American Express Company · NYSE:AXP
American Express — Q1 2023 Earnings Presentation
44 slides from American Express's earnings presentation, Apr 20, 2023
Slide 1: American Express Earnings Conference Call Q1'23
American Express Earnings Conference Call Q1’23 APRIL 20, 2023
Slide 2: Summary Financial Performance
Summary Financial Performance ($ in millions; except per share amounts) YoY% Q1’23 Q1’22 Inc/(Dec) Total Revenues Net of Interest Expense $14,281 $11,735 22% FX-Adjusted* $11,595 23% Pretax Pre-Provision Income** $3,222 $2,679 20% Provision Expense $1,055 ($33) # Net Income $1,816 $2,099 (13%) Dilut
Slide 3: Total Network Volumes Growth
Total Network Volumes Growth % Increase/(decrease) vs. Prior Year (FX-adjusted): Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Billed Business 33% 35% 30% 24% 15% 16% Processed Volumes 15% 15% 19% 19% 17% 15% Total Network Volumes 30% 32% 28% 23% 16% 16% $ in Billions $413 $395 $394 $399 Total Network Volumes
Slide 4: Q1'23 Network Volumes Growth by Customer Type
Q1’23 Network Volumes Growth by Customer Type % Increase/(decrease) vs. Prior Year (FX-adjusted): U.S. Consumer Services: Commercial Services: International Card Services: 16% 10% 29% 34% 34% 27% 16% 15% 6% 1 % of Total US US US Large & Int’l Int’l SME & Processed Network Volumes Consumer SME Global
Slide 5: U.S. Consumer Services Billed Business
U.S. Consumer Services Billed Business Millennials + Q1’23 Gen-X Baby Boomer + Total Gen-Z YoY 28% 14% 8% 16% % of Total 30% 37% 32% 100% $ in Billions $149 $141 $140 $142 $129 $123 $99 $98 $108 $96 G&S, 10% YoY $97 $87 $42 $42 $41 $46 T&E, 30% YoY $32 $35 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 5 Note:
Slide 6: Commercial Services Billed Business
Commercial Services Billed Business Q1’23 US SME US Large & Global Corp Total YoY 6% 34% 10% % of Total 82% 18% 100% $ in Billions $128 $128 $131 $125 $118 $114 $103 $103 $106 $99 G&S, 4% YoY $100 $95 $18 $19 $25 $25 $25 $26 T&E, 41% YoY Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Note: All growth rates ref
Slide 7: International Card Services Billed Business
International Card Services Billed Business Q1’23 Int’l Consumer Int’l SME & Large Corp. Total YoY 27% 34% 29% % of Total 64% 36% 100% $ in Billions $77 $77 $71 $70 $68 $63 $56 $53 G&S, 20% YoY $50 $49 $53 $47 $21 $21 $21 $24 T&E, 58% YoY $15 $16 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Note: All growth
Slide 8: Worldwide Total Loans and Card Member Receivables
Worldwide Total Loans and Card Member Receivables Total Ending Loans and Card Member Receivables $ in billions Pre- Pandemic $171.0 $172.4 $155.5 $159.2 $149.6 $145.3 8% 7% Card Member 13% 3% 27% 18% Receivables YoY Growth 28% 31% 24% 25% Total Loans 8% 27% Q4'19 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Total
Slide 9: Card Member Loans and Receivables Credit Metrics
Card Member Loans and Card Member Receivables Credit Metrics Card Member Loans and Card Member Receivables Net Write-off Rates* Pre- Pandemic 2.2% 1.6% 1.2% 0.8% 0.9% 0.7% Q4'19 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 30+ Days Past Due* 1.5% 0.8% 0.7% 0.9% 1.1% 1.2% Corporate Net Write-off 0.8% 0.2% 0.3% 0.4%
Slide 10: Total Provision
Total Provision ($ in millions) Pre- Pandemic $1,024 $1,027 $1,055 Total Provision $161 Reserve $778 $320 Build/(Release)* $492 $387 $410 $863 ($33) $58 $735 Write-offs $535 $352 $391 $287 ($320) Q4'19 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 See Variance Commentary in the appendix section for an explanation o
Slide 11: Total Reserves
Total Reserves Balance Sheet Credit Reserves* ($ in billions) Card Member $4.3 $4.4 $4.0 $0.3 Receivables $0.1 $0.2 $0.2 $0.3 Total $4.2 $4.1 Loans $3.8 Q1'20 Beginning Q4'22 Ending Reserves Q1'23 Ending Reserves Reserves Reserves as a % of: Total Loans & CM Receivables 2.9% 2.4% 2.5% Total Loans 4.
