American Express Company · NYSE:AXP
American Express — Debt Investor Presentation (May 2012)
43 slides from American Express's debt investor presentation, May 9, 2012
Slide 1: American Express Company Fixed Income Presentation
American Express Company Fixed Income Presentation May 2012
Slide 2: Agenda
Agenda AXP Overview Performance AXP Capital & Funding Management 2
Slide 3: AXP Franchise
AXP Franchise American Express is a global service company that provides customers with access to products, insights and experiences that enrich lives and build business success. Our principal products are charge and credit cards, focusing on the premium market sector. We are the world's largest
Slide 4: Company Overview
Company Overview AMERICAN EXPRESS COMPANY ($ in millions) 2010 2011 Revenues Net of Interest Exp. $27,582 $29,962 Income from Continuing Operations $4,057 $4,899 Net Income $4,057 $4,935 Return on Average Equity* 27.5% 27.7% U.S. Card Services International Card Global Commercial Global Network & Co
Slide 5: Payments Landscape
Payments Landscape Note: The trademarks, logos and service marks used on this slide and throughout this presentation are the property of their respective owners. 5
Slide 6: Spend-Centric Model
Spend-Centric Model The AXP spend-centric business model focuses primarily on generating revenues by driving spending on our cards, and secondarily finance charges and fees, allowing us to grow market share in the payments industry. Investments in Premium Value Attractive Premium Customer Base Econo
Slide 7: Agenda
Agenda AXP Overview Performance AXP Capital & Funding Management 7
Slide 8: Q1'12 Summary Financial Performance
Q1'12 Summary Financial Performance ($ in millions, except per share amounts) Q1'12 Q1‘11 % Inc/(Dec) Total Revenues Net of Interest Expense $7,614 $7,031 8% FX Adjusted † $7,007 9% Net Income $1,256 $1,177 7% Diluted EPS* $1.07 $0.97 10% Return on Average Equity 27% 28% Average Diluted Shares Outst
Slide 9: Q1'12 Metric Performance
Q1'12 Metric Performance 1Q'10 Q1'12 1Q'09 Q1'11 % Inc/Dec FX Adj.* Billed Business ($ in B)** $211.2 $187.9 12% 13% Total Cards In Force (MM) 98.7 92.4 7% Avg. Basic Cardmember † $3,772 $3,438 10% 10% Spending (Dollars) Cardmember Loans ($ in B) $60.1 $57.8†† 4% 4% WW Travel Sales ($ in B) $6.2 $6.
Slide 10: Metric Trends
Metric Trends % increase/(decrease) vs. prior year: Q1'11 Q2'11 Q3'11 Q4'11 Q1’12 Billed Business* 17% 16% 11% 18% 12% Billed Business FX Adjusted** 15% 15% 13% 11% 13% Total Cards In Force 5% 8% 7% 6% 7% Avg. Basic Cardmember Spending † 14% 15% 12% 8% 10% Cardmember Loans 0% 2% 3% 4% 2% Worldwide L
Slide 11: Charge Card Billed Business vs. Receivables Growth
Charge Card Billed Business vs. Receivables Growth $ in billions; % increase/(decrease) vs. prior year: 25% 15% 5% (5%) Proprietary Charge Card Billed Business* (15%) Total Ending Cardmember Receivables (25%) Q1'09 Q3'09 Q1'10 Q3'10 Q1'11 Q3'11 Q1'12 Ending Receivables $30.3 $32.1 $33.7 $35.1 $37.7
Slide 12: Lending Billed Business vs. Managed Loan Growth
Lending Billed Business vs. Managed Loan Growth % increase/(decrease) vs. prior year: 25% 15% 5% (5%) (15%) (25%) Q1'09 Q3'09 Q1'10 Q3'10 Q1'11 Q3'11 Q1'12 Proprietary Credit Card Billed Business* Ending Loans - Managed** Ending Receivables $65.0 $60.7 $57.6 $57.2 $57.8 $58.2 $60.1 *Includes lending
