American Express Company · NYSE:AXP
American Express — Q3 2023 Earnings Presentation
41 slides from American Express's earnings presentation, Oct 20, 2023
Slide 1: American Express Earnings Conference Call Q3'23
American Express Earnings Conference Call Q3’23 OCTOBER 20, 2023
Slide 2: Summary Financial Performance
Summary Financial Performance ($ in millions; except per share amounts) YoY% Q3’23 Q3’22 Inc/(Dec) Total Revenues Net of Interest Expense $15,381 $13,556 13% FX-Adjusted* $13,652 13% Pretax Pre-Provision Income** $4,333 $3,237 34% Provision Expense $1,233 $778 58% Net Income $2,451 $1,879 30% Dilute
Slide 3: Total Network Volumes Growth
Total Network Volumes Growth ($ in billions) $413 $427 $420 $395 $394 $399 Total Network Volumes $59 $54 $350 $56 $53 $54 $55 Processed Volumes $49 G&S, 6% YoY $341 $339 $357 $346 $368 $366 Billed Business $301 T&E, 13% YoY Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 % Increase/(decrease) vs. Prior Ye
Slide 4: U.S. Consumer Services Billed Business
U.S. Consumer Services Billed Business ($ in billions) $155 $154 $149 $141 $140 $142 $123 $107 $106 G&S, 8% YoY $99 $98 $108 $96 $87 $42 $42 $41 $46 $48 $47 T&E, 13% YoY $35 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Millennials + Q3’23 Gen-X Baby Boomer + Total Gen-Z YoY 18% 7% 3% 9% % of Total 32%
Slide 5: Commercial Services Billed Business
Commercial Services Billed Business ($ in billions) $128 $128 $131 $130 $130 $125 $114 $103 $103 $106 $99 $103 $103 G&S, 0% YoY $95 $19 $25 $25 $25 $26 $27 $27 T&E, 6% YoY Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q3’23 US SME US Large & Global Corp Total YoY 2% 0% 1% % of Total 83% 17% 100% Note: A
Slide 6: International Card Services Billed Business
International Card Services Billed Business ($ in billions) $82 $83 $77 $77 $71 $70 $63 $57 $57 G&S, 12% YoY $56 $53 $50 $49 $47 $21 $21 $21 $24 $25 $26 T&E, 20% YoY $16 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q3’23 Int’l Consumer Int’l SME & Large Corp. Total YoY 15% 15% 15% % of Total 65% 35% 10
Slide 7: Worldwide Total Loans and Card Member Receivables
Worldwide Total Loans and Card Member Receivables Total Ending Loans and Card Member Receivables ($ in billions) Pre- Pandemic $183 $172 $179 $171 $159 $150 8% 4% 6% 7% Card Member 13% 3% Receivables YoY Growth Total Loans 8% 31% 24% 25% 22% 20% Q4'19 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Total Loans & CM R
Slide 8: Card Member Loans and Card Member Receivables Credit Metrics
Card Member Loans and Card Member Receivables Credit Metrics 30+ Days Past Due* Net Write-off Rates* Pre- Pre- Pandemic Pandemic 2.2% 1.8% 1.8% 1.5% 1.6% 1.1% 1.2% 1.2% 1.2% 1.2% 0.9% 0.9% Q4'19 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'19 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Corporate Net Write- off Rates 0.8% 0.4
Slide 9: Total Provision
Total Provision ($ in millions) $1,198 $1,233 Total Provision $1,027 $1,055 Reserve $327 $321 Build/(Release)* $778 $320 $492 $387 $410 $912 $871 Write-offs ($33) $58 $735 $535 $352 $391 $287 ($320) Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 See Variance Commentary in the appendix section for an expl
Slide 10: Total Reserves
Total Reserves Balance Sheet Credit Reserves* ($ in billions) $0.3 $5.0 $4.7 $4.3 $0.3 $0.2 Card Member $0.2 $0.0 Receivables $0.1 $0.3 Total $4.5 $4.8 $4.2 Loans Q1'20 Beginning Q2'23 Ending Reserves Q3'23 Ending Reserves Reserves Reserves as a % of: Total Loans & CM Receivables 2.9% 2.6% 2.7% Tota
Slide 11: Revenue Performance
Revenue Performance ($ in millions) Q3’23 YoY% Q3’23 Q3’22 % of Total Inc/(Dec) Revenue Discount Revenue $8,408 $7,848 7% 55% Net Card Fees $1,846 $1,541 20% 12% Service Fees and Other Revenue $1,261 $1,169 8% 8% Processed Revenue $424 $420 1% 3% Net Interest Income $3,442 $2,578 34% 22% Revenues Ne
Slide 12: Discount Revenue
Discount Revenue ($ in billions) $8.5 $8.4 $8.2 $7.9 $7.8 $7.9 $6.8 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 % Increase/(decrease) vs. Prior year (FX-adjusted): Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 YoY Growth* 38% 32% 26% 16% 17% 8% 7% * Discount Revenue YoY growth rates adjusted for FX are no
