American Express Company · NYSE:AXP
American Express — Debt Investor Presentation (January 2012)
46 slides from American Express's debt investor presentation, January 2012
Slide 1: American Express ABS Investor Presentation
American Express ABS Investor Presentation January 2012
Slide 2: Agenda
Agenda ■ AXP Overview and Performance ■ Capital and Liquidity ■ ABS Overview 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 (Preliminary; AMERICAN EXPRESS COMPANY 2010 2011 $ in millions) Total Revenues Net of Interest Expense $27,582 $29,962 Income from Continuing Operations $4,057 $4,899 Net Income $4,057 $4,935 Return on Average Equity* 27.5% 27.7% U.S. Card Services International Card Global Commerci
Slide 5: Spend-Centric Model
Spend-Centric Model The AXP spend-centric business model focuses primarily on generating revenues by driving spending on our cards, and secondarily finance charges and fees, allowing us to grow market share in the payments industry. Investments in Premium Value Attractive Premium Customer Base Econo
Slide 6: 2011 Summary Financial Performance
2011 Summary Financial Performance ($ in millions, except per share amounts) 2011 2010 % Inc/(Dec) Total Revenues Net of Interest Expense $29,962 $27,582 9% FX Adjusted † $28,043 7% Net Income $4,935 $4,057 22% Diluted EPS* $4.09 $3.35 22% Return on Average Equity 28% 27% Average Diluted Shares Outs
Slide 7: 2011 Metric Performance
2011 Metric Performance 1Q'10 2011 1Q'09 2010 % Inc/Dec FX Adj.* Billed Business ($ in B)** $822.2 $713.3 15% 13% Total Cards In Force (MM) 97.4 91.0 7% Avg. Basic Cardmember $14,881 $13,259 12% 11% Spending (Dollars) † Cardmember Loans ($ in B) $62.6 $60.9†† 3% 3% WW Travel Sales ($ in B) $24.5 $21
Slide 8: Billed Business Growth by Region
Billed Business Growth by Region % increase/(decrease) vs. prior year: 25% 20% 15% 10% 5% 0% Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 US EMEA (FX Adj)* JAPA (FX Adj)* LACC (FX Adj)* Total (FX Adj)* *See Annex 1 for reported billings growth rates. 8
Slide 9: 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%) Q4'08 Q2'09 Q4'09 Q2'10 Q4'10 Q2'11 Q4'11 Ending Receivables $33.0 $31.4 $33.7 $34.6 $37.3
Slide 10: Lending Billed Business vs. Managed Loan Growth
Lending Billed Business vs. Managed Loan Growth % increase/(decrease) vs. prior year, Managed: 25% 15% 5% (5%) (15%) (25%) Q4'08 Q2'09 Q4'09 Q2'10 Q4'10 Q2'11 Q4'11 Proprietary Credit Card Billed Business* Ending Loans - Managed** Ending Loans Managed** $72.0 $62.9 $61.8 $57.3 $60.9 $58.7 $62.6 *Inc
Slide 11: USCS Net Interest Yield Managed Cardmember Loans
USCS Net Interest Yield Managed Cardmember Loans $ in billions; Total Cardmember Loans, Managed $51.6 $49.2 $49.9 $49.9 $53.7 9.1% 9.1% 9.0% 8.9% 8.7% Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 See Annex 3 for reconciliation of net interest income divided by average loans, a GAAP measure, and net interest yield,
Slide 12: Full Year 2011 Relative Performance
Full Year 2011 Relative Performance ($ in billions) ($ in billions) $822 $358 $344 $156 $132 $121 $192 $135 $65 $63 $100 $47 AXP Citi* JPM** BofA*** Cap One† Discover†† Citi* JPM** BofA*** Cap One† AXP Discover†† Growth Growth vs. PY 15% 5% 10% 3% 26% 8% vs. PY (3%) (4%) (12%) 6% 3% 3% *Includes Cit
Slide 13: Charge Card Credit Performance
