American Express Company · NYSE:AXP
American Express — Q4 2021 Earnings Presentation
53 slides from American Express's earnings presentation, Jan 25, 2022
Slide 1: American Express Earnings Conference Call Q4'21
American Express Earnings Conference Call Q4’21 JANUARY 25, 2022
Slide 2: Summary Financial Performance
Summary Financial Performance ($ in millions; except per share amounts) YoY% YoY% Notable Impacts, Q4’21 FY’21 FY’21 Pre-tax Income Inc/(Dec) Inc/(Dec) Total Revenues Net of Interest $12,145 30% $42,380 17% Credit Reserve releases: Expense $2,481 FX-Adjusted* 31% 17% Net gains on Amex Ventures equit
Slide 3: Total Network Volumes Growth
Total Network Volumes Growth Q3’21 Q4’21 FY’21 % of FY Total vs. ’19 % 4% 12% 1% Billed Business 85% YoY% 31% 33% 24% vs. ’19 % 3% 3% (1%) Processed 15% Volumes YoY% 18% 15% 14% % Increase/(decrease) vs. 2019: vs. ’19 % 4% 11% 1% Total Netw ork 100% Volum es 20% YoY% 29% 30% 23% Billed Business 10%
Slide 4: Billed Business
Billed Business G&S vs. T&E G&S vs. T&E Growth $ in Billions, % of Total % Increase/(decrease) vs. 2019 (FX-adjusted): vs. ’19 vs. ’19 $1,090 1% 40% $1,071 G&S 20% Billed $871 (19%) 0% Business G&S 70% (20%) T&E 81% 18% 85% (1%) (40%) (60%) T&E 30% (80%) 15% (60%) 19% (37%) (100%) FY'19 FY'20 FY'21
Slide 5: Goods & Services Billed Business
Goods & Services Billed Business G&S by Online vs. Offline % Increase/(decrease) vs. 2019 (FX-adjusted): 40% Online Total G&S 20% Offline 0% (20%) (40%) Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q4’21 Online Offline Total vs. ‘19 31% 12% 24% YoY 16% 28% 19% % of Total 66% 34% 100% 5 Note: Onli
Slide 6: Global Consumer Billed Business
Global Consumer Billed Business G&S vs. T&E Billed Business Growth by Age Cohort $ in Billions, % of Total % Increase/(decrease) vs. 2019 (FX-adjusted): Millennials vs. ’19 vs. ’19 vs. ’19 vs. ’19 50% + Gen-Z $174 17% $153 9% 30% Total $147 4% Consumer $119 (8%) Gen-X 10% 75% 26% Baby 77% 18% 74% 20
Slide 7: Global Commercial Billed Business
Global Commercial Billed Business G&S vs. T&E SME vs. Large & Global Corporate $ in Billions, % of Total % Increase/(decrease) vs. 2019 (FX-adjusted): vs. ’19 vs. ’19 vs. ’19 vs. ’19 40% SME G&S $141 6% $126 (1%) 20% Total SME $120 (8%) $104 (16%) 0% 84% 22% (20%) 86% 18% Large & G&S 88% 14% Global
Slide 8: Billed Business T&E Growth
Billed Business T&E Growth T&E by Customer Type % Increase/(decrease) vs. 2019 (FX-adjusted): Q4’21 % of Q4’19 US Consumer 108% 0% Total SME 83% Total T&E 82% (20%) Intl Consumer 78% (40%) (60%) Large & Global 36% Corporate (80%) (100%) Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 US Intl Total Q
Slide 9: Billed Business Growth by Region
Billed Business Growth by Region US vs. International G&S vs. T&E by Region % Increase/(decrease) vs. 2019 (FX-adjusted): % Increase/(decrease) vs. 2019 (FX-adjusted): US US G&S 20% 20% Intl G&S Total 0% AXP 0% Intl US T&E (20%) (20%) (40%) (40%) Intl T&E (60%) (60%) (80%) (80%) (100%) (100%) Q1'20
Slide 10: Worldwide Total Loans and Card Member Receivables
Worldwide Total Loans and Card Member Receivables Total Ending Loans (Q3-Q4) Total Ending CM Receivables (Q3-Q4) ($ in billions) ($ in billions) 2019 2020 2021 2019 2020 2021 $92.2 $91.5 $88.1 $76.2 $79.4 $73.1 $56.6 $57.4 $53.6 $48.8 $40.8 $43.7 9% 8% (17%) (17%) 9% 20% YoY 2% 3% (28%) (24%) 19% 23
Slide 11: Card Member Credit Metrics
