American Express Company · NYSE:AXP
American Express — Q2 2022 Earnings Presentation
43 slides from American Express's earnings presentation, Jul 22, 2022
Slide 1: American Express Earnings Conference Call Q2'22
American Express Earnings Conference Call Q2’22 JULY 22, 2022
Slide 2: Summary Financial Performance
Summary Financial Performance ($ in millions; except per share amounts) YoY% Q2’22 Q2’21 Inc/(Dec) Total Revenues Net of Interest Expense $13,395 $10,243 31% FX-Adjusted* $10,044 33% Pretax Pre-Provision Income** $2,953 $2,334 27% Provision Expense $410 ($606) (168%) Net Income $1,964 $2,280 (14%) D
Slide 3: Total Network Volumes Growth
Total Network Volumes Growth % Increase/(decrease) vs. Prior Year: Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Billed Business (9%) 51% 31% 33% 35% 30% Processed Volumes (1%) 26% 18% 15% 15% 19% Total Network Volumes (8%) 46% 29% 30% 32% 28% $395 $368 $350 $54 $ in Billions $331 $316 $52 $49 Total Network V
Slide 4: Billed Business G&S Growth
Billed Business G&S Growth G&S by Online vs. Offline % Increase/(decrease) vs. Prior Year (FX-adjusted): 50% 30% Offline Total G&S Online 10% (10%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q2’22 Online Offline Total YoY 15% 23% 18% % of Total 66% 34% 100% 4 Note: G&S = Goods & Services spending. Online =
Slide 5: Billed Business T&E Growth
Billed Business T&E Growth T&E by Customer Type % Increase/(decrease) vs. 2019 (FX-adjusted): 60% Q2’22 % of Q2’19 40% US Consumer 136% 20% Intl Consumer 109% Total SME 108% 0% Total T&E 108% (20%) (40%) Large & Global 60% Corporate (60%) (80%) (100%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 US Intl Tota
Slide 6: Global Consumer Billed Business
Global Consumer Billed Business G&S vs. T&E Billed Business Growth by Age Cohort Millennials Baby Q2’22 G&S T&E Total Q2’22 Gen-X + Gen-Z Boomer + YoY 18% 70% 31% YoY 48% 30% 19% % of Total 30% 38% 31% $ in Billions % Increase/(decrease) vs. Prior Year (FX-adjusted): Pre- 80% $187 Pandemic $174 $164
Slide 7: Global Commercial Billed Business
Global Commercial Billed Business G&S vs. T&E SME vs. Large & Global Corporate US Intl Total Q2’22 G&S T&E Total Q2’22 L&G Total SME SME SME YoY 17% 117% 30% YoY 23% 40% 25% 58% 30% Vs. ‘19 33% (15%) 19% Vs. ‘19 32% 40% 33% (22%) 19% $ in Billions % of Total 70% 14% 84% 16% 100% Pre- % Increase/(dec
Slide 8: Worldwide Total Loans and Card Member Receivables
Worldwide Total Loans and Card Member Receivables Total Ending Loans Total Ending CM Receivables ($ in billions) ($ in billions) $99.5 $91.5 $92.1 $77.8 $79.4 $53.6 $53.2 $56.0 $47.6 $48.8 YoY 4% 9% 20% 27% 28% 27% 19% 23% 27% 18% Growth Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 27
Slide 9: Card Member Credit Metrics
Card Member Credit Metrics Card Member Loans Net Write-off Rates Card Member Receivables Net Write-off Rates (excluding GCP) 1.0% 0.8% 0.8% 0.8% 0.6% 0.6% 0.6% 0.3% 0.2% 0.3% Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 30+ Days 30+ Days Past Due 0.6% 0.7% 0.7% 0.7% 0.7% Past Due* 0.5
Slide 10: Total Provision
Total Provision ($ in millions) $2,621 $1,703 $1,555 $628 $665 ($111) ($675) $410 $918 $927 ($606) ($33) Total Provision $781 ($191) $53 $58 $563 $379 Write-offs $260 $202 $221 $287 $352 ($116) ($168) ($320) ($674) ($393) Reserve ($1,054) ($866) Build/(Release)* Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q
Slide 11: Total Reserves
Total Reserves Balance Sheet Credit Reserves* ($ in billions) $1.5 $5.8 ($2.4) $0.1 $0.3 ($0.2) $1.4 $4.3 Card Member ($2.2) Receivables $0.1 $3.4 ($0.3) $3.1 $0.1 $3.2 $0.1 $5.6 $0.1 $0.1 Total $4.2 Loans $3.4 $3.0 $3.0 Q1'20 Q4'20 Q4'21 Q1'22 Q2'22 Beginning Ending Ending Ending Ending Reserves Re
Slide 12: Revenue Performance
Revenue Performance ($ in millions) Q2’22 YoY% Q2’22 Q2’21 % of Total Inc/(Dec) Revenue Discount Revenue $7,873 $6,044 30% 59% Net Card Fees $1,481 $1,286 15% 11% Service Fees and Other Revenue $1,265 $705 79% 9% Processed Revenue $416 $390 7% 3% Net Interest Income $2,360 $1,818 30% 18% Revenues Ne
Slide 13: Discount Revenue
Discount Revenue Discount Revenue Growth* % Increase/(decrease) vs. Prior year (FX-adjusted): 70% 57% 60% 50% 36% 38% 40% 34% 32% 30% 20% 10% 0% (10%) (10%) (20%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 * Discount Revenue adjusted for FX and the related growth rates are non-GAAP measures. See Annex 3 fo