Slide 12: Revenue Performance
Revenue Performance ($ in millions) Q1’23 YoY% Q1’23 Q1’22 % of Total Inc/(Dec) Revenue Discount Revenue $7,947 $6,835 16% 56% Net Card Fees $1,713 $1,423 20% 12% Service Fees and Other Revenue $1,218 $906 34% 9% Processed Revenue $420 $372 13% 3% Net Interest Income $2,983 $2,199 36% 21% Revenues N
Slide 13: Discount Revenue
Discount Revenue Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 YoY Growth* 36% 38% 32% 26% 16% 17% $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): $ in Billions $7.9 $8.2 $7.9 $7.8 $7.1 $6.8 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 * Discount Revenue adjusted for FX and th
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) 30% 25% 25% 23% 23% 3.3 3.4 3.2 3.0 3.0 19% 20% 2.7 16% 15% 11% 10% 10% 10% 10% 11% 14% 5% 0% Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22
Slide 15: Net Interest Income
Net Interest Income Q4’19 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 YoY Growth* 13% 20% 31% 30% 32% 36% $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): $ in Billions $2.8 $3.0 $2.3 $2.4 $2.6 $2.2 Q4'19 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 WW Net Interest Yield on CM 11.3% 10.5
Slide 16: Total Revenue Net of Interest Expense
Total Revenue Net of Interest Expense Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 YoY Growth* 31% 31% 33% 27% 19% 23% $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): $14.2 $14.3 $ in Billions $13.6 $13.4 $12.1 $11.7 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 * Revenue Net
Slide 17: Expense Performance
Expense Performance ($ in millions) YoY% Q1’23 Q1’22 Inc/(Dec) Card Member Rewards $3,766 $3,111 21% Business Development $1,393 $1,043 34% Card Member Services $983 $626 57% Q1’23 VCE % of Revenue Variable Customer Engagement $6,142 $4,780 28% 43% Expenses Marketing $1,341 $1,224 10% Operating Expe
Slide 18: Capital
Capital Common Equity Tier 1 Capital Return ($ in billions) 10.4% 10.3% 10.6% 10.3% 10.6% $1.9 $1.0 $1.0 $1.0 $0.6 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 CET1 Ratio Target: 10-11% 18
Slide 19: The Growth Plan
The Growth Plan January 2022: 2022 Guidance 2023 Expectations 2024+ Aspiration Revenue Growth: Revenue Growth: 18% - 20% Higher than long-term in excess of 10% aspirational levels of EPS: Revenue growth EPS Growth: $9.25 - $9.65 Mid-teens January 2023: 2022 Actuals 2023 Guidance 2024+ Aspiration Rev
Slide 20: Appendix
Appendix AMERICA 8XBRESS
Slide 21: Historical Network Volumes Trend
Historical Network Volumes Trend Network Volumes Indexed to 2000 COVID-19 Great Financial Recession YoY (18%) YoY 9/11 Flat YoY (9%) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 21