Card Member Credit Metrics Card Member Loans Net Write-off Rates Card Member Receivables Net Write-off Rates (excluding GCP) 2.5% 1.9% 2.0% 1.4% 1.0% 1.0% 0.6% 0.6% 0.5% 0.3% 0.2% 0.3% Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 30+ Days 30+ Days Past Due 1.2% 1.0% 0.9% 0
Slide 12: Total Provision
Total Provision ($ in millions) 2021 vs. 2020 FY’20 FY’21 Better/(Worse) $2,621 Net Write-offs $3,189 $1,062 $2,127 Reserve $1,541 ($2,481) $4,022 Build/(Release) $1,703 $1,555 Total $4,730 ($1,419) $6,149 Provision $628 $665 ($111) ($675) Total Provision $918 $927 ($606) ($191) $53 $781 $563 $379 W
Slide 13: Total Reserves
Total Reserves Balance Sheet Credit Reserves* ($ in billions) $1.5 $5.8 ($2.2) $0.1 $0.3 ($0.3) $1.4 $4.3 ($2.0) Card Member Receivables $0.1 $3.6 ($0.2) $3.4 $0.0 $0.1 $5.6 ($0.2) Total $4.2 Loans $3.6 $3.4 Q1'20 Q4'20 Ending Q3'21 Ending Q4'21 Ending Beginning Reserves Reserves Reserves Reserves R
Slide 14: Revenue Performance
Revenue Performance ($ in millions) YoY% vs. ’19% YoY% vs. ’19% Q4’21 FY’21 Inc/(Dec) Inc/(Dec) Inc/(Dec) Inc/(Dec) Discount Revenue $7,482 35% 10% $25,727 26% (2%) Net Card Fees $1,344 10% 25% $5,195 11% 29% Other Fees & Commissions $680 32% (18%) $2,392 11% (27%) Other Revenue* $531 218% 55% $1,31
Slide 15: Discount Revenue
Discount Revenue Discount Revenue* (Q3-Q4) $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): FY’21 $B YoY vs. ‘19 Discount Revenue $25.7 25% (2%) 2019 2020 2021 $7.5 $6.6 $6.8 $6.7 $5.5 $5.0 YoY Change 7% 6% (24%) (19%) 33% 36% (12 bps) Q3’19 2019 Q4’19 Q3’20
Slide 16: Net Card Fees
Net Card Fees Net Card Fees* $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): FY’21 $B YoY vs. ‘19 $1.3 $1.3 Net Card Fees $5.2 10% 28% $1.3 $1.2 $1.3 $1.2 $1.1 $1.1 $1.1 $1.0 $1.0 $0.9 Y oY Change 17% 19% 20% 20% 19% 17% 15% 12% 10% 10% 10% 11% Q1'19 Q2'19 Q
Slide 17: Net Interest Income
Net Interest Income Net Interest Income* (Q3-Q4) $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): FY’21 $B YoY vs. ‘19 Net Interest Income $7.8 (4%) (10%) 2019 2020 2021 $2.2 $2.3 $2.1 $1.9 $2.0 $1.9 YoY Change 13% 13% (15%) (17%) 6% 11% (12 bps) Q3’19 2019 Q
Slide 18: Total Revenue Net of Interest Expense
Total Revenue Net of Interest Expense Total Revenue Growth FX-Adjusted* % inc/(dec) YoY FY’21 $B YoY vs. ‘19 % inc/(dec) vs. 2019 Revenue 42.4 17% (3%) 45% 35% 31% 31% 24% 25% 15% 9% 10% 9% 9% 7% 5% 1% (5%) (1%) 10% 9% 9% 1% (28%) (20%) (18%) (6%) (13%) 29% (15%) (13%) (25%) (18%) (20%) (35%) (28%)
Slide 19: Expense Performance
Expense Performance ($ in millions) YoY% YoY% Q4’21 FY’21 Inc/(Dec) Inc/(Dec) Card Member Rewards $3,032 32% $11,007 37% Card Member Services $665 117% $1,993 62% Business Development $1,127 36% $3,761 23% Variable CM Engagement Expenses $4,824 41% $16,761 36% Marketing $1,586 54% $5,292 43% Operati
Slide 20: Marketing Investments and New Cards Acquired
Marketing Investments and New Cards Acquired Marketing Proprietary NCA ($ in billions) (in millions) FY’21 $B Value 2.7 Injection Marketing $5.3 2.6 2.4 2.1 1.7 $1.6 $1.4 1.4 $1.3 $1.1 $1.0 $1.0 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 20
Slide 21: Capital
Capital Common Equity Tier 1 Capital Return ($ in billions) $9.0 13.5% 10.7% 10.5% $6.0 $2.3 Q4'19 Q4'20 Q4'21 Q4 FY'19 FY'20 FY'21 Div idend CET1 Ratio Target: 10-11% per $0.43 $0.43 $0.43 Common Share* 21 * Dividends per Common Share reflects quarterly dividend declared in Q4 of 2019-2021.
