American Express Company · NYSE:AXP
American Express — Q1 2021 Earnings Presentation
50 slides from American Express's earnings presentation, Apr 23, 2021
Slide 1: American Express Earnings Conference Call Q1'21
American Express Earnings Conference Call Q1’21 APRIL 23, 2021
Slide 2: Key Priorities
Key Priorities 2021 2022+ Transition Year Aspiration Investing to rebuild growth momentum: Back to our original EPS • Firing up the core business expectations for 2020 in 2022, • Scaling next horizon and resuming our financial initiatives growth algorithm beyond 2022 • Retaining financial flexibilit
Slide 3: Summary Financial Performance
Summary Financial Performance ($ in millions; except per share amounts) YoY% Q1’21 Q1’20 Inc/(Dec) Total Revenues Net of Interest Expense $9,064 $10,310 (12%) FX-Adjusted* $10,459 (13%) Net Income $2,235 $367 # Diluted EPS† $2.74 $0.41 # Average Diluted Shares Outstanding 805 808 (0%) * Total Revenu
Slide 4: Total Network Volumes Growth
Total Network Volumes Growth %Increase/(decrease) vs. Prior year (FX-adjusted) Q1’21 $B % of total Billed Business* $225 84% Processed Volumes** $44 16% 15% Total Network Volumes $269 100% 10% 5% 0% (1%) Processed Volumes (5%) (8%) Total Network Volumes (10%) (9%) Billed Business (15%) (20%) (25%) (
Slide 5: Billed Business Growth
Billed Business Growth Jan’21 Feb’21 Mar’21 Q1’21 % of Total % Increase/(decrease) vs. Prior period (FX-adjusted): % inc/(dec) YoY YoY% 0% (1%) 20% 6% % inc/(dec) vs. 2019 G&S* 86% vs. ’19 % 7% 10% 15% 11% YoY% (68%) (63%) 28% (50%) T&E 14% vs. ’19 % (65%) (62%) (54%) (60%) YoY% (21%) (20%) 21% (9%)
Slide 6: Global Consumer Billed Business Growth
Global Consumer Billed Business Growth G&S vs. T&E G&S: Online vs. Offline % Increase/(decrease) vs. Prior period (FX-adjusted): % Increase/(decrease) vs. Prior period (FX-adjusted): Q1’21 G&S T&E Total Q1’21 Online Offline Total YoY 7% (40%) (6%) YoY 23% (9%) 7% vs. ‘19 13% (50%) (8%) vs. ‘19 36% (
Slide 7: Global Commercial Billed Business Growth
Global Commercial Billed Business Growth G&S vs. T&E SME vs. Large & Global Corporate % Increase/(decrease) vs. Prior period (FX-adjusted): % Increase/(decrease) vs. Prior period (FX-adjusted): Q1’21 G&S T&E Total Q1’21 SME L&G Total YoY 5% (64%) (12%) YoY (3%) (44%) (12%) vs. ‘19 8% (72%) (16%) vs.
Slide 8: Q1'21 Billed Business Growth by Customer Type
Q1’21 Billed Business Growth by Customer Type % Increase/(decrease) vs. Prior period (FX-adjusted): % of Total US US Int’l Int’l Large & Global Network Consumer SME Consumer** SME** Corporate** Volumes* 33% 28% 11% 5% 5% (2%) (1%) (9%) (17%) (44%) Q1’21 vs. Q1’19 (3%) (3%) (19%) (3%) (54%) 1 US Cons
Slide 9: Billed Business T&E Growth Trends
Billed Business T&E Growth Trends Q1’21 Restaurants Other Lodging Airlines Total T&E YoY (26%) (47%) (52%) (73%) (50%) vs. ’19 (32%) (55%) (62%) (81%) (60%) Global T&E by Industry Q1’21 Monthly T&E by Industry, vs. 2019 % Increase/(decrease) vs. Prior period (FX-adjusted): % Increase/(decrease) vs.