Slide 22: Travel & Entertainment Billed Business
Travel & Entertainment Billed Business T&E by Industry % Increase/(decrease) vs. Prior Year: 250% 200% 150% Airlines 100% Total T&E Other 50% Lodging Restaurants 0% (50%) (100%) Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q1’23 Restaurants Lodging Airlines Other Total YoY 28% 31% 60% 38% 39% % of Total 25%
Slide 23: Card Member Credit Metrics
Card Member Credit Metrics Q4’19 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Card Member Loans Net Write-off Rate* 2.3% 0.8% 0.8% 0.8% 1.1% 1.5% Card Member Receivables Net Write-off Rates* 1.9% 0.6% 0.8% 1.0% 1.4% 1.9% Corporate Net Write-off Rates** 0.8% 0.2% 0.3% 0.4% 0.6% 0.6% Card Member Loans 30+ Days Past
Slide 24: Credit Reserve Macroeconomic Scenarios: Select Variables
Credit Reserve Macroeconomic Scenarios: Select Variables US Unemployment Rate % US GDP Growth* % 10% 8% 9% 6% 8% 4% 7% 2% 6% 5% 0% 4% (2%) 3% (4%) 2% 1% (6%) 0% (8%) Q2'21 Q1'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3
Slide 25: Funding and Deposits
Funding and Deposits Funding Mix Retail Deposit Program ($ in billions) $155 $164 Short-term $109 $120 91% FDIC 1% insured at 1% Funding Q1’23 71% Deposits 73% Direct 74% 74% Deposits*** Third Party 8% 7% Card ABS* CDs 12% 13% 20% Unsecured Third Party 18% 15% 13% Term** Sweep Q4'22 Q1'23 Q4'22 Q1'2
Slide 26: FX Impact on Network Volumes and Revenue Growth
FX Impact on Network Volumes and Revenue Growth Network Volumes Revenue Net of Interest Expense % Increase/(decrease) vs. Prior year: % Increase/(decrease) vs. Prior year: 50% 50% (15%) (15%) Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23
Slide 27: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis The following summary provides selected variance information for the three months ended March 31, 2023 compared to the same period in the prior year. It should be read in conjunction with the statistical tables for Q1’23, available at ir.americanexpress.com.
Slide 28: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis • Card Member Rewards Expense: Increased 21 percent versus Q1'22, driven by increases in Membership Rewards, cobrand rewards and cash back rewards expenses, all of which were primarily driven by higher billed business. The increase in Membership Rewards expe
Slide 29: Annex 1: Pretax Pre-Provision Income
Annex 1 Pretax Pre-Provision Income ($ in millions) YoY% Q1’23 Q1’22 Inc/(Dec) Pretax income $2,167 $2,712 (20%) Provisions for credit losses $1,055 ($33) # Pretax pre-provision income $3,222 $2,679 20% 29 Note: # Denotes a variance of 100% or more.
