American Express Company · NYSE:AXP
American Express — Investor Day (February 2011)
97 slides from American Express's investor day presentation, Feb 15, 2011
Slide 1: American Express Company Financial Community Meeting February 9, 2011
American Express Company Financial Community Meeting February 9, 2011 Kenneth Chenault Chairman and Chief Executive Officer Doug Buckminster President, International Consumer Card and Small Business Services
Slide 2: Note Relating to Non-GAAP Financial Disclosures
2 Note Relating to Non-GAAP Financial Disclosures This presentation contains certain non-GAAP financial disclosures, including information regarding the Company’s “International Business Operations” and information that is reported on a “managed” basis. International Business Operations (IBO) includ
Slide 3: Cautionary Note Regarding Forward-Looking Statements
3 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 the company’s expected
Slide 4: Cautionary Note Regarding Forward-Looking Statements (cont'd)
4 Cautionary Note Regarding Forward- Looking Statements (cont’d) data breaches and fraudulent activity, which could damage our brand, increase our costs or have regulatory implications, and changes in regulation affecting privacy and data security under federal, state and foreign law, which could re
Slide 5: Annex
5 Annex 1 ($ in millions) 2010 2009 %Inc/(Dec) GAAP Total Revenues Net of Interest Expense $27,819 $24,523 13% Securitization Adjustments: Discount revenue, net card fees and other NA Interest income NA 3,097 Securitization income, net NA (400) Interest expense NA (244) Managed Total Revenues Net of
Slide 6: Annex
6 Annex 2 *FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars. (e.g., assumes foreign exchange rate used for Q4'10 applies to Q4'09; rate used for Q3’10 applies to Q3’09, etc.) Billed Business Metrics - R
Slide 7: Annex
7 Annex 3 Cardmember Lending ($ in billions, except percentages) Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Total Loans Worldwide Cardmember Lending Reported (GAAP) $42.2 $48.2 $50.4 $54.4 $49.4 $49.6 $45.7 $42.2 $36.7 $32.5 $31.5 $32.8 Managed $63.1 $68.5 $71.9 $77.1 $7
Slide 8: Annex (A)
Annex 4 (A) 8 ($ in millions, except percentages) (A) Beginning in the first quarter of 2010, the Company changed the manner in which it allocates related interest expense and capital to its reportable operating segments to more accurately reflect the funding and capital characteristics of the Compa
Slide 9: Annex
Annex 5 9 Note: The Company is presenting information on an IBO basis because management believes it presents a useful perspective on the performance of the Company’s international businesses. *Unallocated Corporate & Other Segment represents Corporate & Other Segment results which are not directly
Slide 10: Annex
Annex 6 10 * FX adjusted information assumes the average exchange rate in 2010 applies to all prior periods for purposes of currency translation into U.S. dollars. Billed Business Metrics - Reported & FX Adjusted* $ in billions, % increase/(decrease) vs. prior year: 2006 2007 2008 2009 2010 Internat
Slide 11: Annex
Annex 7 11 Note: The Company is presenting information on an IBO basis because management believes it presents a useful perspective on the performance of the Company’s international businesses. *Unallocated Corporate & Other Segment represents Corporate & Other Segment results which are not directly
Slide 12: Annex
Annex 8 12 Note: The Company is presenting information on an IBO basis because management believes it presents a useful perspective on the performance of the Company’s international businesses. *Unallocated Corporate & Other Segment represents Corporate & Other Segment results which are not directly
Slide 13: Annex
Annex 9 13 International Card Services Loans, FX Adjusted* ($ in billions, except percentages) 2008 2009 2010 Total Loans Reported $9.5 $9.2 $9.3 FX Adjusted $10.7 $9.6 $9.3 Growth Rates vs. Prior Year Reported (3%) 1% FX Adjusted (10%) (3%) * FX adjusted information assumes the average exchange rat