Charge Card Credit Performance USCS Net Write-off Rate GCS Net Loss Ratio 1.9% 1.8% 1.7% 1.5% 1.4% 0.06% 0.06% 0.06% 0.06% 0.06% Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Note: USCS Net write-off rates above include Principal only. See Statistical tables in Q4’11/Full Year 2011 Ear
Slide 14: AXP Lending Net Write-off Rates versus Competitors
AXP Lending Net Write-off Rates versus Competitors 9.1% 7.9% 7.8% 7.2% 7.0% 5.6% 5.2% 4.3% 4.3% 4.3% 3.2% 2.3% Q4’10 Q4’11 AXP* Discover** JPMorgan*** Cap One† Bank of America†† Citi††† *Rates include principal only. See Statistical tables in Q4’11/Full Year 2011 Earnings Release for net write-off r
Slide 15: AXP Lending 30 Days Past Due Rates versus Competitors
AXP Lending 30 Days Past Due Rates versus Competitors 5.2% 4.3% 4.2% 4.1% 4.1% 3.9% 3.7% 3.1% 2.8% 2.4% 2.1% 1.5% Q4‘10 Q4'11 AXP Discover * JPMorgan ** Cap One*** Bank of † Citi †† America *Fiscal year ends November 30. US Card. ** Includes the impact of the Washington Mutual acquisition. ***Global
Slide 16: USCS Managed Lending Roll Rates and Bankruptcy Filings
USCS Managed Lending Roll Rates and Bankruptcy Filings Current to 30 Days Past Due Number of Bankruptcy Filings 1.5% USCS Customers, x000 73 71 69 1.0% 65 63 58 54 50 0.5% 46 Jan'10 Jul'10 Jan'11 Jun'11 Dec'11 30 Days Past Due to Write-off 50% 20% Jan'10 Jul'10 Jan'11 Jun'11 Dec'11 Q4'09 Q2'10 Q4'10
Slide 17: Peer Comparison Trust FICO Distributions
Peer Comparison Trust FICO Distributions* FICO <660 (“Sub-prime”)** FICO >720 (“Super-prime”) 76% 26% 63% 63% 54% 51% 50% 45% 18% 19% 15% 16% 12% 7% AXP AXP JP Morgan Citi Bank of Discover Cap One AXP AXP JP Morgan Citi Bank of Discover Cap One Charge Lending America Charge Lending America Trust† Tr
Slide 18: Agenda
Agenda ■ AXP Overview and Performance ■ Capital and Liquidity ■ ABS Overview 18
Slide 19: Capital Management
Capital Management (Regulatory Ratios, Debt Investor Expectations, Acquisition Capacity) (Organic growth and acquisition, dividends, repurchases, and capital-raising) 19
Slide 20: Capital Ratios
Capital Ratios (Preliminary) Q4'11 Q3'11 Tier 1 Common Risk-Based* 12.3% 12.3% Tier 1 Leverage 10.2% 9.8% Tier 1 Risk-Based Capital 12.3% 12.3% Total Risk-Based Capital 14.2% 14.3% Tangible Common Equity to Risk- 11.9% 12.0% Weighted Assets (“TCE/RWA”)** Note: These ratios represent a preliminary es
Slide 21: 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 22: Funding & Liquidity Sources
Funding & Liquidity Sources Funding Sources Contingent Sources ■ Deposits ■ Cash & Readily Marketable Securities ■ ABS ■ Discount Window ■ Unsecured Term Debt ■ Committed Bank ■ Term Bank Facility Credit Facilities ■ Commercial Paper ■ Secured Borrowing through Conduit Facility* *Drawn balance of th
Slide 23: Q4'11 Liquidity Snapshot
Q4'11 Liquidity Snapshot ($ in billions) Resources Funding Maturities Cash* $18 Q1‘12 3 Readily Marketable 1 Q2'12 4 Securities Liquidity Portfolio 19 Q3'12 4 CP and Short-Term 3 (1) Q4‘12 Deposits Outstanding Twelve Month Excess Cash & Securities $18 Maturities $14** *Includes $24.9B classified as
Slide 24: US Retail Deposit Programs
US Retail Deposit Programs ($ in billions) Third Party Third Party Total Direct * CDs Sweep Deposits September 30, 2011 Balance $14.1 $9.2 $9.2 $32.5 Maturities (0.2) (1.1) - (1.3) Amount Raised 1.6 2.7 1.8 6.1 December 31, 2011 Balance $ 15.5 $10.8 $11.0 $37.3 Weighted Avg., Retail CD 22 Months Rem
