Business AXP 2009-11 CAGR: Significant spend and AXP 2009-11 CAGR: U.S.: +12% lend opportunity +20%* Int’l: +12%* B2B Prepaid Online/Mobile AXP 2009-11 CAGR: AXP 2009-11 CAGR: AXP 2009-11 CAGR: +24%* +30% +23% *FX adjusted. See slides 31, 32
Slide 44: Well Positioned in a Dynamic Environment
Well Positioned in a Dynamic Environment Concentrating investments in areas with attractive growth Uncertain macroeconomic Strengthened capital position and risk profile environment Demonstrating flexibility in our business model Refreshing products to attract premium spend and lend Deepen
Slide 45: Core Business Opportunities
Core Business Opportunities Consistent Strong Performance Robust Merchant Value Proposition Diverse Mid-term Growth Opportunities Long-term Vision to Increase Relevance 45
Slide 46: AXP's Record of Delivering Relevance
AXP’s Record of Delivering Relevance 46
Slide 47: Digital Closed Loop Ecosystem
Digital Closed Loop Ecosystem Value to Cardmembers Value to Merchants Unique offers and experiences New and repeat business Source Distribute Data and analytics Measure 47
Slide 48: Select Examples of Digital Closed Loop Content
Select Examples of Digital Closed Loop Content Sync, Explore, Save Early Access 48
Slide 49: Loyalty Partner: A Platform for Performance Marketing
Loyalty Partner: A Platform for Performance Marketing Coalition Consumers Merchant partners Platform Loyalty 40 million Information SKU-level transaction & behavioral data Assets Applications Performance Card-based marketing products cross-sell 49
Slide 50: Loyalty Partner: Expanding into New Markets
Loyalty Partner: Expanding into New Markets Germany India Mexico 45-50% penetration* Successfully Joint-market launch of households re-branded local business of American Express into Payback and Payback in Initiatives in mobile, Mexico web, Facebook 15M consumers enrolled Payback and C
Slide 51: Core Business Opportunities
Core Business Opportunities Consistent Strong Performance Robust Merchant Value Proposition Diverse Mid-term Growth Opportunities Long-term Vision to Increase Relevance 51
Slide 52: Slide 52
Slide 53: Annex 1
Annex 1 Billed Business - Reported & FX Adjusted* % increase/(decrease) vs. prior year: Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 U.S. 14% 13% 14% 15% 14% 13% 11% 12% 9% International Reported 19% 17% 16% 20% 27% 21% 10% 12% 3% FX Adjusted 16% 16% 15% 14% 15% 14% 11% 13% 10% EMEA Reporte
Slide 54: Annex 2
Annex 2 Billed Business - Reported & FX Adjusted* % increase/(decrease) vs. prior year: Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Total Reported 12% 8% (10%) (16%) (16%) (11%) 8% 16% 16% 14% 15% 17% 18% 16% 11% 12% 7% FX Adjusted 10% 7% (5%
Slide 55: Annex 3
Annex 3 ($ in millions) 2007 2008 2009 2010 2011 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 GAAP Total Revenues Net of Interest Expense $27,462 $28,227 $24,336 $27,582 $29,962 $7,618 $7,571 $7,742 $7,614 $7,965 Securitization Adjustments: Discount revenue, net card fees and other 310 400 331 NA NA NA NA NA NA NA
Slide 56: Annex 4
Annex 4 ($ in millions) 2007 2011 GAAP Total Revenues Net of Interest Expense $27,462 $29,962 Securitization Adjustments: Discount revenue, net card fees and other 310 NA Interest income 3,130 NA Securitization income, net (1,507) NA Interest expense (1,136) NA Managed Total Revenues Net of Interest
Slide 57: Annex 5
Annex 5 ($ in millions) Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 GAAP Total Operating Expenses $2,685 $3,195 $2,752 $2,915 $3,100 $3,197 $3,110 $3,210 Visa/MasterCard Settlement Payments 220 220 220 220 70 70 - - Adjusted Total Operating Expenses $2,905 $3,415 $2,972 $3,135 $3,170 $3,267 $3,1
Slide 58: Annex 6
Annex 6 The Tier 1 Common Risk-Based Capital Ratio is calculated as Tier 1 Common Equity, a non-GAAP measure, divided by Risk-weighted assets. Tier 1 Common Equity is calculated by reference to Total Shareholders’ Equity as shown below: Tier 1 Common Equity Reconciliation ($ in Millions) Q4’08 Q3’11
Slide 59: Annex 7
Annex 7 Owned/Managed Credit Data Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 USCS 30 Days Past Due Loans as a % of Total Cardmember Lending GAAP Basis 2.1% 2.4% 2.8% 3.4% 3.5% 3.9% 4.7% 5.1% 4.4% 4.2% 3.7% Cardmember Lending Managed Basis 2.1% 2.4% 2.8% 3.2% 3.3% 3.9% 4.7% 5.1
Slide 60: Annex 8
Annex 8 International Billed Business - Reported & FX Adjusted* $B 09-11 CAGR 1H’11-1H’12 CAGR Emerging Reported 23% 12% FX Adjusted 20% 18% Developed Reported 18% 5% FX Adjusted 16% 8% Total ‘09 ‘10 ‘11 1H '11 1H '12 Reported 19% 7% $196 $234 $279 $135 $145 FX Adjusted 17% 11% $203 $247 $279 $130 $
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