Slide 13: Q1'12 Relative Performance
Q1’12 Relative Performance Total Billed Business Ending Loans ($ in billions) ($ in billions) Spend Velocity $146 $211 AXP 8.5x $125 Industry 2.4x $96 $61 $60 $87 $85 $46 $45 $34 $26 AXP JPM** Citi* BofA*** Cap One† Discover†† Citi* JPM** BofA*** Cap One † AXP Discover †† Growth Growth vs. PY 12% 12
Slide 14: Charge Card Credit Performance
Charge Card Credit Performance USCS Net Write-off Rate ICS/GCS Net Loss Ratio 2.3% 1.9% 1.8% 1.7% 1.5% 0.09% 0.09% 0.10% 0.10% 0.11% Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Note: USCS Net write-off rates above include Principal only. See Statistical tables in Q1’12 Earnings Relea
Slide 15: AXP Lending Net Write-off Rates versus Competitors
AXP Lending Net Write-off Rates versus Competitors 8.4% 7.4% 7.0% 6.0% 6.1% 5.4% 5.4% 4.4% 4.1% 3.7% 3.1% 2.3% Q1'11 Q1'12 AXP* Discover** JPMorgan*** Cap One † Bank of America †† Citi ††† *Rates include principal only. See Slide 10 for net write-off rates including interest and/or fees. **Fiscal ye
Slide 16: AXP Lending 30 Days Past Due Rates versus Competitors
AXP Lending 30 Days Past Due Rates versus Competitors 4.8% 4.6% 3.9% 3.6% 3.6% 3.5% 3.5% 3.6% 2.6% 2.2% 1.9% 1.4% Q1'11 Q1'12 AXP Discover* JPMorgan** Cap One*** Bank of America † Citi †† *Fiscal year ends November 30. US Card. **Results exclude Commercial Card. ***Global Card. †Credit Card, include
Slide 17: Peer Comparison - Trust FICO Distributions
Peer Comparison - Trust FICO Distributions* FICO <660 (“Sub-prime”)** FICO >720 (“Super-prime”) 76% 26% 63% 63% 55% 50% 50% 19% 45% 17% 15% 15% 12% 8% AXP AXP Citi JP Bank of Discover Cap One AXP AXP JP Citi Bank of Discover Cap One Charge Lending Morgan America Charge Lending Morgan America Trust†
Slide 18: Agenda
Agenda AXP Overview Performance AXP Capital & Funding Management 18
Slide 19: Capital Management
Capital Management (Regulatory Ratios, Debt Investor Expectations, Acquisition Capacity, CCAR) (Organic growth and acquisition, dividends, repurchases, and capital-raising) 19
Slide 20: Capital Ratios
Capital Ratios Q1'12 Q4'11 Tier 1 Common Risk-Based* 13.4% 12.3% Tier 1 Leverage 10.8% 10.2% Tier 1 Risk-Based Capital 13.4% 12.3% Total Risk-Based Capital 15.4% 14.3% Tangible Common Equity to Risk- 13.2% 12.0% Weighted Assets (“TCE/RWA”)** Note: These ratios represent a preliminary estimate as of
Slide 21: CCAR Stress Test Results – Tier 1 Common Ratio
CCAR Stress Test Results – Tier 1 Common Ratio Minimum Tier 1 Common Ratio in the Supervisory Stress Scenario (%) 13.0% 12.5% 10.8% 7.8% 6.4% 6.3% 6.6% 5.9% 5.7% 5.4% 5.3% 5.1% 5.4% 5.9% 5.4% 6.0% 4.9% 4.8% 2.5% Source: Federal Reserve estimates in the Supervisory Stress Scenario for the for nine-qu
Slide 22: CCAR Stress Test Results – Pre-Tax Net Income Rate
CCAR Stress Test Results – Pre-Tax Net Income Rate Pre-Tax Net Income Rates in the Supervisory Stress Scenario (%) 4.8% 1.6% 0.8% -0.5% -0.7% -1.0% -0.3% -1.6% -1.5% -1.5% -2.0% -2.6% -2.8% -2.5% -3.3% -3.2% -3.2% -3.3% -5.2% Ally SunTrust Wells CapOne Citi MetLife PNC USB BNYM Fifth Third KeyCorp M
Slide 23: Funding & Liquidity
