American Express Company · NYSE:AXP
American Express — Investor Day (February 2014)
113 slides from American Express's investor day presentation, Feb 5, 2014
Slide 1: American Express Company Financial Community Meeting
American Express Company Financial Community Meeting February 5, 2014
Slide 2: Financial Community Meeting
Financial Community Meeting Kenneth Chenault Chairman and Chief Executive Officer Susan Sobbott President, OPEN Anré Williams President, Global Merchant Services
Slide 3: Agenda
Agenda Financial and Business Performance Business Model Advantages Growth Opportunities Small Business Opportunity ‒ Global Small Business Issuing ‒ Small Merchant Coverage Strategy Q&A 3
Slide 4: Financial Performance
Financial Performance $ in billions; except per share amounts Q1'13 Q2'13 Q3'13 Q4'13 2013 Total Revenues Net of Interest Expense $7.9 $8.2 $8.3 $8.5 $33.0 Growth vs. Prior Year 4% 4% 6% 5% 4% FX Adjusted Growth vs. Prior Year† 5% 4% 7% 6% 5% Net Income $1.3 $1.4 $1.4 $1.3 $5.4 Diluted EPS* $1.15 $1
Slide 5: Scenario
Scenario 1 February '13 Potential Slow Growth Scenarios 700bps (200bps) 500bps 12% (300bps) 5% Scenario 2 500bps (200bps) 400bps 9% (300bps) 5% (200bps) 600bps 15% 700bps Scenario 3 (300bps) 7% Revenue OPEX* M&P/Rewards Provision/Credit Share Repurchase EPS *Operating expense includes salaries and e
Slide 6: 2013 Contribution to Adjusted EPS Growth
2013 Contribution to Adjusted EPS* Growth 800bps (400bps) (0bps) 500bps 11% (200bps) 4% Revenue Adj OPEX* M&P/Adj Provision/Credit Taxes Share Adj EPS* Rewards* Repurchases Note: Figures rounded. *The growth rates of adjusted diluted earnings per share, adjusted operating expense and adjusted reward
Slide 7: AXP Financial Target
AXP Financial Target On average and over time: 2010-2013 EPS CAGR 12-15% 13% 7
Slide 8: Metric Trends
Metric Trends % increase/(decrease) vs. prior year Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Billed Business* 8% 6% 7% 7% 8% Billed Business FX Adjusted** 7% 7% 8% 9% 9% Total Cards In Force 5% 5% 4% 4% 5% Card Member Loans 4% 4% 3% 2% 3% Worldwide Lending 2.0% 1.9% 2.0% 1.7% 1.6% Write-off Rate† *Card billed b
Slide 9: Billed Business Growth by Region
Billed Business Growth by Region % increase/(decrease) vs. prior year: FY'13 (FX Adj)* 20% U.S. 8% International 10% Worldwide 8% 15% 15% 11% 10% 9% 9% 6% 5% 0% Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 US EMEA (FX Adj)* JAPA (FX Adj)* LACC (FX Adj)* Total (FX Adj)* *See slide 4 for a de
Slide 10: Billings Growth – U.S.