Slide 22: 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 - $9.65 Mid-teens Pandemic Recovery Tailwinds (2022-2023) Steady State Macro Environment 22
Slide 23: Appendix
Appendix
Slide 24: Q4'21 Network Volumes Growth by Customer Type
Q4’21 Network Volumes Growth by Customer Type % of Total US US Int’l Int’l Large & Global Processed Network Consumer SME Consumer* SME* Corporate* Volumes* Volumes 35% 27% 12% 5% 6% 14% % Increase/(decrease) vs. 2019 (FX-adjusted): 22% 18% 12% 5% 3% (33%) YoY% 37% 29% 32% 1 31% 34% 15% US Consumer I
Slide 25: Global Consumer G&S Growth
Global Consumer G&S Growth G&S: Online vs. Offline % Increase/(decrease) vs. 2019 (FX-adjusted): 50% Online 40% 30% G&S 20% 10% Offline 0% (10%) (20%) (30%) (40%) Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Global Consumer G&S Holiday Spend* Q4’21 Online Offline Total Q4’21 Online Offline Total
Slide 26: Travel & Entertainment Billed Business
Travel & Entertainment Billed Business T&E by Industry % Increase/(decrease) vs. 2019 (FX-adjusted): 20% Restaurants 0% Other (20%) Total T&E Lodging (40%) Airlines (60%) (80%) (100%) (120%) Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q4’21 Restaurants Lodging Airlines Other Total vs. ‘19 10% (2
Slide 27: Worldwide Total Loans and Card Member Receivables Mix
Worldwide Total Loans and Card Member Receivables Mix Q4’21 Total Loan Mix Q4’21 Card Member Receivables Mix Intl. Small Business Small Business Consumer 20% 14% 34% Intl. U.S. Consumer 12% 28% Consumer 68% U.S. Consumer 24% Corporate Card 27 Note: Total Loans reflect Card Member loans and Other loa
Slide 28: Delinquent and Financial Relief Program Balances
Delinquent and Financial Relief Program Balances ($ in billions) $11.5 $8.5* Customer Pandemic Relief $4.0 (CPR) Program Enrolled** $2.8 $0.0 Financial Relief $2.3 $2.2 $0.7 $0.9 $3.0 Programs (FRP) $0.0 $0.0 Enrolled *** $2.1 $2.0 $1.5 $1.3 $1.0 Delinquent $0.8 $0.9 Dec'19 Apr'20 Dec'20 Sep'21 Dec'
Slide 29: 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) 2.4% Credit Insurance Claim (Proceeds)/Repayment within Other, net $33M
Slide 30: Credit Reserve Build Macroeconomic Assumptions
Credit Reserve Build Macroeconomic Assumptions US Unemployment Rate % US GDP Growth* % 18% 40% 16% 35% 14% 30% 25% 12% 20% 10% 15% 8% 10% 6% 5% 4% 0% 2% (5%) 0% (10%) Q4'20 Q4'21 Q3'22 Q4'22 Q3'23 Q4'23 Q3'20 Q1'21 Q2'21 Q3'21 Q1'22 Q2'22 Q1'23 Q2'23 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q
Slide 31: Funding Mix
Funding Mix Funding Mix ($ in billions) $138 $132 4% $126 1% 2% Short-term Funding 53% 66% 67% Deposits 14% 10% 11% Card ABS* 28% 23% Unsecured 20% Term** Q4'19 Q4'20 Q4'21 Note: % of total may not foot due to rounding. * Reflects face amount of Card ABS, net of securities retained by the Company. I
Slide 32: 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 Q1'21 Q2'21 Q3'21 Q4'21 Reported FX Adj. Reported FX Adj. Euro € UK £ Japan ¥ Australia $ Canada $ Mexico $ Approximate Q4
Slide 33: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis The following summary provides selected variance information for the three months ended December 31, 2021 compared to the same period in the prior year. It should be read in conjunction with the statistical tables for Q4’21, available at ir.americanexp ress.