Slide 10: Billed Business T&E Growth Trends
Billed Business T&E Growth Trends T&E Mix by Customer Type T&E Growth by Customer Type Q1’20 T&E Billed Business: $64B % Increase/(decrease) vs. Prior period (FX-adjusted): Large & Global Corporate Q1’21 Consumer SME L&G Total 20% YoY (40%) (51%) (79%) (50%) vs. ’19 (50%) (60%) (85%) (60%) 56% 24% 0
Slide 11: Worldwide Total Loans and Card Member Receivables
Worldwide Total Loans and Card Member Receivables Total Ending Loans Total Ending Card Member Receivables ($ in billions) ($ in billions) $82.9 $74.6 $76.2 $73.1 $72.4 $44.7 $43.7 $40.8 $42.0 $37.6 YoY (3%) (15%) (17%) (17%) (13%) (21%) (36%) (28%) (24%) (6%) Growth Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q1'
Slide 12: Card Member Credit Metrics
Card Member Credit Metrics Card Member Loans Card Member Receivables* (Net Write-off $ in millions) (Adj. Net Write-off $ in millions*) $518 $499 $432 $346 $241 $196 $176 $144 $77 13% 8% (3%) (30%) (53%) YoY Growth 20% 8% (15%) $36 (59%) (82%) Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q1'20 Q2'20 Q3'20 Q4'20 Q1
Slide 13: Credit Reserve Build Macroeconomic Assumptions
Credit Reserve Build Macroeconomic Assumptions US Unemployment Rate % US GDP Growth* % 18% 40% 16% 35% 14% 30% 25% 12% 20% 10% 15% 8% 10% 6% 5% 4% 0% 2% (5%) 0% (10%) Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q
Slide 14: Total Provision
Total Provision ($ in millions) $2,621 $1,555 $1,703 $628 $665 ($111) Total Provision ($675) $918 $927 $781 $563 $379 Write-offs ($116) ($674) ($1,054) Reserve Build/(Release)* Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 YoY 224% 81% (24%) (111%) (126%) Growth See Variance Commentary in the appendix section for a
Slide 15: Delinquent and Financial Relief Program Balances
Delinquent and Financial Relief Program Balances ($ in billions) $11.5 $8.5* Customer Pandemic Relief $4.0 (CPR) Program $3.6 Enrolled ** $2.8 $0.0 Financial Relief $0.0 $0.7 $0.9 $3.0 Programs (FRP) $2.8 Enrolled *** $2.1 $2.0 Delinquent $1.0 $0.8 Dec'19 Apr'20 Dec'20 Mar'21 Total Loans $1.9 $7.1 $
Slide 16: Total Reserves
Total Reserves Balance Sheet Credit Reserves* ($ in billions) $5.8 ($1.0) $1.5 $0.1 $0.3 ($0.1) $4.8 $4.3 ($1.0) Charge $1.4 $0.2 Receivables $0.1 Total $5.6 $4.2 $4.6 Loans Q1'20 Beginning Q4'20 Ending Q1'21 Ending Reserves Reserves Reserves Reserves as a % of Total loans 4.6% 7.3% 6.4% Reserves as
Slide 17: Marketing Investments and New Cards Acquired
Marketing Investments and New Cards Acquired Marketing Proprietary New Cards Acquired ($ in billions) (in millions) $1.1 $1.0 2.5 $1.0 2.1 $0.8 $0.7 1.7 1.4 1.0 YoY Change (2%) (16%) 23% 6% 21% Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 17
Slide 18: FX-Adjusted Revenue Growth
FX-Adjusted Revenue Growth* Jan’21 Feb’21 Mar’21 % Increase/(decrease) vs. Prior year (FX-adjusted): YoY% (22%) (22%) 7% vs. ’19 % (15%) (13%) (10%) 20% 9% 10% 9% 9% 10% 1% 0% (10%) (13%) (18%) (20%) (20%) (28%) (30%) (40%) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 * Total Revenue Net of
Slide 19: Revenue Performance
Revenue Performance ($ in millions; except per share amounts) Q1’21 YoY% Q1’21 Q1’20 % of Total Inc/(Dec) Revenue Discount Revenue $5,242 $5,838 (10%) 58% Net Card Fees $1,253 $1,110 13% 14% Other Fees & Commissions $520 $720 (28%) 6% Other Revenue $219 $312 (30%) 2% Net Interest Income $1,830 $2,33
Slide 20: Net Card Fees
Net Card Fees Net Card Fees* $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): $1.3 $1.2 $1.2 $1.1 $1.1 $1.1 $1.0 $1.0 $0.9 YoY Change 17% 19% 20% 20% 19% 17% 15% 12% 10% Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 * Net Card Fees YoY growth rates ad