Billings Growth – U.S. % increase/(decrease) vs. prior year: AXP U.S. FY'13 Growth 20% Consumer 7% Corporate 8% 15% Small Business 11% 10% 5% 0% (5%) AXP (10%) MasterCard/Visa - Credit & Charge Volume (15%) Q2'09 Q4'09 Q2'10 Q4'10 Q2'11 Q4'11 Q2'12 Q4'12 Q2'13 Q4'13 Source: Company filed reports. 10
Slide 11: Billings Growth – Global
Billings Growth – Global FX adjusted† % increase/(decrease) vs. prior year AXP FY'13 Growth (FX Adj) Consumer 7% 20% Corporate 6% Small Business 10% 15% GNS 16% 10% 5% 0% (5%) AXP (10%) MasterCard/Visa - Credit & Charge Volume (15%) Q2'09 Q4'09 Q2'10 Q4'10 Q2'11 Q4'11 Q2'12 Q4'12 Q2'13 Q4'13 Source:
Slide 12: 2013 Volumes – Relative Performance
2013 Volumes – Relative Performance Billed Business Ending Loans $ in billions $ in billions Growth Growth vs. PY 7% 10% 2% 6% 11% 4% vs. PY 1% 0% (3%) (11%) 3% 4% $952 $150 $128 $92 $81 $420 $67 $365 $53 $206 $201 $110 AXP JPM* Citi** BofA*** CapOne† Discover†† Citi** JPM* BofA*** CapOne† AXP Disco
Slide 13: Revenue Growth vs. Issuing Competitors
Revenue Growth vs. Issuing Competitors % increase/(decrease) vs. prior year 41% 17% 10% 9% 6% 5% 6% 4% 4% 4% 3% 1% 2% 0% 2% 1% Q1 Q2 Q3 Q4 (1%) '13 '13 '13 '13 (3%) (2%) (4%) (6%) (7%) (7%) (9%) † AXP BofA* Citi** JPM Discover CapOne†† Source: Company Reports. Note: Issuing Competitors reflect rewar
Slide 14: Lending Managed Net Write-off Rate
Lending Managed Net Write-off Rate* U.S. Lending ICS Lending 6.8% 6.7% 3.2% 5.1% 1.8% 1.5% Q4'08 Q4'09 Q4'10 Q4'11 Q4'12 Q4'13 Q4'08 Q4'09 Q4'10 Q4'11 Q4'12 Q4'13 AXP USCS Industry (Excluding AXP)** AXP ICS *Managed Net Write-off Rate (Principal Only). See Statistical Tables in the Company’s Fourth
Slide 15: Net Fraud Losses
Net Fraud Losses As a % of Total U.S. General Purpose Purchase Volumes 0.08% MasterCard 0.07% 0.06% 0.06% Visa 0.03% 0.03% AXP 2008 2009 2010 2011 2012 *Source: Nilson. 15
Slide 16: Adjusted Total Operating Expense Growth
Adjusted Total Operating Expense Growth* % increase/(decrease) vs. prior year: 9% 8% <3% Annual Target 2% 0% 2010 2011 2012 2013 Note: See slide 5 for definition of operating expenses. *The growth rate of adjusted total operating expenses, a non-GAAP measure, excludes Visa/MasterCard litigation sett
Slide 17: Marketing and Promotion Expense
Marketing and Promotion Expense ($ in millions) $871 $809 $722 $370 Q1'09 Q4'09 Q4'10 Q4'11 Q4'12 Q4'13 Full Year 2009 2010 2011 2012 2013 ($ in B) $2.0 $3.1 $3.0 $2.9 $3.0 17
Slide 18: Loyalty Partner Update
Loyalty Partner Update Customers (Collectors) ~34MM ~50MM ~60MM +75% Mexico India Poland Germany Oct'11 Dec'12 Dec'13 18
Slide 19: Enterprise Growth Customer Trends
Enterprise Growth Customer Trends Enterprise Growth Customers* # of customers in millions Reloadable Prepaid Statistics 7.0 90% of Serve/Bluebird customers do not have an existing American Express account 5.8 54% of Serve customers are under age 35 (since product re-launch) 4.7 46% of Bluebird
Slide 20: Loyalty Partner, Serve
EP \ ( LOYALTY PARTNER ® AINVIERICAN EXPRESS serve’ 20
Slide 21: Strong Capital Position
Strong Capital Position Percentage of Capital Generated Tier 1 Common Risk-Based Returned to Shareholders Capital Ratio* 98% 12.5% 12.3% 11.9% 81% 11.1% 56% 30% 2010 2011 2012 2013 2010 2011 2012 2013 Note: Payout Ratio is calculated by dividing the total amount returned to shareholders through divi
Slide 22: 2013 Payout Ratio