Slide 34: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis • Marketing and Business Development: Increased 46% versus Q4’20, primarily due to an increase in marketing investments to continue building growth momentum and higher partner payments driven by higher spending volumes. • Card Member Rewards Expense: Increas
Slide 35: Environmental, Social and Governance (ESG) Strategy
Environmental, Social and Governance (ESG) Strategy MISSION: BACK PEOPLE AND BUSINESSES TO THRIVE AND CREATE EQUITABLE, RESILIENT, AND SUSTAINABLE COMMUNITIES GLOBALLY STAKEHOLDERS INCLUDING SHAREHOLDERS, COLLEAGUES, CUSTOMERS, AND COMMUNITIES SOUND GOVERNANCE INCLUDING BUSINESS ETHICS, TRANSPARENCY
Slide 36: 2021 ESG Highlights
2021 ESG Highlights • Prom oting Diversity, Equity, and Inclusion (DE&I): We are committed to supporting a diverse, equitable, and inclusive w orkforce, marketplace, and society. – We announced a $1 Billion DE&I Action Plan in October 2020, w hich outlined our initiatives to promote DE&I for our col
Slide 37: Annex 1 (1 of 2)
Annex 1 (1 of 2) Network Volumes – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q1’21 Q2’21 Q3’21 Q4’21 FY’21 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 FY’21 vs. vs. vs. vs. vs. Q1’19 Q2’19 Q3’19 Q4’19 FY’19 Int’l Consumer Reported 8% 10% 10% 11% (6%)
Slide 38: Annex 1 (2 of 2)
Annex 1 (2 of 2) Network Volumes – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q1’21 Q2’21 Q3’21 Q4’21 FY’21 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 FY’21 vs. vs. vs. vs. vs. Q1’19 Q2’19 Q3’19 Q4’19 FY’19 Large & Global Corporate Reported (20%) (64%) (54%) (50%) (43%) 37%
Slide 39: Annex 2
Annex 2 Discount Revenue – Reported & FX-Adjusted* ($ in billions) 2018 2019 2020 2021 Q3’18 Q4’18 FY’18 Q3’19 Q4’19 FY’19 Q3’20 Q4’20 FY’20 Q3’21 Q4’21 FY’21 GAAP Discount Revenue $6.2 $6.5 $24.7 $6.6 $6.8 $26.2 $5.0 $5.5 $20.4 $6.7 $7.5 $25.7 FX-Adjusted Discount Revenue* $6.1 $6.4 $24.5 $6.6 $6
Slide 40: Annex 3
Annex 3 Net Card Fees – Reported & FX-Adjusted* ($ in billions) Q1’18 Q2’18 Q3’18 Q4’18 FY’18 Q1’19 Q2’19 Q3’19 Q4’19 FY’19 Q1’20 Q2’20 Q3’20 Q4’20 FY’20 Q1’21 Q2’21 Q3’21 Q4’21 FY’21 GAAP Revenues Net Card Fees $0.8 $0.8 $0.9 $0.9 $3.4 $0.9 $1.0 $1.0 $1.1 $4.0 $1.1 $1.1 $1.2 $1.2 $4.7 $1.3 $1.3 $
Slide 41: Annex 4
Annex 4 Net Interest Income – Reported & FX-Adjusted* ($ in billions) 2018 2019 2020 2021 Q3’18 Q4’18 FY’18 Q3’19 Q4’19 FY’19 Q3’20 Q4’20 FY’20 Q3’21 Q4’21 FY’21 GAAP Net Interest Incom e $2.0 $2.0 $7.7 $2.2 $2.3 $8.6 $1.9 $1.9 $8.0 $2.0 $2.1 $7.7 FX-Adjusted Net Interest Income* $1.9 $2.0 $7.6 $2
Slide 42: Annex 5
Annex 5 Consolidated Net Interest Yield on Average Card Member Loans ($ in millions, except percentages and where indicated) 2019 2020 2021 Q3’19 Q4’19 Q3’20 Q4’20 Q3’21 Q4’21 Net interest incom e $2,203 $2,284 $1,874 $1,897 $1,994 $2,107 Exclude: Interest expense not attributable to our Card Memb