Slide 21: Net Interest Income and Net Interest Yield
Net Interest Income and Net Interest Yield Net Interest Income* WW Net Interest Yield on CM Loans** $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): 11.9% $2.3 11.6% 11.6% 11.4% 11.3% $1.9 $1.9 $1.9 $1.8 YoY 14% (8%) (15%) (17%) (22%) Change 70 bps 70 bps 40
Slide 22: Discount Revenue
Discount Revenue Discount Revenue Growth* Average Discount Rate % Increase/(decrease) vs. Prior year (FX-adjusted): 2.34% 2.27% 2.25% 2.26% 2.23% (5%) (11%) (19%) (24%) YoY Change (3 bps) (14 bps) (12 bps) (11 bps) (8 bps) (38%) Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 * Discount
Slide 23: Expense Performance
Expense Performance ($ in millions; except per share amounts) YoY% Q1’21 Q1’20 Inc/(Dec) Card Member Rewards $2,243 $2,392 (6%) Card Member Services $317 $456 (30%) Business Development $802 $906 (11%) Variable CM Engagement Expenses $3,362 $3,754 (10%) Marketing $964 $799 21% Operating Expenses* $2
Slide 24: Capital and Liquidity
Capital and Liquidity Common Equity Tier 1 Cash and Investments* ($ in billions) $62.0 $61.6 $58.1 14.8% $54.6 13.6% 13.9% 13.5% 11.9% $43.6 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 * Cash and Investments represent Cash and cash equivalents and Investment securities on the Consoli
Slide 25: 2021 Scenarios
2021 Scenarios 2021 Scenarios Scenario 1 Scenario 2 Macro Environment (vs. Q1’21 reserve assumptions) Provision & Credit (vs. Q1’21 reserve assumptions) EPS ~$6.00 ~$7.50 2022+ Aspiration Back to our original EPS expectations for 2020 in 2022, and resuming our financial growth algorithm beyond 2022
Slide 26: Appendix
Appendix
Slide 27: Volume Reporting Nomenclature Changes
Volume Reporting Nomenclature Changes $ in billions 2020 Volume 2020 Volume (Point of Departure) (Point of Arrival) Proprietary Billed Business Billed Business $871 $871 Global Network Services Processed Volumes* Billed Business $140 $167 Total Billed Business Total Network Volumes $1,011 $1,038 27
Slide 28: Billed Business Growth by Region
Billed Business Growth by Region Total Billed Business by Region* % Increase/(decrease) vs. Prior period (FX-adjusted): US Asia LACC Europe Q1’21 (5%) (11%) (18%) (28%) 20% vs. ’19 (8%) (12%) (24%) (32%) 10% 0% US (10%) Asia (20%) LACC Europe (30%) (40%) (50%) % inc/(dec) YoY % inc/(dec) vs. 2019 (6
Slide 29: Worldwide Total Loans and Card Member Receivables Mix
Worldwide Total Loans and Card Member Receivables Mix Q1’21 Total Loan Mix Q1’21 Card Member Receivables Mix Intl. Small Business Small Business Consumer 21% 15% 34% Intl. Consumer U.S. 11% 27% Consumer 68% U.S. Consumer 24% Corporate Card 29 Note: Total Loans reflects Card Member loans and Other lo
Slide 30: Global Corporate Payments Card Member Credit Metrics
Global Corporate Payments Card Member Credit Metrics Card Member Receivables Net Write-offs ($ in millions) $105* $60 $43 $18 $10 YoY 19% # 40% (51%) Growth (77%) Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Net Write-off rates 1.0% 4.0% 2.4% 0.7% 0.4% 30 # Denotes a variance greater than 100%. * Includes Client b
Slide 31: 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: 10% 10% (40%) (40%) Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Reported FX Adj. Reported FX Adj. Euro € UK £ Japan ¥ Australia $ Canada $ Mexico $ Ap
Slide 32: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis The following summary provides selected variance information for the three months ended March 31, 2021 compared to the same period in the prior year. It should be read in conjunction with the statistical tables for Q1’21, available at ir.americanexpress.com.