Slide 14: Annex
Annex 10 14 Note: The Company is presenting information on an IBO basis because management believes it presents a useful perspective on the performance of the Company’s international businesses. *Unallocated Corporate & Other Segment represents Corporate & Other Segment results which are not directl
Slide 15: Supplemental Annex
15 Supplemental Annex Average Fee Per Card on Consolidated Basis – GAAP & Adjusted * 2010 Average Fee Per Card (GAAP) $38 Average Fee Per Card (Adjusted) $41 * Average fee per card is computed from proprietary card activities only. Average fee per card is computed based on net card fees, including t
Slide 16: Presentation of Kenneth Chenault
American Express Company Financial Community Meeting February 9, 2011 Presentation of Kenneth Chenault Chairman and Chief Executive Officer
Slide 17: Agenda
17 Agenda Success in 2010 Investing in Transformation AXP : The International Story Q & A
Slide 18: Historical Financial Performance
Historical Financial Performance 18 *Net income, including results from discontinued operations, was $3.7B for 2006, down 1% vs. the prior year, $4.0B for 2007, up 8%; $2.7B for 2008, down 33%; $2.1B for 2009, down 21%, and $4.1 for 2010, up 90%. **Attributable to common shareholders. Excludes prefe
Slide 19: Historical Metric Trends
Historical Metric Trends 19 Mgd. Cardmember Loans*** Credit Performance Avg. Basic Cardmember Spending** Total Cards In Force *Card billed business includes activities (including cash advances) related to proprietary cards, cards issued under network partnership agreements, and certain insurance fee
Slide 20: Full Year 2010 Relative Performance
Full Year 2010 Relative Performance 20 $161 $141 $138 $61 $61 $45 Citi* BofA*** JPM** Cap One AXP Discover $342 $313 $213 $107 $93 $713 AXP Citi* JPM** BofA*** Cap One Discover Growth vs. PY 15% (5%) 6% 3% 5% 6% *Includes Citi-Branded Cards and Citi Holdings Retail Partners North America Cards. **In
Slide 21: Billings Growth – U.S.
21 Billings Growth – U.S. % increase/(decrease) vs. prior year: *AXP includes credit and charge, excludes debit & cash. **Includes credit and charge only, but excludes debit and cash. ***Includes credit, charge and debit, but excludes cash. (20%) (15%) (10%) (5%) 0% 5% 10% 15% 20% Q1'08 Q3'08 Q1'09
Slide 22: AXP Share of U.S. Purchase Volume
AXP Share of U.S. Purchase Volume 22 19.9% 20.6% 19.9% 19.5% 20.4% 21.2% 22.2% 23.0% 23.7% 24.0% 23.8% 25%+ (Est.) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010** General Purpose Charge and Credit* Source: The Nilson Report. *Excludes cash advances. **Internal estimate of 2010 AXP shar
Slide 23: Billings Growth – Global
Billings Growth – Global 23 † FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars. (e.g., assumes foreign exchange rate used for Q4'10 applies to Q4'09 and rate used for Q3'10 applies to Q3'09, etc.) *AXP in
Slide 24: AXP Worldwide Managed Loans
AXP Worldwide Managed Loans 24 77.078 57.2 $0 $20 $40 $60 $80 Q1'07 Q3'07 Q1'08 Q3'08 Q1'09 Q3'09 Q1'10 Q3'10 See Annex 3 for loans on a GAAP basis for periods prior to 2010. ($ in billions) Q4’10
Slide 25: USCS Net Interest Yield Managed Cardmember Loans
USCS Net Interest Yield Managed Cardmember Loans 25 February implementation of the CARD Act Increased Cost of Funds due to spike in October 1M LIBOR rate Repriced additional segments of US lending portfolio Loss of revenue due to August CARD Act implementation Impact of Collections Strategy Lower re
Slide 26: AXP Lending Managed Net Write-off Rates versus Competitors
AXP Lending Managed Net Write-off Rates versus Competitors 26 *See Annex 3 for GAAP basis for Q4’09. **Fiscal year ends November 30. US Card. *** Includes the impact of the Washington Mutual acquisition. †Global Card. ††Credit Card, includes US consumer and foreign credit card. ‡Citi-Branded Cards.