Funding & Liquidity Our liquidity strategy is to target holding sufficient cash and readily marketable securities to meet all maturing funding obligations for the next 12 months, without having to access the unsecured or secured debt capital markets, or raise further retail deposits. We continue
Slide 24: Funding & Liquidity Sources
Funding & Liquidity Sources Funding Sources Contingent Sources ■ Deposits ■ Cash & Readily Marketable ■ ABS Securities ■ Discount Window ■ Unsecured Term Debt ■ Term Bank Facility ■ Committed Bank Credit Facilities ■ Commercial Paper ■ Secured Borrowing through Conduit Facility* *Drawn balance of th
Slide 25: Q1'12 Liquidity Snapshot
Q1'12 Liquidity Snapshot ($ in billions) Resources Funding Maturities Cash* $20 Q2‘12 4 Readily Marketable 1 4 Q3'12 Securities Liquidity Portfolio 21 Q4'12 4 Commercial Paper (1) 1 Q1‘13 Outstanding Twelve Month Excess Cash & Securities $20 Maturities $13** * Includes $27.1B classified as Cash and
Slide 26: US Retail Deposit Programs
US Retail Deposit Programs ($ in billions) Third Party Third Party Total Direct * CDs Sweep Deposits December 31, 2011 Balance $15.5 $10.8 $11.0 $37.3 Maturities (0.1) (1.1) - (1.2) Amount Raised 1.3 - 0.1 1.4 March 31, 2012 Balance $16.7 $9.7 $11.1 $37.5 Weighted Avg., Remaining Maturity 21 Months
Slide 27: American Express Primary Issuance Structure
American Express Primary Issuance Structure American Express Company (AXP) Total Assets*: $153.3B Credit Ratings † † : A3/BBB+/A+/A(High) Regulated By: FRB & SEC American Express Travel Related Services (TRS) American Express Total Assets*: $152.3B Issuance Trust (AEIT) Credit Ratings † †: A2/BBB+/A
Slide 28: AXP & TRS
AXP & TRS AXP and TRS are Bank and Financial Holding Companies American Express • Leading global payments and travel company Company (AXP) • Sources of funding: Credit Ratings*: A3/BBB+/A+/A(High) • Dividends from subsidiaries • Unsecured long-term notes • Issues corporate charge cards and prepaid p
Slide 29: Credco
Credco • Funds the following products: • US and Non-US charge cards American Express Travel Related Services (TRS) • Non-US revolving cards • Sources of funding: • Issuance of US and non-US unsecured long term debt • Asset backed securities (ABS) issued by American Express Issuance Trust • Borrowing
Slide 30: US Banks
US Banks American Express Travel Related Services (TRS) American Express American Express Centurion Bank (AECB) Bank, Federal Savings Bank (AEFSB) 100% owned by TRS 100% owned by TRS Credit Ratings*: A2/BBB+/A+/A(High) Credit Ratings*: A2/BBB+/A+/A(High) • Incorporated in 1987 • Incorporated in 2000
Slide 31: Outstanding Funding Composition
Outstanding Funding Composition ($ in billions) $105.4 $98.7 $100.0 $98.0 2.3 3.4 3.4 3.8 26.3 Short-term Debt* 29.7 37.9 38.2 Deposits** 30.0 23.3 20.9 17.5 Card ABS*** † 46.8 Unsecured Term† 42.3 37.8 38.5 12/31/09 12/31/10 12/31/11 3/31/12 *Short-term Debt as of 3/31/12 includes $0.4B of Commerci
Slide 32: Term Maturity Profile – Debt and LT CDs
Term Maturity Profile – Debt and LT CDs ($ in billions) 3/31/12 $16.5 $14.5 $11.7 4.8 $11.7 2.6 Long term CDs* 0.2 2.1 1.2 4.1 4.0 $4.5 Card ABS** $4.7 0.6 6.3 0.3 10.3 Unsecured** 7.6 7.9 1.9 6.9 3.3 2.5 2012 2013 2014 2015 2016 Thereafter 12/31/11 $19.5 $14.3 4.8 $14.1 Long term CDs* $11.0 3.2 2.4
Slide 33: American Express ABS Trusts