Slide 13: 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% 25% 25% 23% 23% 3.3 3.4 22% 3.2 3.0 3.0 3.0 2.9 19% 19% 20% 16% 15% 10% 10% 10% 10% 11% 14% 5% 0% Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q1'22 Q2'22 Q3'
Slide 14: Net Interest Income
Net Interest Income Net Interest Income $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): $3.1 $3.4 $2.8 $3.0 $2.3 $2.6 YoY 13% 30% 32% 36% 32% 33% Growth* Q4'19 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 WW Net Interest Yield on CM 11.3% 10.8% 10.8% 11.3% 11.2% 11.7% Loan
Slide 15: Total Revenue Net of Interest Expense
Total Revenue Net of Interest Expense ($ in billions) $15.1 $15.4 $14.2 $14.3 $13.4 $13.6 $11.7 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 % Increase/(decrease) vs. Prior year (FX-adjusted): Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 YoY Growth* 31% 33% 27% 19% 23% 13% 13% * Revenue Net of Interest Ex
Slide 16: Expense Performance
Expense Performance ($ in millions) YoY% Q3’23 Q3’22 Inc/(Dec) Card Member Rewards $3,794 $3,571 6% Business Development $1,393 $1,194 17% Card Member Services $973 $774 26% Q3’23 VCE % of Revenue Variable Customer Engagement $6,160 $5,539 11% 40% Expenses Marketing $1,236 $1,458 (15%) Operating Exp
Slide 17: Capital
Capital Common Equity Tier 1 Capital Return ($ in billions) 10.6% 10.3% 10.6% 10.6% 10.7% Target CET1 Ratio: 10 -11% $1.6 $1.7 Regulatory Minimum*: 7% $1.0 $1.0 $0.6 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 * Inclusive of Stress Capital Buffer 17
Slide 18: 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 - $9.65 Mid-teens January 2023: 2022 Actuals 2023 Guidance 2024+ Aspiration Rev
Slide 19: Appendix
Appendix AMERICA 8XBRESS
Slide 20: Travel & Entertainment Billed Business
Travel & Entertainment Billed Business Q3’23 Restaurants Lodging Airlines Other Total T&E YoY Growth 13% 7% 12% 18% 13% % of Total Billed Business 7% 6% 6% 8% 27% 20 Note: All growth rates reflect FX-adjusted rates. See Slide 2 for an explanation of FX-adjusted information.
Slide 21: Q3'23 Network Volumes Growth by Customer Type
Q3’23 Network Volumes Growth by Customer Type % Increase/(decrease) vs. Prior Year (FX-adjusted): U.S. Consumer Services: Commercial Services: International Card Services: 9% 1% 15% 15% 15% 9% 2% 0% (1%) % of Total US US US Large & 1 Int’l Int’l SME & Processed Network Volumes Consumer SME Global Co
Slide 22: Card Member Credit Metrics
Card Member Credit Metrics Q4’19 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Card Member Loans Net Write-off Rate* 2.3% 0.8% 0.8% 1.1% 1.5% 1.7% 1.8% Card Member Receivables Net Write-off Rates* 1.9% 0.8% 1.0% 1.4% 1.9% 1.9% 1.9% Corporate Net Write-off Rates** 0.8% 0.3% 0.4% 0.6% 0.6% 0.6% 0.6% Card Member
Slide 23: Credit Reserve Macroeconomic Scenarios: Select Variables
Credit Reserve Macroeconomic Scenarios: Select Variables US Unemployment Rate % US GDP Growth* % 10% 8% 9% 6% 8% 7% 4% 6% 2% 5% 0% 4% 3% (2%) 2% (4%) 1% 0% (6%) Q2'21 Q1'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q
Slide 24: Funding and Deposits
Funding and Deposits Funding Mix Retail Deposit Program ($ in billions) ($ in billions) $172 $173 Short-term $122 $124 92% FDIC 1% insured at 1% Funding Q3’23 Deposits Direct 71% 72% 74% 77% Deposits*** Third Party 9% 8% Card ABS* 12% 11% CDs Unsecured Third Party 19% 20% Term** 13% 12% Sweep Q2'23
Slide 25: FX Impact on Network Volumes and Revenue Growth
FX Impact on Network Volumes and Revenue Growth Network Volumes Revenue Net of Interest Expense % Increase/(decrease) vs. Prior year: % Increase/(decrease) vs. Prior year: 50% 50% (15%) (15%) Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Reported FX Adj. Reporte
Slide 26: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis The following summary provides selected variance information for the three months ended September 30, 2023 compared to the same period in the prior year. It should be read in conjunction with the statistical tables for Q3'23, available at ir.americanexpress.