Slide 33: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis • Marketing and Business Development: Increased 4% versus Q1’20, primarily driven by incremental marketing investments, partially offset by decreases in corporate client incentives due to lower corporate card billed business. • Card Member Rewards Expense: D
Slide 34: Annex 1 (1 of 3)
Annex 1 (1 of 3) Network Volumes – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q1’21 vs Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q1’19 Int’l Consumer Reported 8% 10% 10% 11% (6%) (41%) (21%) (17%) (10%) (16%) FX-Adjusted 16% 15% 14% 11% (2%) (39%) (23%) (20%) (17%) (1
Slide 35: Annex 1 (2 of 3)
Annex 1 (2 of 3) Network Volumes – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q1’21 vs Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q1’19 Large & Global Corporate Reported (20%) (64%) (54%) (50%) (43%) (54%) FX-Adjusted (19%) (64%) (54%) (51%) (44%) (54%) Int’l SME Reported 2% (29%) (16%) (10%)
Slide 36: Annex 1 (3 of 3)
Annex 1 (3 of 3) Network Volumes – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q1’21 vs. Q1’19 Q1’21 vs. Q1’20 Jan Feb Mar Jan Feb Mar Billed Business Reported (14%) (12%) (7%) (20%) (18%) 24% FX-Adjusted (15%) (13%) (7%) (21%) (20%) 21% 36 * See Slide 3 for an explanation of FX-a
Slide 37: Annex 2
Annex 2 Card Member Receivables Net Write-off Rate Components ($ in millions, except percentages and where indicated) Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Net Write-offs Card Member Receivables Net Write-offs – Principal and Fees $258 $299 $219 $105 $53 GCP Net Write-offs – Principal and Fees* (43) (105)
Slide 38: Annex 3
Annex 3 Troubled Debt Restructurings (TDR) Balance ($ in billions) Dec’19 Apr’20 Dec’20 Mar’21 In-Program TDR Balance $0.8 $1.0 $3.1 $2.9 Delinquent Financial Relief Programs (FRP) 0.1 0.1 0.1 0.1 balance Non-delinquent FRP balance $0.7 $0.9 $3.0 $2.8 38
Slide 39: Annex 4 (1 of 2)
Annex 4 (1 of 2) Revenues Net of Interest Expense – Reported & FX-Adjusted* ($ in billions) Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 GAAP Revenues Net of Interest Expense $9.7 $10.0 $10.1 $10.5 $10.3 $10.8 $11.0 $11.4 $10.3 $7.7 $8.8 $9.4 $9.1 FX-Adjusted Reven
Slide 40: Annex 4 (2 of 2)
Annex 4 (2 of 2) Revenues Net of Interest Expense – Reported & FX-Adjusted* ($ in billions) Jan’19 Feb’19 Mar’19 Jan’20 Feb’20 Mar’20 Jan’21 Feb’21 Mar’21 GAAP Revenues Net of Interest Expense $3.5 $3.2 $3.6 $3.8 $3.6 $3.0 $3.0 $2.8 $3.3 FX-Adjusted Revenues Net of Interest* $3.5 $3.3 $3.6 $3.8 $3
Slide 41: Annex 5
Annex 5 Net Card Fees – Reported & FX-Adjusted* ($ in billions) Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 GAAP Revenues Net Card Fees $0.8 $0.8 $0.9 $0.9 $0.9 $1.0 $1.0 $1.1 $1.1 $1.1 $1.2 $1.2 $1.3 FX-Adjusted Net Card Fees* $0.8 $0.8 $0.9 $0.9 $0.9 $1.0 $1.0 $
Slide 42: Annex 6
Annex 6 Net Interest Income – Reported & FX-Adjusted* ($ in billions) Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 GAAP Net Interest Income $2.1 $2.1 $2.2 $2.3 $2.3 $1.9 $1.9 $1.9 $1.8 FX-Adjusted Net Interest Income* $2.0 $2.1 $2.2 $2.3 $2.3 YoY% Inc/(Dec) in GAAP Net Interest Income 13%
Slide 43: Annex 7
Annex 7 Discount Revenue – Reported & FX-Adjusted* ($ in billions) Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 GAAP Discount Revenue $6.2 $6.6 $6.6 $6.8 $5.8 $4.0 $5.0 $5.5 $5.2 FX-Adjusted Discount Revenue* $6.1 $6.5 $6.6 $6.9 $5.9 YoY% Inc/(Dec) in GAAP Discount Revenue (6%) (39%) (24%
Slide 44: Annex 8
Annex 8 Consolidated Net Interest Yield on Average Card Member Loans ($ in millions, except percentages and where indicated) Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Net interest income $2,330 $1,884 $1,874 $1,897 $1,830 Exclude: Interest expense not attributable to our Card Member $395 $350 $296 $254 $236 l
Slide 45: 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 American Express Company’s current expectations reg
Slide 46: Forward Looking Statements
Forward Looking Statements • future credit performance and the amount and timing of future credit reserve builds and releases, which will depend in part on changes in consumer behavior that affect loan and receivable balances (such as paydown and revolve rates) and delinquency and write-off rates; m
Slide 47: Forward Looking Statements
Forward Looking Statements • the ability of the company to control its operating expenses and the actual amount the company spends on operating expenses in 2021 and beyond, which could be impacted by, among other things, management’s decision to increase or decrease spending in such areas as technol
Slide 48: Forward Looking Statements
Forward Looking Statements • changes affecting the company’s plans regarding the return of capital to shareholders, including for the second quarter of 2021, which will depend on factors such as capital levels and regulatory capital ratios; changes in the stress testing and capital planning process
Slide 49: Forward Looking Statements
Forward Looking Statements • a failure in or breach of the company’s operational or security systems, processes or infrastructure, or those of third parties, including as a result of cyberattacks, which could compromise the confidentiality, integrity, privacy and/or security of data, disrupt its ope
Slide 50: American Express
AMERICAN EXPRESS
American Express Company — Q1 2021 Earnings Presentation on 6ix