2013 Payout Ratio 120% 94% 87% 68% 81% 62% (Including employee plans) 38% 36% 8% AXP BofA Citi JPM Discover CapOne Visa MasterCard Note: Payout Ratio is calculated by dividing the total amount returned to shareholders through dividends and share repurchases during the respective period by the total
Slide 23: Voice of the Customer
Voice of the Customer Improvement in Recommend to a Friend* (U.S.) Indexed to 2009 1.4x 1.2x 1.0x 2009 2010 2011 2012 2013 *Recommend to a Friend (RTF) measures a Card Member’s satisfaction with the level of servicing provided by American Express customer care professionals. The metric is calculated
Slide 24: USCS Card Member Non-credit Attrition
USCS Card Member Non-credit Attrition* Indexed to FY'08 levels 1.2x 1.0x 0.8x 0.7x 0.6x 0.4x 2008 2009 2010 2011 2012 2013 Note: Q4'08, Q1'09 and Q2'09 were normalized for inactive card cancellations of 300K cards in Q4'08, 500K cards in Q1'09 and 2.6MM cards in Q2'09. *Non-Credit attrition includes
Slide 25: U.S. Membership Rewards Redeemer Performance
U.S. Membership Rewards Redeemer Performance Percentage of MR Enrollees Who Have Redeemed Indexed to Q4'09 1.2 1.0 Q4'09 Q4'10 Q4'11 Q4'12 Q4'13 Avg. Spend per Account* Share of Wallet** Attrition*** ~1.8x ~5x 1.0x 1.0x ~ 0.7x 1x MR Enrollee Redeemers MR Enrollee Non Redeemers Indexed to Non Redeeme
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Slide 27: Agenda
Agenda Financial and Business Performance Business Model Advantages Growth Opportunities Small Business Opportunity ‒ Global Small Business Issuing ‒ Small Merchant Coverage Strategy Q&A 27
Slide 28: AXP Managed Revenue Performance
AXP Managed Revenue Performance* '10-'13 CAGR = 6% 5% 2009 2010 2011 2012 2013 AXP FX-Adjusted Revenue YoY Growth *Managed revenue on an FX-Adjusted basis is a non-GAAP measure. On a reported basis, the 2010-2013 CAGR was 6% and the 2013 year-over-year growth rate was 4%. See slide 4 for an explanat
Slide 29: U.S. Consumer Revolving Credit – Industry Growth
U.S. Consumer Revolving Credit – Industry Growth % increase/(decrease) vs. prior year: Avg. '02-'08 = 5% Avg. '11-'13 = (1%) 9% 1% 2002 2004 2006 2008 2010 2012 Q3’13 (9%) *Source: Federal Reserve, Consumer Credit Release, January 2014. Non-seasonally adjusted U.S. consumer revolving credit outstand
Slide 30: U.S. Charge/Credit Purchase Volume – Industry Growth
U.S. Charge/Credit Purchase Volume – Industry Growth % increase/(decrease) vs. prior year: Avg. '02-'08 = 8% Avg. '11-Q3’13 = 9% 12% 8% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q3 YTD (10%) *Source: AXP internal data and The Nilson Report. 30
Slide 31: Industry Loan and Purchase Volume Growth
Industry Loan and Purchase Volume Growth % increase/(decrease) vs. prior year: U.S. Revolving Credit Growth U.S. Charge/Credit Purchase Volume Avg. '02-'08 = 5% Avg. '11-'13 = (1%) Avg. '02-'08 = 8% Avg. '11-Q3’13 = 9% 12% 9% 8% 1% 2002 2004 2006 2008 2010 2012 Q3’13 2002 2004 2006 2008 2010 2012 20
Slide 32: Cumulative Revenue Growth vs. Issuer Peers
Cumulative Revenue Growth vs. Issuer Peers AXP Card Issuing Peers Indexed to 2010 Indexed to 2010 +6% CAGR 120 (2)% CAGR 100 100 94 2010 2013 2010 2013 NII* as a % of Revenue 17% 15% 75% 76% Note: Issuing Competitors reflect rewards costs as a contra revenue item whereas the majority of AXP rewards
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Slide 34: Agenda