Slide 30: Annex 2 (1 of 3): Network Volumes Reported & FX-Adjusted
Annex 2 (1 of 3) Network Volumes – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Billed Business Reported 32% 34% 27% 21% 13% 15% FX-Adjusted 33% 35% 30% 24% 15% 16% Processed Volumes Reported 13% 12% 12% 10% 8% 8% FX-Adjusted 15% 15% 19% 19% 17%
Slide 31: Annex 2 (2 of 3): Billed Business Reported & FX-Adjusted
Annex 2 (2 of 3) Billed Business – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 US Large and Global Corp Reported 34% 41% 53% 42% 25% 33% FX-Adjusted 34% 42% 55% 43% 26% 34% Commercial Services Reported 30% 31% 27% 20% 11% 10% FX-Adjusted 30% 31%
Slide 32: Annex 2 (3 of 3): Billed Business Reported & FX-Adjusted
Annex 2 (3 of 3) Billed Business – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 International Consumer Reported 28% 36% 28% 18% 12% 20% FX-Adjusted 32% 43% 42% 34% 23% 27% International SME & Large Corp Reported 27% 29% 31% 27% 19% 25% FX-Adjuste
Slide 33: Annex 3: Discount Revenue Reported & FX-Adjusted
Annex 3 Discount Revenue – Reported & FX-Adjusted* ($ in billions) Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 GAAP Discount Revenue $5.6 $3.8 $4.8 $5.3 $5.0 $6.0 $6.4 $7.1 $6.8 $7.9 $7.8 $8.2 $7.9 FX-Adjusted Discount $5.6 $3.8 $4.8 $5.3 $5.0 $6.0 $6.2 $7.0 $6.8
Slide 34: Annex 4: Net Card Fees Reported & FX-Adjusted
Annex 4 Net Card Fees – Reported & FX-Adjusted* ($ in billions) Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 GAAP Net Card Fees $1.1 $1.1 $1.2 $1.2 $1.3 $1.3 $1.3 $1.3 $1.4 $1.5 $1.5 $1.6 $1.7 FX-Adjusted Net Card Fees* $1.1 $1.2 $1.2 $1.2 $1.2 $1.2 $1.3 $1.3 $1.4
Slide 35: Annex 5: Net Interest Income Reported & FX-Adjusted
Annex 5 Net Interest Income – Reported & FX-Adjusted* ($ in billions) Q4’18 Q4’19 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 GAAP Net Interest Income $2.0 $2.3 $1.9 $1.8 $1.8 $2.0 $2.1 $2.2 $2.4 $2.6 $2.8 $3.0 FX-Adjusted Net Interest Income* $2.0 $2.3 $1.9 $1.8 $1.8 $2.0 $2.1 $2.
Slide 36: Annex 6: Consolidated Net Interest Yield on Average Card Member Loans
Annex 6 Consolidated Net Interest Yield on Average Card Member Loans ($ in millions, except percentages and where indicated) Q4’19 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Net interest income $2,284 $2,108 $2,199 $2,360 $2,578 $2,758 $2,983 Exclude: Interest expense not attributable to our Card Member
Slide 37: Annex 7: Revenues Net of Interest Expense Reported & FX-Adjusted
Annex 7 Revenues Net of Interest Expense – Reported & FX-Adjusted* ($ in billions) Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 GAAP Revenues Net of $10.3 $7.7 $8.8 $9.4 $9.1 $10.2 $10.9 $12.1 $11.7 $13.4 $13.6 $14.2 $14.3 Interest Expense FX-Adjusted Revenues Net
Slide 38: 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 39: Forward Looking Statements
Forward Looking Statements • the company’s ability to achieve its 2023 revenue growth outlook and its revenue growth aspirations for 2024 and beyond, and the sustainability of the company’s future growth, which could be impacted by, among other things, the factors identified above and in the subsequ
Slide 40: Forward Looking Statements
Forward Looking Statements • future credit performance, the level of future delinquency, reserve and write-off rates and the amount and timing of future reserve builds and releases, which will depend in part on macroeconomic factors such as unemployment rates, GDP and the volume of bankruptcies; the
Slide 41: Forward Looking Statements
Forward Looking Statements • the company’s ability to control operating expenses, including relative to future revenue growth, and the actual amount spent on operating expenses in 2023 and beyond, which could be impacted by, among other things, salary and benefit expenses to attract and retain talen
Slide 42: Forward Looking Statements
Forward Looking Statements • the company’s ability to expand its leadership in the premium consumer space, which will be impacted in part by competition, brand perceptions (including perceptions related to merchant coverage) and reputation, and the company’s ability to develop and market new benefit
Slide 43: Forward Looking Statements
Forward Looking Statements • the company’s ability to grow and increase efficiencies internationally, which could be impacted by regulation and business practices, such as those capping interchange or other fees, mandating network access or data localization, favoring local competitors or prohibitin
Slide 44: American Express
AMERICAN EXPRESS
American Express Company — Q1 2023 Earnings Presentation on 6ix