Slide 27: Agenda
27 Agenda Success in 2010 Investing in Transformation AXP : The International Story Q & A
Slide 28: 2010 Investment Priorities
28 2010 Investment Priorities Focus on premium customers Charge Card Co-Brands Drive network growth Coverage / brand awareness GNS partner volume Alternative payments Drive new revenues by leveraging our unique business model
Slide 29: Total Expenses: A Year of Investment
29 Total Expenses: A Year of Investment 16.4 19.6 0.6 0.2 0.4 0.3 1.0 0.7 2009 Total Expenses Charge & Premium Lending* Merchant & GNS** Fee Based Revenue/Alt Payments† Brand Investment Cardmember Rewards Other†† 2010 Total Expenses $ in billions; change in 2010 total expenses vs. 2009: *Includes ex
Slide 30: Global Proprietary New Cards and First Year Spend Acquired
Global Proprietary New Cards and First Year Spend Acquired 30 *First Year Spend reflects the first 12 months of spending for a new card acquired. For future periods, internal estimates have been used, i.e. new cards acquired in June’10 include 6 months of actual spend and 6 months of internally fore
Slide 31: Global Coverage Expansion
31 Global Coverage Expansion FY'2009 FY'2010 Expanding Acceptance and Growing Spend December ‘10 YTD vs. December ‘09 YTD New Signings New Booked Charge Volume Global:
Slide 32: Global Network Services Billed Business
Global Network Services Billed Business 32 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 CAGR 1999-2010: ($ in billions)
Slide 33: 2010 Investment Priorities
33 2010 Investment Priorities Focus on premium customers Charge Card Co-Brands Drive network growth Coverage / brand awareness GNS partner volume Alternative payments Drive new revenues by leveraging our unique business model
Slide 34: Fee Based Revenue
Fee Based Revenue 34 Registered Card
Slide 35: Strategic Acquisitions
35 Strategic Acquisitions* *The Loyalty Partner acquisition is expected to close in the first quarter of 2011, subject to regulatory approval.
Slide 36: 2010 Investment Priorities
36 2010 Investment Priorities Focus on premium customers Charge Card Co-Brands Drive network growth Coverage / brand awareness GNS partner volume Alternative payments Drive new revenues by leveraging our unique business model
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Slide 38: Growth Drivers
Growth Drivers 38 Drive greater value to merchant base Expand customer segment penetration Accelerate International growth across businesses Achieve significant progress within Enterprise Growth Increase share of online spend and enhance digital experience For the Moderate to Long-term:
Slide 39: Drive Greater Merchant Value
Insights and Information Services to Improve Merchant Efficiencies High Spending Cardmembers Services to Drive Merchant Revenues Drive Greater Merchant Value 39 Sources of Value
Slide 40: Penetrate New Customer Segments
Penetrate New Customer Segments 40 Prospect Segments Minorities Under 35 Women Cardmember Base
Slide 41: Accelerate International Growth
Accelerate International Growth New Payment Options Diversity Multiple Models Global Player 41
Slide 42: Enterprise Growth
Enterprise Growth Business Units 42 Online and Mobile Emerging Payments and New Ventures Global Payment Options Fee Based Services
Slide 43: Growth Drivers
Growth Drivers 43 Drive greater value to Merchant base Expand customer segment penetration Accelerate International growth across businesses Achieve significant progress within Enterprise Growth Increase share of online spend and enhance digital experience For the Moderate to Long-term:
Slide 44: AXP Online Spend – Global
44 AXP Online Spend* – Global 2009 2010 $100B + * Primarily includes spending at pure online merchants and spending through known online channels for merchants with both online and offline presence. Also includes an estimate of online spend for merchants in industries where external and internal ben