Agenda Financial and Business Performance Business Model Advantages Growth Opportunities Small Business Opportunity ‒ Global Small Business Issuing ‒ Small Merchant Coverage Strategy Q&A 34
Slide 35: Consumer and Small Business Card Acquisition
Consumer and Small Business Card Acquisition New First Year Spend* by Product Type 7% YoY Growth Prop Lending Co-Brand Charge Cards Acquired in Cards Acquired in 2012 2013 Note: Includes customers acquired in the USCS and ICS segments. *First Year Spend reflects the first 12 months of spending for a
Slide 36: High Spending Card Members
High Spending Card Members FY'13 vs. FY'07 – Worldwide Average Card Member Spend $ in thousands $16.3 $12.1 $11.5 $9.8 $4.1 $2.7 $3.3 $2.3 2013 2007 AXP - Proprietary Cards AXP - Total Visa MasterCard Note: Calculated using a five point average of worldwide total basic cards in force for AXP and cre
Slide 37: U.S. Consumer Affluent Spend
U.S. Consumer Affluent* Spend 2013 Average Annual Spend Spend Growth Indexed to All Other Card Member Spend Indexed to 2011 levels ~6x 121 100 1x 2011 2013 Affluent Card All Other Card Affluent Card Member Spend Member Spend Member Spend *Affluent Card Members defined as U.S. Consumer Basic Card Mem
Slide 38: U.S. Commercial Card Performance
U.S. Commercial Card Performance Corporate Card B2B / Purchasing Card Indexed to 2010 levels Indexed to 2010 levels +10% CAGR +3% CAGR +23% CAGR +16% CAGR 151 121 135 107 100 100 100 100 2010 2012 2010 2012 2010 2012 2010 2012 AXP Industry* Note: AXP figures represent Corporate Card volumes. AXP B2B
Slide 39: International Business Operations Performance
International Business Operations* Performance Billed Business New Deals Fx adjusted % increase/(decrease) ($ in billions) 10% CAGR** $311 $260 2011 2013 *International represents the sum of the Europe, Middle East and Africa (EMEA) region, the Japan, Asia/Pacific and Australia (JAPA) region and the
Slide 40: GNS Performance
GNS Performance Billed Business New Deals ($ in billions) $160 CAGR 1999-2013 $140 23% $120 $100 $80 $60 $40 $20 $0 1999 2004 2009 2013 40
Slide 41: GNS China
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Slide 42: Loyalty Partner
Loyalty Partner PAYBACK launch Interjet PAYBACK in Mexico co-brand cards launch in Mexico AXP Acquires India PAYBACK co-brand card launch (Operating in Germany, Poland & India) 2011 2012 2013 2014 PAYBACK Germany PAYBACK launch PAYBACK launch in India co-brand card in Italy launch 42
Slide 43: Serve Software Platform: International Opportunities
Serve Software Platform: International Opportunities Retail Around the World China Partnerships Partnership With Payback Cross Border Payments & Commerce 43
Slide 44: Digital Progress
Digital Progress Digital Metrics New Deals 7.4M (58% YoY) Cumulative AXP Mobile App downloads Sync to Buy Receipt Match 83% Payments Received Electronically* Pay With Points 3.0M+ (86% YoY) on Mobile Registered Card Offers Redeemed Mobile App Bluebird 1.0M+ (60% YoY) Card Syncs Digital Marketing 39%
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Slide 46: History of Amex in Serving Small Businesses
History of Amex in Serving Small Businesses 1983 2010 2006 Created Small Launched 1995 Accelerated Business Saturday Company Card Launched ESA International Small Program in the U.S. Business Growth 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2002 Established
Slide 47: Untapped Opportunity: U.S.