Slide 25: Outstanding Funding Composition
Outstanding Funding Composition (Preliminary; $ in Billions) $112.1 $106.0 9.0 2.3 $99.5 $100.9 3.4 3.4 15.5 26.3 Short-term Debt* 29.7 37.9 32.5 Deposits** 30.0 23.3 20.9 Card ABS*** 55.1 Unsecured Term 47.4 43.1 38.7 12/31/08 12/31/09 12/31/10 12/31/11 *Short-term Debt as of 12/31/11 includes $0.6
Slide 26: Term Maturity Profile – Debt and LT CDs
Term Maturity Profile – Debt and LT CDs (Preliminary; $ in Billions) $16.7 $17.3 12/31/11 $14.3 2.4 4.8 3.2 $10.6 6.9 Long term CDs* 4.1 $7.4 0.2 1.2 6.8 Card ABS $4.8 0.6 0.3 9.2 Unsecured 7.8 8.0 1.9 6.8 4.3 2.6 2012 2013 2014 2015 2016 Thereafter 12/31/10 $19.9 $18.2 5.6 2.9 $13.1 $11.9 Long term
Slide 27: ABS & Unsecured Debt Issuances
ABS & Unsecured Debt Issuances ($ in Billions) Card ABS* Unsecured** $2 $1-6 $2 $3-9 $7 $1 $4 $2 2009 2010 2011 2012 (Estimated Range) *All ABS debt is presented net of securities that have been retained by the Company; excludes drawn amounts on the secured borrowing through the conduit facility. **
Slide 28: Agenda
Agenda ■ AXP Overview and Performance ■ Capital and Liquidity ■ ABS Overview 28
Slide 29: American Express Primary Issuance Structure
American Express Primary Issuance Structure American Express Company (AXP) Total Assets1: $148.7B Credit Ratings3: A3/BBB+/A+/A(High) Regulated By: FRB & SEC American Express Travel Related Services (TRS) American Express Total Assets1: $146.5B Issuance Trust (AEIT) Credit Ratings3: A2/BBB+/A+/A(Hig
Slide 30: 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 • All US Consumer and Small Business • All US Consumer, Small Business and cardmember loans Corporate cardmember rece
Slide 31: 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 12/10 1/11 2/11 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/11 11/11 12/11 0% 12/10 1/11 2/11 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/11 11/11 12/
Slide 32: 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 12/10 1/11 2/11 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/11 11/11 12/11 0.0% 12/10 1/11 2/11 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/11 11/11 12/11 31-60 61-90 90+ Annua
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Slide 34: Annex 1: Region Billed Business
Annex 1 Region Billed Business - Reported & FX Adjusted* % increase/(decrease) vs. prior year: Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 U.S. 2% 11% 14% 13% 14% 15% 14% 13% 11% International Reported 21% 27% 19% 17% 16% 20% 27% 21% 10% FX Adjusted 7% 14% 16% 16% 15% 14% 15% 14% 11% EMEA
Slide 35: Annex 2: Worldwide Cardmember Lending
Annex 2 Worldwide Cardmember Lending ($ in billions, except percentages) Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Total Worldwide Ending Loans GAAP $ 42.2 $ 36.7 $ 32.5 $31.5 $32.8 Growth vs PY (22%) (26%) (34%) (31%) (22%) Managed $ 72.0 $ 65.0 $ 62.9 $60.7 $61.8 Growth vs PY (7%) (13%) (18%) (20%) (14%) For
Slide 36: Annex 3: Net Interest Yield
Annex 3 ($ in millions, except percentages) 12/31/10 3/31/11 6/30/11 9/30/11 12/31/11 USCS - Net Interest Yield on Cardmember Loans Net interest income $1,122 $1,091 $1,063 $1,128 $1,141 Average loans (billions) $49.8 $49.6 $49.7 $50.2 $51.4 Adjusted net interest income (A) $1,143 $1,112 $1,080 $1,1