Slide 45: AXP Online Holiday Spend
45 AXP Online Holiday Spend* Nov-Dec 2009 Nov-Dec 2010 Nov-Dec 2009 Nov-Dec 2010 Estimated Spending: * Primarily includes spending at pure online merchants and spending through known online channels for merchants with both online and offline presence. Also includes an estimate of online spend for me
Slide 46: AXP Online Spend – Global
46 AXP Online Spend* – Global 2009 2010 $100B + Estimated Spending: * Primarily includes spending at pure online merchants and spending through known online channels for merchants with both online and offline presence. Also includes an estimate of online spend for merchants in industries where exter
Slide 47: AXP vs. PayPal – Global
47 AXP vs. PayPal – Global $100B+ $92B 2010 AXP PayPal* * $156 $63 2010 *Primarily includes spending at pure online merchants and spending through known online channels for merchants with both online and offline presence. Also includes an estimate of online spend for merchants in industries where ex
Slide 48: Membership Rewards – U.S. Online Point Redemptions
48 Membership Rewards – U.S. Online Point Redemptions 63% 70% 2009 2010 Offline Online
Slide 49: Membership Rewards: A Virtual Currency
49 Membership Rewards: A Virtual Currency
Slide 50: Small Business Solutions
Small Business Solutions 50 Launched 2009 All-in-one online invoicing and payment acceptance solution Launched 2010 Online tool to compare and purchase commercial insurance more effectively Launched 2010 Online solution to manage search engine marketing OPEN Business Apps:
Slide 51: Small Business – OPEN Forum
Small Business – OPEN Forum 51 SCORE Speed Coaching August 10, Orange County, CA Connecting Cardmembers to share insights and build relationships A community designed to help small businesses grow
Slide 52: Corporations – Product Evolution
Corporations – Product Evolution 52 B2B Payment Solutions Corporate Card Programs Global Business Travel Corporate Purchasing Card Buyer Initiated Payments vPayment Integrated Online Expense Management
Slide 53: Growth Drivers
Growth Drivers 53 Drive greater value to Merchant base Expand customer segment penetration Accelerate International growth across businesses Achieve significant progress within Enterprise Growth Increase share of online spend and enhance digital experience For the Moderate to Long-term:
Slide 54: Profile: U.S. Online Cardmembers
Profile: U.S. Online Cardmembers 54 Household Income Under 35 Higher Average Spend Online Spending Lower Credit Losses Enrollment in Online Servicing
Slide 55: Growth Drivers
Growth Drivers 55 Drive greater value to Merchant base Expand customer segment penetration Accelerate International growth across businesses Achieve significant progress within Enterprise Growth Increase share of online spend and enhance digital experience For the Moderate to Long-term:
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Slide 57: Agenda
57 Agenda Success in 2010 Investing in Transformation AXP : The International Story Q & A
Slide 58: Presentation of Doug Buckminster
American Express Company Financial Community Meeting February 9, 2011 Presentation of Doug Buckminster President, International Consumer Card and Small Business Services
Slide 59: AXP: The International Story
59 AXP: The International Story Large and diverse footprint Differentiated assets and capabilities Flexibility to meet market conditions Delivering strong growth Accelerate momentum with growth opportunities Commitment to win a larger share of International for AXP
Slide 60: Agenda
60 Agenda AXP Footprint in International Performance in International Growth Going Forward
Slide 61: AXP International Across the Payments Landscape
61 AXP International Across the Payments Landscape Note: The trademarks, logos and service marks used on this slide and throughout this presentation are the property of their respective owners.