Untapped Opportunity: U.S. $4.4T Estimated Total Small Business Spend (ex. Payroll) in 20131 Plastic Spend 9% Non-Plastic Spend 91% 1. “Estimated Total Small Business Spend” U.S. small businesses with less than $10MM in revenue based on “McKinsey Payments Map (January 2014)” from McKinsey. “Plastic
Slide 48: Global Small Business Issuing Update
Global Small Business Issuing Update Susan Sobbott President, American Express OPEN
Slide 49: Small Business: Why Focus on the Sector?
Small Business: Why Focus on the Sector? 99.7% of all U.S. firms1 Nearly 50% of non-farm GDP2 Over $4T in annual spend3 KENNY FELDMAN Less than 10% of spend on plastic4 FELDMAN LUMBER CARD MEMBER SINCE '72 1. % of U.S. Employer Firms and % of Non-Farm GDP based on “Frequently Asked Questions Septemb
Slide 50: Small Business: Growth Focus
Small Business: Growth Focus New businesses formed every day Substantial spending with checks We grow as small businesses grow ERIKA NAKAMURA & AMELIA POSADA LINDY & GRUNDY CARD MEMBERS SINCE '99 50
Slide 51: Small Business: Our Mission
Small Business: Our Mission Helping Small Businesses Do More Business MABLE LEE LALA PRESS CARD MEMBER SINCE ‘99 51
Slide 52: Small Business: Our OPEN Members
Small Business: Our OPEN Members Less than $10MM in revenue, up to 100 employees Operate across diverse industries Growth focus MORDY KOHN SUNSHINE LIGHTING CARD MEMBER SINCE '88 52
Slide 53: Small Business: Our OPEN Members
Small Business: Our OPEN Members TED VADAKAN & ANGIE MYUNG POKETO CARD MEMBERS SINCE '05 53
Slide 54: Small Business: Our OPEN Members
Small Business: Our OPEN Members JESSICA BANKS & MIHAE MUKAIDA ROCKPAPERROBOT CARD MEMBERS SINCE ‘09 54
Slide 55: Small Business: Unique Business Needs
Small Business: Unique Business Needs NELSON GUTIERREZ STRICTLY BIKES CARD MEMBER SINCE '01 55
Slide 56: Small Business: Unique Business Needs
Small Business: Unique Business Needs Large purchases Controls over employee spend Expense tracking and assign to specific clients Service delays impact their JACQUELINE SHARP FORT bottom line CARD MEMBER SINCE '13 56
Slide 57: Growth Strategy: Pillars
Growth Strategy: Pillars ATTRACT ENGAGE 57
Slide 58: Attract: Small Business Saturday
Attract: Small Business Saturday 58
Slide 59: Attract: Small Business Saturday
Attract: Small Business Saturday 59
Slide 60: Attract: OPEN Forum
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Slide 61: Attract: OPEN Forum
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Slide 62: Attract: Charge Cards
— Attract: Charge Cards Here's another reason to get a Business Card vsaemicans EXPRESS FE “"BUSINESS from American Express OPEN. 6) 62
Slide 63: Attract: Lending Cards
= Attract: Lending Cards wes vor ibe i os 4 375% 876543 BLOM 2 ¢ E FROST | REKPORT IRC = The SimplyCash® Business Credit Card 63
Slide 64: Attract: OPEN Savings
Attract: OPEN Savings 64
Slide 65: Attract: Service
Attract: Service JOANNA GUTIERREZ STRICTLY BIKES CARD MEMBER SINCE '01 65
Slide 66: Attract: Digital Acquisition
Attract: Digital Acquisition 66
Slide 67: Engage: Purchasing Capacity
Engage: Purchasing Capacity 67
Slide 68: Engage: Purchasing Capacity
Engage: Purchasing Capacity 68
Slide 69: Engage: ReceiptMatch
ANTE Engage: ReceiptMatch RECEIPTMATCH™ DIGITALLY MATCH AND STORE BUSINESS CARD RECEIPTS TO YOUR ONLINE STATEMENT.