Slide 37: Annex 4: Tier 1 Common Equity Reconciliation
Annex 4 The Tier 1 Common Risk-Based Capital Ratio is calculated as Tier 1 Common Equity, a non-GAAP measure, divided by Risk-weighted assets. Tier 1 Common Equity is calculated by reference to Total Shareholders’ Equity as shown below: Tier 1 Common Equity Reconciliation as of December 31, 2011 ($
Slide 38: Annex 5: Trust Structures
Annex 5 Trust Structures Lending Charge AECB AEFSB AECB AEFSB (Originator) (Originator) (Originator) (Originator) Receivables Cash Receivables Cash Receivables Cash Receivables Cash RFC III RFC IV TRS (Transferor) (Transferor) (Originator) Cash / Cash / Receivables Cash Receivables Receivables Selle
Slide 39: Annex 6: Q4'11 Summary Financial Performance
Annex 6 Q4'11 Summary Financial Performance ($ in millions, except per share amounts) Q4'11 Q4'10 % Inc/(Dec) Total Revenues Net of Interest Expense $7,742 $7,244 7% FX Adjusted † $7,225 7% Net Income $1,192 $1,062 12% Diluted EPS* $1.01 $0.88 15% Return on Average Equity 28% 27% Average Diluted Sha
Slide 40: Annex 7: Q4'11 Metric Performance
Annex 7 Q4'11 Metric Performance 1Q'10 Q4'11 1Q'09 Q4'10 % Inc/Dec FX Adj.* Billed Business ($ in B)** $219.0 $197.7 11% 11% Total Cards In Force (MM) 97.4 91.0 7% Avg. Basic Cardmember $3,933 $3,629 8% 9% Spending (Dollars)† Cardmember Loans ($ in B) $62.6 $60.9†† 3% 3% WW Travel Sales ($ in B) $5.
Slide 41: Annex 8: Billed Business Growth by Segment
Annex 8 Billed Business Growth by Segment % increase/(decrease) vs. prior year: 30% 20% 10% 0% Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 USCS ICS (FX Adj)* GCS (FX Adj)* GNS (FX Adj)* Total (FX Adj)* *See Annex 9 for reported billings growth rates. 41
Slide 42: Annex 9: Segment Billed Business
Annex 9 Segment Billed Business - Reported & FX Adjusted* % increase/(decrease) vs. prior year: Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 ICS Reported 14% 19% 12% 12% 12% 16% 24% 17% 6% FX Adjusted 0% 6% 9% 10% 11% 10% 11% 9% 6% GCS Reported 8% 23% 21% 19% 16% 19% 19% 17% 10% FX Adjusted
Slide 43: Annex 10: Total Payout Ratio
Annex 10 Total Payout Ratio 105% 88% 61% 56% 43% 35% 30% 29% 16% 2007 2008 2009* 2010 2011 Q1'11 Q2'11 Q3'11 Q4'11 ($ Billions) $3.6 $0.2 - $0.6 $2.3 - $0.8 $1.2 $0.3 Note: Payout Ratio is calculated by dividing the total amount returned to shareholders through dividends and share repurchases during
Slide 44: 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 45: Forward-Looking Statements
Forward-Looking Statements •changes in the substantial and increasing worldwide competition in the payments industry, including competitive pressure that may impact the prices the Company charges merchants that accept the Company’s cards and the success of marketing, promotion or rewards programs; •
Slide 46: Forward-Looking Statements
Forward-Looking Statements •changes affecting the success of the Company’s reengineering and other cost control initiatives, which may result in the Company not realizing all or a significant portion of the benefits that the Company intends; •the actual amount to be spent by the Company on investmen
American Express Company — Debt Investor Presentation (January 2012) on 6ix