Slide 62: Global Presence
Global Presence: Over 130 Markets 62 AXP Top Ten Markets by Billings, 2010 AXP International Markets
Slide 63: International Business Operations Business Growth
International Business Operations* Business Growth 63 $0.0 $0.5 $1.0 $1.5 2006 2007 2008 2009 2010 $0 $50 $100 $150 $200 $250 2006 2007 2008 2009 2010 $ in billions, FX Adjusted**: CAGR 2006-2010: CAGR 2006-2010: Growth vs. PY (12% ) (1% ) % 54% Growth vs. PY 14% 11% (2% ) % *International Business
Slide 64: Strong Network of Relationships
64 Strong Network of Relationships
Slide 65: Airlines and Financial Institutions
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Slide 66: Strong Network of Relationships
66 Strong Network of Relationships
Slide 67: Unique Capabilities and Assets
67 Unique Capabilities and Assets Brand Loyalty Marketing Marketing Analytics Co-branding Relationship Management Customer Service Partnership Management Risk Management New Product Development Global Platforms
Slide 68: Agenda
68 Agenda AXP Footprint in International Performance in International Growth Going Forward
Slide 69: International Business Operations Financial Performance
International Business Operations * Financial Performance 69 69 *International Business Operations (IBO) includes the ICS segment and the international portions of the GNMS and GCS segments. See Annex 5, 7 and 8 for a reconciliation to the geographic operations footnote to be set forth in the Compan
Slide 70: International Business Operations Cards in Force and Billed Business
International Business Operations* Cards in Force and Billed Business 70 $0 $50 $100 $150 $200 $250 2006 2007 2008 2009 2010 $ in billions, FX Adj.** Growth vs. PY 14% 11% (2%) 15% 2006 2007 2008 2009 2010 Growth vs. PY 14% 13% 2% 8% millions *International Business Operations (IBO) includes the ICS
Slide 71: International Business Operations Billings Growth vs. U.S.
71 International Business Operations* Billings Growth vs. U.S. (20%) (10%) 0% 10% 20% Q1'08 Q3'08 Q1'09 Q3'09 Q1'10 Q3'10 International Business Operations (FX Adj.**) U.S. % increase/decrease vs. prior year: Q4’10 *International Business Operations (IBO) includes the ICS segment and the internation
Slide 72: International Card Services Segment
International Card Services Segment 72 $10.7 $9.6 $9.3 $0.0 $4.0 $8.0 $12.0 2008 2009 2010 $ in billions Growth vs. PY (10% ) (3%) Canada $2.5B Australi a $2.1B UK $1.8B Other $1.9B Mexico $1.0B * FX adjusted information assumes the average exchange rate in 2010 applies to all prior periods for purp
Slide 73: International Card Services Segment
73 International Card Services Segment 0% 2% 4% 6% 8% 10% 12% Q1 '08 Q3'08 Q1 '09 Q3'09 Q1 '10 Q3'10 ICS USCS Managed* *See Annex 3 for a reconciliation to GAAP basis for periods prior to 2010. Q4’10
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Slide 75: International and US: Similarities
International and US: Similarities 75 High Spending Customer base Strong Credit Quality Strong Co-Brand Practice Strong Digital Engagement
Slide 76: International and US: Differences
International and US: Differences 76 Spend Velocity Outbound Spend Average Fee Per Card (Adj.)* 7x 5x 19% 2% $68 $36 *Average fee per card is computed from proprietary card activities only. Average fee per card is computed based on net card fees, including the amortization of deferred direct acquisi
Slide 77: International Business Operations Regional Overview
International Business Operations* Regional Overview 77 Billed Business ($ in B) Card in Force (in MM) CAGR 2008-2010 CAGR 2008-2010 1% $87.7 2% 14.2 12% $85.5 13% 14.1 7% $60.5 1% 13.8 IBO Pre-Tax Income ($ in MM) CAGR 2008-2010 32% $572 57% $304 37% $503 IBO Pre-Tax Income/Billed Business 65bps 36
Slide 78: Growth Markets
78 Growth Markets “Growth Markets“ include BRIC plus Turkey, Mexico, Indonesia and South Korea
Slide 79: International Business Operations Growth Market Performance