Slide 70: Growth Strategy: Why OPEN?
Growth Strategy: Why OPEN? Business growth programs Business sized purchasing capacity Rewards and savings JOHN KAPLAN Best-in-class service WEIGLWORKS CARD MEMBER SINCE '09 70
Slide 71: Financial Performance: OPEN Card Billed Business
Financial Performance: OPEN Card Billed Business Card Billed Business Growth Indexed to 2010 CAGR +12% 141 127 114 100 2010 2011 2012 2013 71
Slide 72: Financial Performance: OPEN New First Year Spend
Financial Performance: OPEN New First Year Spend OPEN New First Year Spend1 Indexed to 2010 CAGR +18% 165 154 130 100 2010 2011 2012 2013 1. First Year Spend reflects the first 12 months of spending for a new customer acquired. For customers acquired less than 12 months prior, internal estimates hav
Slide 73: Financial Performance: OPEN Average Spend Per Small Business Card
Financial Performance: OPEN Average Spend Per Small Business Card Average OPEN Card Spend OPEN Card Spend1 vs. Industry2 Indexed to 2010 2012, Indexed to Industry Average CAGR +11% 137 126 115 100 3.3x OPEN U.S. Small Business 2010 2011 2012 2013 Credit Card Industry Average 1. Calculated using bill
Slide 74: Financial Performance: OPEN Write-Off Rates
Financial Performance: OPEN Write-Off Rates OPEN Charge and Lending Write-Off Rates Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Dec 13 Charge Lending 1. Net Write-off Rates (Principal Only) for OPEN Charge and Lending Products. 74
Slide 75: Financial Performance: Summary
Financial Performance: Summary One of best examples of spend centric model Outpacing AXP top-line metrics High return on equity LEAH BROWN A10 CLINICAL SOLUTIONS, INC. CARD MEMBER SINCE ‘82 75
Slide 76: Performance: Net Promoter Score (NPS)
Performance: Net Promoter Score (NPS) OPEN 2013 NPS Among Small Business Owners vs. Industry1 Indexed to Average of Top 4 Small Business Card Issuing Competitors 5.6x OPEN Top 4 Small Business Card Issuing Competitors Note: NPS is the percentage of customer 'promoters' (i.e., customers who are likel
Slide 77: Performance: U.S. Share Growth
Performance: U.S. Share Growth OPEN Billed Business Growth vs. Industry Growth OPEN Growth Rate over Industry Growth Rate 1.6x 1.7x OPEN Industry OPEN Industry 2011 2012 1. Year over Year industry growth calculated by totaling the purchase volume of Visa and MasterCard Small Business Credit Card pur
Slide 78: Untapped Opportunity: U.S. Small Business
Untapped Opportunity: U.S. Small Business $4.4T Estimated Total Small Business Spend (ex. Payroll) in 20131 Business Plastic Spend ~$4T 9% Potential Example Spend Categories Raw Materials Advertising Non-Plastic Telecommunications Spend Shipping 91% Computer Hardware & Software 1. “Estima
Slide 79: Untapped Opportunity: International Small Business
Untapped Opportunity: International Small Business Established Markets Emerging Partner Markets 15MM+ Small Businesses1 1. Estimated number of small business (defined as companies with less than 250 employees) in France, Italy, Germany, Japan, and the UK. Australian small businesses defined as compa
Slide 80: Financial Performance: International Small Business Card Billed Business
Financial Performance: International Small Business Card Billed Business International Small Business Card Billed Business Growth Indexed to 2010, FX Adjusted1 CAGR +9% 131 120 111 100 2010 2011 2012 2013 1. F/X adjusted assumes a constant exchange rate between the periods being compared for purpose
Slide 81: Conclusions