Slide 14: 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) 3.2 20% 19% 3.0 16% 2.7 2.6 2.4 15% 2.1 11% 10% 10% 10% 10% 5% 0% Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Note: Effective Q2’21
Slide 15: Net Interest Income
Net Interest Income Net Interest Income* $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): $2.4 $2.1 $2.2 $2.1 $2.0 $1.8 YoY 14% (5%) 6% 11% 20% 31% Change Q2'19 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 WW Net Interest Yield on CM 10.9% 10.6% 10.8% 10.3% 10.5% 10.4% Loan
Slide 16: Total Revenue Net of Interest Expense
Total Revenue Net of Interest Expense Total Revenue Growth* % Increase/(decrease) vs. Prior year (FX-adjusted): 45% 33% 35% 31% 31% 31% 24% 25% 15% 5% (5%) 10% 9% 9% 1% (28%) (20%) (18%) (13%) 29% (13%) (15%) (25%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 * Total Revenue Net of Interest Expense adjusted
Slide 17: Expense Performance
Expense Performance ($ in millions) YoY% Q2’22 Q2’21 Inc/(Dec) Card Member Rewards $3,591 $2,712 32% Business Development $1,404 $889 58% Card Member Services $678 $432 57% Variable CM Engagement Expenses $5,673 $4,033 41% Marketing $1,502 $1,330 13% Operating Expenses* $3,267 $2,546 28% Total Expen
Slide 18: Capital
Capital Common Equity Tier 1 Capital Return ($ in billions) $3.6 14.2% $3.4 12.6% 10.5% 10.4% 10.3% $1.9 $1.3 $1.0 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 CET1 Ratio Target: 10-11% 18
Slide 19: The Growth Plan
The Growth Plan 2022 Guidance 2023 Expectations 2024+ Aspiration Revenue Growth: Revenue Growth: 23% - 25% 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 19
Slide 20: Appendix
Appendix
Slide 21: Historical Network Volumes Trend
Historical Network Volumes Trend Network Volumes Indexed to 2000 COVID-19 Great Financial Recession YoY (18%) YoY 9/11 Flat YoY (9%) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 21 Note: 2022 network volumes are based on forecaste
Slide 22: Q2'22 Network Volumes Growth by Customer Type
Q2’22 Network Volumes Growth by Customer Type % of Total US Int’l US Int’l Large & Global Processed Network Consumer Consumer* SME SME* Corporate* Volumes* Volumes 36% 12% 27% 5% 6% 14% % Increase/(decrease) vs. Prior Year (FX-adjusted): 58% 42% 40% 27% 23% 19% Consumer Commercial 22 1 Annex 2 for r
Slide 23: Travel & Entertainment Billed Business
Travel & Entertainment Billed Business T&E by Industry % Increase/(decrease) vs. 2019 (FX-adjusted): 60% 40% Restaurants 20% Other Total T&E 0% Lodging (20%) Airlines (40%) (60%) (80%) (100%) (120%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q2’22 Restaurants Lodging Airlines Other Total vs. ‘19 35% (5%) (
Slide 24: 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) Credit Insurance Claim (Proceeds)/Repayment within Other, net $33M 0.5%
Slide 25: Credit Reserve Build Macroeconomic Assumptions
Credit Reserve Build Macroeconomic Assumptions US Unemployment Rate % US GDP Growth* % 18% 8% 16% 6% 14% 4% 12% 2% 10% 0% 8% (2%) 6% 4% (4%) 2% (6%) 0% (8%) Q4'21 Q1'22 Q2'22 Q3'22 Q4'20 Q1'21 Q2'21 Q3'21 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23
Slide 26: Funding Mix
Funding Mix Funding Mix ($ in billions) $140 $134 Short-term $124 1% 2% Funding 1% 54% 69% Deposits 68% 14% 10% 9% Card ABS* 30% Unsecured 21% 21% Term** Q2'19 Q2'21 Q2'22 Note: % of total may not foot due to rounding. * Reflects face amount of Card ABS, net of securities retained by the Company. In
Slide 27: FX Impact on Network Volumes and Revenue Growth
FX Impact on Network Volumes and Revenue Growth Network Volumes Revenue Net of Interest Expense % Increase/(decrease) vs. Prior year: % Increase/(decrease) vs. Prior year: 50% 50% (15%) (15%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Reported FX Adj. Reported FX Adj. Eu
Slide 28: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis The following summary provides selected variance information for the three months ended June 30, 2022 compared to the same period in the prior year. It should be read in conjunction with the statistical tables for Q2’22, available at ir.americanexpress.com.