International Business Operations* Growth Market Performance 79 8.4 8.6 10.2 2008 2009 2010 “Growth Markets“ include BRIC plus Turkey, Mexico, Indonesia and South Korea $203 $162 $318 2008 2009 2010 $28.7 $32.8 $39.2 2008 2009 2010 $ in billions, FX Adj.** In millions $ in millions, FX Adj.** *Inter
Slide 80: Flexible, Multi-Model Approach
Flexible, Multi-Model Approach 80 Attractive Stable Margins Large Affluent Segment Strong Credit Bureau Financial Institution Loyalty Co-Brand Availability Merchant Value
Slide 81: Mexico: High Growth Proprietary Market
Mexico: High Growth Proprietary Market 81 (1%) Highly Profitable High Share of Spend Strong Brand, Relevance 2006-10 CAGR, FX Adj*: * FX adjusted information assumes the average exchange rate in 2010 applies to all prior periods for purposes of currency translation into U.S. dollars. The CAGR for 20
Slide 82: Australia: GNS and Proprietary
Australia: GNS and Proprietary 82 Large Affluent Segment Strong Bank Concentration 2006-10 CAGR, FX Adj*: * FX adjusted information assumes the average exchange rate in 2010 applies to all prior periods for purposes of currency translation into U.S. dollars. The CAGR for 2006 – 2010 for billed busin
Slide 83: Brazil: Partnering for Growth
Brazil: Partnering for Growth 83 10% Strong bank distribution – card & merchant Relatively volatile market Jul ‘05-Jun ’10* CAGR, FX Adj*: * FX adjusted information assumes the average exchange rate in 2010 applies to all prior periods for purposes of currency translation into U.S. dollars. The CAGR
Slide 84: Agenda
84 Agenda AXP Footprint in International Performance in International Growth Going Forward
Slide 85: Growing International
85 Growing International 85 Partnerships Loyalty New Segments Alternative Payments
Slide 86: Growing International
86 Growing International 86 Coverage & Utilization Loyalty Alternative Payments Digital Partnerships New Segments Fee Based Offerings &
Slide 87: Products for Business-Sized Spend
~~ Products for Business-Sized Spend Commercial Underwriting & Relationship Management Targeted Merchant Acqui n Rewards and Insurance Benefits
Slide 88: Dental Industry – Japan
88 Dental Industry – Japan 2008 2009 2010 X 3X 12X 2008 2009 2010 4.2K 0.3K
Slide 89: Growth Through Partners
89 Growth Through Partners Help partners address high-end segment through our unique expertise. Increase size of business through existing Bank and co-brand partners.
Slide 90: Expanding Merchant Coverage
90 Expanding Merchant Coverage Launched Sept 2010 Launched June 2010 Launched Nov 2010
Slide 91: Digitize the Business
91 Digitize the Business In addition to meeting evolving customer needs, our advancements in digital engagement create cost and revenue opportunity. Online Card Acquisition Mobile Card Apps and electronic wallet Online Spend Paperless statements Online Servicing Online Remittances Deliver quality se
Slide 92: Fee Revenue Mix
Fee Revenue Mix 92 21% 35% 44% 1. Strengthen value and price for value 2. Innovative products for current base 3. Add new sources of revenue Net Card Fees & Other Revenue Discount Revenue Net Interest Income
Slide 93: Why Loyalty Services?
Why Loyalty Services? 93
Slide 94: Coalition Loyalty Structure
94 Coalition Loyalty Structure Consolidate loyalty programs More earn opportunities Access to valuable discounts and offers Gain new customers Higher consumer spend Increased loyalty / reduced churn Build relationships with large customer pool Access to rich data Facilitate commerce across coalition
Slide 95: Loyalty Partner Synergies
Loyalty Partner Synergies 95 Creating value through: Card Distribution New Card Products Membership Rewards Online and digital channels Location-based offers New Markets Add 100M Consumers
Slide 96: AXP: The International Story
96 AXP: The International Story Large and diverse footprint Differentiated assets and capabilities Flexibility to meet market conditions Delivering strong growth Accelerate momentum with growth opportunities Commitment to win a larger share of International for AXP
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