Conclusions Vital to global economy Growth strategy Strong track record of performance NEAL MALONEY Future opportunity MORRO BAY OYSTER COMPANY CARD MEMBER SINCE ‘13 81
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Slide 83: Small Merchant Coverage Strategy
Small Merchant Coverage Strategy Anré Williams President Global Merchant Services
Slide 84: GMS Strategy
GMS Strategy Issuers Merchants U.S. Consumer Global Int’l Consumer Global National Small Business Merchant Regional Services Bank Partners Small Merchants Corporate Payments Serve/Prepaid 84
Slide 85: Merchant Landscape
Merchant Landscape Global National Regional Small 85
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Slide 87: Small Merchants’ Perceptions
Small Merchants’ Perceptions Many believe AXP is too expensive (i.e. Discount Rate too high) Many say accepting AXP is more cumbersome than Visa/MasterCard ‒ Our statements are separate and look different ‒ Our “Speed of Pay” is too slow ‒ Our policies are different AXP Card Members carry and
Slide 88: AXP’s Coverage Evolution
AXP’s Coverage Evolution Partners GNS Third Party Co-Brand Every Day Acquirers Small Merchants Spend Gas, Grocery, Drug Stores Large Retail T&E 1950s/60s 1970s/80s Early 1990s Mid 1990s Late 1990s/2000s 88
Slide 89: Actions We Are Taking Today
Actions We Are Taking Today New Acquiring Constructs Policy Changes Tools 89
Slide 90: U.S. Merchant Acquisition Channels: Overview
U.S. Merchant Acquisition Channels: Overview New Volume Merchants Acquired (Indexed) Direct/Proprietary X 100 Inbound 3X 54 Third Party Acquirers External Sales Agent 21X 97 OnePoint 73X 144 Note: Average annual data, 2012-2013. 90
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Slide 92: U.S. Merchant Acquisition Channels: Overview
U.S. Merchant Acquisition Channels: Overview New Volume Merchants Acquired (Indexed) Direct/Proprietary X 100 Inbound 3X 54 Third Party Acquirers External Sales Agent 21X 97 OnePoint 73X 144 Aggregators 105X 77 Note: Average annual data, 2012-2013. 92
Slide 93: U.S. Merchant Acquisition Channels: Roles
U.S. Merchant Acquisition Channels: Roles American Express External Acquire Contract/Rate Service Acquire Contract/Rate Service Direct/Proprietary Inbound Third Party Acquirers External Sales Agent OnePoint OptBlue 93
Slide 94: OptBlue Overview
OptBlue Overview One Pricing Construct Single Statement One Settlement Process One Contact for Servicing 94
Slide 95: OptBlue Overview
= OptBlue Overview ~ OptBlue vantiv. WorldPay First In Secure Electronic Payments B ssobaivayment fay Heartland = seepary> @= TRANSFIRST’ 95
Slide 96: Japan
Japan Merchants Acquired New Volume (Indexed) Direct/Proprietary X 100 Third Party Acquirers JCB 44X 141 Note: Average annual data, 2012-2013. 96
Slide 97: Brazil
Brazil Merchants Acquired New Volume (Indexed) Direct/Proprietary X 100 GNS Third Party Acquirers Bradesco/Cielo 11X 206 Note: Average annual data: Direct/Proprietary (2005-2006); Bradesco/Cielo (2012-2013). 97
Slide 98: United Kingdom
United Kingdom Merchants Acquired New Volume (Indexed) Direct/Proprietary X 100 Third Party Acquirers 4X 25 Note: Average annual data, 2012-2013. 98
Slide 99: Small Merchant Policy Changes
Small Merchant Policy Changes Eliminating Statement Fees New Chargeback Policy (U.S. Only) Faster “Speed of Pay” 99
Slide 100: Small Merchant Tools
Small Merchant Tools Update Account Information Manage Chargebacks Order AXP Signage 100
Slide 101: Small Merchant Coverage Strategy