Slide 27: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis • Card Member Rewards Expense: Increased 6 percent versus Q3'22, driven by increases in Membership Rewards, cobrand rewards and cash back rewards expenses, all of which were primarily driven by higher billed business, partially offset by the impact of change
Slide 28: Annex 1: Pretax Pre-Provision Income
Annex 1 Pretax Pre-Provision Income ($ in millions) YoY% Q3’23 Q3’22 Inc/(Dec) Pretax income $3,100 $2,459 26% Provisions for credit losses $1,233 $778 58% Pretax pre-provision income $4,333 $3,237 34% 28
Slide 29: Annex 2 (1 of 2): Network Volumes Reported & FX-Adjusted
Annex 2 (1 of 2) Network Volumes – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q3'23 Billed Business Billed Business Reported FX-Adj.* Reported 34% 27% 21% 13% 15% 8% 8% G&S 6% 6% FX-Adjusted* 35% 30% 24% 15% 16% 8% 7% T&E 13% 13% Processe
Slide 30: Annex 2 (2 of 2): Billed Business Reported & FX-Adjusted
Annex 2 (2 of 2) Billed Business – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q3’23 Q3’23 Reported FX-Adj.* Reported FX-Adj.* US Large and Global Corp. 0% 0% International Consumer 19% 15% Commercial Services International SME & Large Corp. 16% 15% Total Billed Business 1% 1% Int
Slide 31: Annex 3: Discount Revenue Reported & FX-Adjusted
Annex 3 Discount Revenue – Reported & FX-Adjusted* ($ in billions) Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 GAAP Discount Revenue $5.0 $6.0 $6.4 $7.1 $6.8 $7.9 $7.8 $8.2 $7.9 $8.5 $8.4 FX-Adjusted Discount Revenue* $5.0 $6.0 $6.2 $7.0 $6.8 $7.9 $7.9 YoY% Inc/(Dec) in GAAP
Slide 32: Annex 4: Net Card Fees Reported & FX-Adjusted
Annex 4 Net Card Fees – Reported & FX-Adjusted* ($ in billions) Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 GAAP Net Card Fees $1.3 $1.3 $1.3 $1.3 $1.4 $1.5 $1.5 $1.6 $1.7 $1.8 $1.8 FX-Adjusted Net Card Fees* $1.2 $1.2 $1.3 $1.3 $1.4 $1.5 $1.6 YoY% Inc/(Dec) in GAAP Net Card
Slide 33: Annex 5: Net Interest Income Reported & FX-Adjusted
Annex 5 Net Interest Income – Reported & FX-Adjusted* ($ in billions) Q4’18 Q4’19 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 GAAP Net Interest Income $2.0 $2.3 $2.0 $2.1 $2.2 $2.4 $2.6 $2.8 $3.0 $3.1 $3.4 FX-Adjusted Net Interest Income* $2.0 $2.3 $2.0 $2.1 $2.2 $2.4 $2.6 YoY% Inc/(Dec)
Slide 34: Annex 6: Net Interest Yield on Average Card Member Loans
Annex 6 Consolidated Net Interest Yield on Average Card Member Loans ($ in millions, except percentages and where indicated) Q4’19 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Net interest income $2,284 $2,578 $2,758 $2,983 $3,105 $3,442 Exclude: Interest expense not attributable to our Card Member loan portfoli
Slide 35: Annex 7: Revenues Net of Interest Expense Reported & FX-Adjusted
Annex 7 Revenues Net of Interest Expense – Reported & FX-Adjusted* ($ in billions) Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 GAAP Revenues Net of Interest $9.1 $10.2 $10.9 $12.1 $11.7 $13.4 $13.6 $14.2 $14.3 $15.1 $15.4 Expense FX-Adjusted Revenues Net of Interest* $9.0 $10
Slide 36: 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 37: Forward Looking Statements
Forward Looking Statements • the company’s ability to achieve its 2023 revenue growth outlook and its longer-term 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
Slide 38: 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 39: Forward Looking Statements
Forward Looking Statements • the company’s ability to control operating expenses, including relative to future revenue growth, 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 talen
Slide 40: 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 41: American Express
AMERICAN EXPRESS
American Express Company — Q3 2023 Earnings Presentation on 6ix