Slide 43: Annex 6 (1 of 2)
Annex 6 (1 of 2) Revenues Net of Interest Expense – Reported & FX-Adjusted* ($ in billions) Q1’18 Q2’18 Q3’18 Q4’18 FY’18 Q1’19 Q2’19 Q3’19 Q4’19 FY’19 Q1’20 Q2’20 Q3’20 Q4’20 FY’20 Q1’21 Q2’21 Q3’21 Q4’21 FY’21 GAAP Rev enues Net of Interest Expense $9.7 $10.0 $10.1 $10.5 $40.3 $10.3 $10.8 $11.0
Slide 44: Annex 6 (2 of 2)
Annex 6 (2 of 2) Revenues Net of Interest Expense comparison to 2019 – Reported & FX-Adjusted* ($ in billions) Q1’19 Q2’19 Q3’19 Q4’19 FY’19 Q1’21 Q2’21 Q3’21 Q4’21 FY’21 GAAP Revenues Net of Interest Expense $10.3 $10.8 $11.0 $11.4 $43.6 $9.1 $10.2 $10.9 $12.1 $42.4 FX-Adjusted Revenues Net of In
Slide 45: Annex 7
Annex 7 Troubled Debt Restructurings (TDR) Balance ($ in billions) Dec’19 Apr’20 Dec’20 Jun’21 Sep’21 Dec’21 In-Program TDR Balance $0.8 $1.0 $3.1 $1.9 $1.5 $1.3 Delinquent Financial Relief Programs (FRP) balance 0.1 0.1 0.1 0.1 0.1 0.1 Non-delinquent FRP balance $0.7 $0.9 $3.0 $1.8 $1.5 $1.3 45 N
Slide 46: Annex 8
Annex 8 GCP Card Member Receivables Net Write-Off rates ($ 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 47: 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 48: 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, uncertainty regarding the continued spread of COVID-19
Slide 49: Forward Looking Statements
Forward Looking Statements • the actual amount to be spent 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; management’s identification and assessment of attractive investment opportunities
Slide 50: Forward Looking Statements
Forward Looking Statements • the average discount rate not performing consistent w ith current expectations, including as a result of further changes in the mix of spending by location and industry (including the level of T&E spending), merchant negotiations (including merchant incentives, concessio
Slide 51: Forward Looking Statements
Forward Looking Statements • the ability of the company to execute on its plans to expand merchant coverage globally, w hich w ill depend in part on the suc cess of the company, OptBlue merchant acquirers and GNS partners in signing merchants to accept American Express, w hich could be impacted by o
Slide 52: Forward Looking Statements
Forward Looking Statements • factors beyond the company’s control such as continued w aves of COVID-19 cases, the severity and contagiousness of new variants, severe w eather conditions, natural disasters, pow er loss, disruptions in telecommunications, terrorism and other catastrophic events, any o
Slide 53: American Express
AMERICAN EXPRESS
American Express Company — Q4 2021 Earnings Presentation on 6ix