Small Merchant Coverage Strategy New Acquiring Constructs Policy Changes Tools 101
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Slide 103: Annex 1
Annex 1 Adjusted Diluted EPS Q4'12 Q4'13 2012 2013 ($ in millions except per share amounts) GAAP Net Income $ 637 $ 1,308 $ 4,482 $ 5,359 Adjustments for Q4'12 Charges (After-Tax) Restructuring Charges* $ 287 $ 287 Membership Rewards Estimation Process Enhancement Expense* $ 212 $ 212 Card Member Re
Slide 104: Annex 2
Annex 2 Adjusted Total Operating Expense* and Card Member Rewards Expense 2012 2013 ($ in millions) GAAP Total Operating Expenses $ 13,170 $ 12,709 Adjustments for Q4'12 Charges (Before-Tax) Restructuring Charges** $ 400 Card Member Reimbursements** $ 33 Adjusted Total Operating Expenses $ 12,737 $
Slide 105: Annex 3
Annex 3 Region Billed Business - Reported & FX Adjusted* % increase/(decrease) vs. prior year: Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 2013 EMEA Reported 4% 4% (4%) (4%) 5% 2% 7% 10% 9% FX Adjusted 4% 6% 4% 3% 5% 4% 6% 8% 6% JAPA Reported 18% 22% 10% 8% 11% 6% 8% 4% 6% FX Adjusted 17%
Slide 106: Annex 4
Annex 4 Billed Business - Reported & FX Adjusted* % increase/(decrease) vs. prior year: Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Total Reported (16%) (11%) 8% 16% 16% 14% 15% 17% 18% 16% 11% 12% 7% 6% 8% 6% 7% 7% 8% FX Adjusted
Slide 107: Annex 5
Annex 5 Owned/Managed Credit Data Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 USCS Net Write-Off Rate Cardmember Lending GAAP Basis 7.0% 8.5% 10.3% 9.8% 8.0% Cardmember Lending Managed Basis 6.7% 8.5% 10.0% 8.9% 7.5% *Note: For periods ended on or prior to December 31, 2009, information presented is based on the
Slide 108: Annex 6
Annex 6 Adjusted Total Operating Expenses ($ in millions) 2009 2010 2011 2012 2013 GAAP Total Operating Expenses $9,619 $10,673 $11,964 $13,170 $12,709 Visa/MasterCard Settlement Payments 880 880 580 Net Investment in a Foreign Subsidiary 180 Q4'12 Charges: Restructuring Charges* (400) Adjusted Tota
Slide 109: Annex 7
Annex 7 Tier 1 Common Equity Reconciliation ($ in Millions) 2010 2011 2012 2013 Total Shareholders' Equity $16,230 $18,794 $18,886 $19,496 Effect of certain items in accumulated other comprehensive loss excluded from Tier 1 common equity 415 194 173 336 Less: Ineligible goodwill and intangible asset
Slide 110: 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 111: Forward-Looking Statements
Forward-Looking Statements –the ability of the Company to meet its on-average and over-time objective to return 50 percent of capital generated to shareholders through dividends and share repurchases, which will depend on factors such as approval of the Company’s capital plans by its regulators, the
Slide 112: Forward-Looking Statements
Forward-Looking Statements –changes in the Company’s ability to attract or retain small business Card Members, including any changes that may result from increasing competition, brand perceptions and reputation, and ineffective or diminished investments by the Company, including on marketing and pro
Slide 113: Forward-Looking Statements
Forward-Looking Statements –the Company’s ability to continue to grow its fee businesses and generate good margins and economics, which will depend on, among other things, the Company’s success in identifying and exploiting new opportunities, the ability of the Company to offer attractive value prop
American Express Company — Investor Day (February 2014) on 6ix