Slide 29: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis • Card Member Rew ards Expense: Increased 32% versus Q2’21, pr imarily driven by increases in Membership Rew ards, cash back rew ards and cobrand rew ards expenses, all of w hich w ere primar ily dr iven by higher billed business. The increase in Membership
Slide 30: Annex 1: Pretax Pre-Provision Income
Annex 1 Pretax Pre-Provision Income ($ in millions) YoY% Q2’22 Q2’21 Inc/(Dec) Pretax income $2,543 $2,940 (14%) Provisions for credit losses $410 ($606) (168%) Pretax pre-provision income $2,953 $2,334 27% 30
Slide 31: Annex 2 (1 of 2): Network Volumes – Reported & FX-Adjusted
Annex 2 (1 of 2) Network Volumes – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Int’l Consumer Reported (10%) 59% 27% 28% 36% 28% FX-Adjusted (17%) 46% 24% 32% 43% 42% Global Consumer Reported (4%) 62% 34% 34% 37% 27% FX-Adjusted (6%) 58% 34% 35%
Slide 32: Annex 2 (2 of 2): Network Volumes – Reported & FX-Adjusted
Annex 2 (2 of 2) Network Volumes – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q2’22 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 vs Q2’19 Large & Global Corporate Reported (43%) 37% 26% 34% 41% 55% (23%) FX-Adjusted (44%) 34% 25% 34% 42% 58% (22%) Int’l SME Reported (1%) 50% 28% 27% 27% 2
Slide 33: Annex 3: Discount Revenue – Reported & FX-Adjusted
Annex 3 Discount Revenue – Reported & FX-Adjusted* ($ in billions) Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 GAAP Discount Revenue $5.6 $3.8 $4.8 $5.3 $5.0 $6.0 $6.4 $7.1 $6.8 $7.9 FX-Adjusted Discount Revenue* $5.6 $3.8 $4.8 $5.3 $5.0 $6.0 YoY% Inc/(Dec) in GAAP Discount (10%) 5
Slide 34: Annex 4: Net Card Fees – Reported & FX-Adjusted
Annex 4 Net Card Fees – Reported & FX-Adjusted* ($ in billions) Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 GAAP Net Card Fees $1.1 $1.1 $1.2 $1.2 $1.3 $1.3 $1.3 $1.3 $1.4 $1.5 FX-Adjusted Net Card Fees* $1.1 $1.2 $1.2 $1.2 $1.2 $1.2 YoY% Inc/(Dec) in GAAP Net Card 13% 13% 10% 10%
Slide 35: Annex 5: Net Interest Income – Reported & FX-Adjusted
Annex 5 Net Interest Income – Reported & FX-Adjusted* ($ in billions) Q2’18 Q2’19 Q2’20 Q3’20 Q4’20 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 GAAP Net Interest Income $1.8 $2.1 $1.9 $1.9 $1.9 $1.8 $2.0 $2.1 $2.2 $2.4 FX-Adjusted Net Interest Income* $1.8 $2.1 $1.9 $1.9 $1.9 $1.8 YoY% Inc/(Dec) in GAAP Net Int
Slide 36: Annex 6: Consolidated Net Interest Yield on Average Card Member Loans
Annex 6 Consolidated Net Interest Yield on Average Card Member Loans ($ in millions, except percentages and where indicated) Q2’19 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Net interest incom e $2,074 $1,818 $1,994 $2,108 $2,199 $2,360 Exclude: Interest expense not attributable to our Card Member loan portfol
Slide 37: Annex 7: Revenues Net of Interest Expense – Reported & FX-Adjusted
Annex 7 Revenues Net of Interest Expense – Reported & FX-Adjusted* ($ in billions) Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 GAAP Rev enues Net of Interest Expense $10.3 $7.7 $8.8 $9.4 $9.1 $10.2 $10.9 $12.1 $11.7 $13.4 FX-Adjusted Revenues Net of Interest* $10.5 $7.8 $8.8 $9.3 $
Slide 38: Annex 8: GCP Card Member Receivables Net Write-Off rates
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 ra
Slide 39: 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 40: 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, the factors identified above and in the subsequent para
Slide 41: Forward Looking Statements
Forward Looking Statements • the actual amount the company spends 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; the effectiveness of management’s investment optimization process, manageme
Slide 42: Forward Looking Statements
Forward Looking Statements • changes affecting the company’s plans regarding the return of capital to shareholders, w hich w ill depend on factors such as c apital levels and regulatory capital ratios; changes in the stress testing and capital planning process and new guidance from the Federal Reser
Slide 43: American Express
AMERICAN EXPRESS
American Express Company — Q2 2022 Earnings Presentation on 6ix