American Express ABS Trusts American Express American Express Credit Account Master Trust Issuance Trust (AEIT) (AMXCA) Trust Established • 1996 • 2005 Eligible loans and receivables • US Consumer and Small Business • US Consumer, Small Business and cardmember loans Corporate cardmember receivables
Slide 34: Credit Account Master Trust - Performance Trend
Credit Account Master Trust - Performance Trend Days Delinquencies Past Due Rate vs. Default Rate $500 MM 7% 6% $400 MM 5% $300 MM 4% $200 MM 3% 2% $100 MM 1% $ MM 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/11 11/11 12/11 1/12 2/12 3/12 0% 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/11 11/11 12/11 1/12 2/12 3/
Slide 35: Issuance Trust - Performance Trend
Issuance Trust - Performance Trend Days Delinquencies Past Due vs. Default Rate $80 MM 2.5% $60 MM 2.0% 1.5% $40 MM 1.0% $20 MM 0.5% $ MM 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/11 11/11 12/1 1/12 2/12 3/12 0.0% 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/11 11/11 12/11 1/12 2/12 3/12 31-60 61-90 90+ Annual
Slide 36: Slide 36
Slide 37: Annex 1
Annex 1 Worldwide Cardmember Lending ($ in billions, except percentages) Q1'09 Q2'09 Q3'09 Q4'09 Total Worldwide Ending Loans GAAP $ 36.7 $ 32.5 $31.5 $32.8 Growth vs PY (26%) (34%) (31%) (22%) Managed $ 65.0 $ 62.9 $60.7 $61.8 Growth vs PY (13%) (18%) (20%) (14%) For periods ended on or prior to De
Slide 38: Annex 2
Annex 2 The Tier 1 Common Risk-Based Capital Ratio is calculated as Tier 1 Common Equity, a non-GAAP measure, divided by Risk-weighted assets. Tier 1 Common Equity is calculated by reference to Total Shareholders’ Equity as shown below: Tier 1 Common Equity Reconciliation as of March 31, 2012 ($ in
Slide 39: Total Payout Ratio
Total Payout Ratio Percentage of Capital Generated Returned to Shareholders 105% 88% 61% 56% 43% 35% 32% 29% 30% ($ in billions) 2007 2008 2009* 2010 2011 Q2'11 Q3'11 Q4'11 Q1'12 Share Repurchases $3.6 $0.2 - $0.6 $2.3 $0.8 $1.2 $0.3 $0.2 Note: Payout Ratio is calculated by dividing the total amount
Slide 40: 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 the Company’s expected business and financial perfo
Slide 41: Forward Looking Statements
Forward Looking Statements •the Company’s net interest yield on U.S. cardmember loans not remaining at historical levels, which will be influenced by, among other things, the effects of the CARD Act (including the regulations requiring the Company to periodically reevaluate APR increases), interest
Slide 42: Forward Looking Statements
Forward Looking Statements •uncertainty in the growth of operating expenses relative to the growth of revenues in 2012 and subsequent years and the possibility that the ratio of total expenses to revenues will not migrate back towards historical levels over time, which will depend on (i) factors aff
Slide 43: Forward Looking Statements
Forward Looking Statements •changes affecting the Company’s ability to accept or maintain deposits due to market demand or regulatory constraints, such as changes in interest rates and regulatory restrictions on the Company’s ability to obtain deposit funding or offer competitive interest rates, whi
American Express Company — Debt Investor Presentation (May 2012) on 6ix