American Express Company · NYSE:AXP

American Express — Q4 2020 Earnings Presentation

46 slides from American Express's earnings presentation, Jan 26, 2021

  1. Slide 1: American Express Company Earnings Conference Call Q4'20

    oO AMERICAN EXPRESS American Express Company Earnings Conference Call Q4'20

  2. Slide 2: Support our colleagues and win as a team

    Support our colleagues and 64K+ Global colleagues Executing robust, Created Office of Enterprise Inclusion, Ranked #9 in Fortune’s 100 win as a team enabled to work multi-faceted Return Diversity and Business Engagement and Best Companies to Work from home to Office plan announced 4-year $1B action

  3. Slide 3: Q4'20 and FY'20 Results Summary

    ($ in millions; except per share amounts) Q4’20 Inc/(Dec) FY’20 Inc/(Dec) Total Revenues Net of Interest Expense $9,351 (18%) $36,087 (17%) FX-Adjusted* (18%) (17%) Net Income $1,438 (15%) $3,135 (54%) † Diluted EPS $1.76 (13%) $3.77 (53%) Average Diluted Shares Outstanding 806 (1%) 806 (3%) * Total

  4. Slide 4: Total billed business growth (FX-adjusted)

    % Increase/(decrease) vs. Prior year (FX-adjusted): Q1’20 Q2’20 Q3’20 Q4’20 FY’20 AXP Prop (3%) (35%) (20%) (16%) (19%) GNS (10%) (25%) (16%) (15%) (17%) Total AXP (4%) (33%) (20%) (16%) (18%) 10% 5% 0% (5%) (10%) GNS: (15%) (15%) Total AXP: (16%) (20%) AXP Proprietary: (16%) (25%) (30%) (35%) (40%)

  5. Slide 5: T&E and Non-T&E billed business growth

    % Increase/(decrease) vs. Prior year (FX-adjusted): Q1’20 Q2’20 Q3’20 Q4’20 FY’20 Non-T&E 4% (11%) 1% 4% 0% T&E (20%) (87%) (68%) (65%) (60%) AXP Prop (3%) (35%) (20%) (16%) (19%) 20% Non-T&E: 4% 0% (20%) AXP Proprietary: (16%) (40%) (60%) T&E: (65%) (80%) (100%) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20

  6. Slide 6: Proprietary billed business mix, T&E and Non-T&E

    Q4’19 Prop (87% of WW Total) Q4’20 Prop (86% of WW Total) Q4’19 Proprietary Billed Business: $282B Q4’20 Proprietary Billed Business: $240B T&E T&E 28% 12% 72% 88% Non-T&E Non-T&E % of Prop Billed Business % of Prop Billed Business 52% 54% 37% 39% Non-T&E 37% Non-T&E 46% 30% 36% 11% 6% T&E 15% 5% T&

  7. Slide 7: T&E by Customer Type and Industry

    T&E by Customer Type T&E by Industry % Increase/(decrease) vs. Prior year (FX-adjusted): % Increase/(decrease) vs. Prior year (FX-adjusted): Consumer SME L&G Total Restaurants Other Lodging Airlines Cruises Q4 YoY% (57%) (64%) (85%) (65%) Q4 YoY% (39%) (63%) (68%) (85%) (98%) 10% 10% (10%) (10%) (30

  8. Slide 8: T&E vs. Non-T&E; Online vs. Offline

    T&E vs. Non-T&E Non-T&E: Online vs. Offline % Increase/(decrease) vs. Prior year (FX-adjusted): % Increase/(decrease) vs. Prior year (FX-adjusted): Non-T&E T&E Total Q4 YoY% Online Offline Total Q4 YoY% 5% (57%) (13%) Non-T&E 25% (14%) 5% Holiday Spend 40% (12%) 11% Online 20% 20% Non-T&E Non-T&E 0%

  9. Slide 9: T&E vs. Non-T&E; SME vs. Large & Global Corporate

    T&E vs. Non-T&E SME vs. Large & Global Corporate % Increase/(decrease) vs. Prior year (FX-adjusted): % Increase/(decrease) vs. Prior year (FX-adjusted): Non-T&E T&E Total SME L&G Total 20% Q4 YoY% 2% (74%) (19%) 20% Q4 YoY% (9%) (51%) (19%) 0% Non-T&E 0% SME (20%) Total (20%) GCS (40%) (40%) Large &

  10. Slide 10: Total Billed Business by Region

    Total Billed Business by Region* % Increase/(decrease) vs. Prior year (FX-adjusted): US Asia LACC Europe 20% Q4 YoY% (12%) (18%) (25%) (30%) 10% 0% (10%) US Asia (20%) LACC (30%) Europe (40%) (50%) (60%) Q1'20 Q2'20 Q3'20 Q4'20 * Reflects spend on proprietary cards issued in the respective region. P

  11. Slide 11: Total Ending Loans and Card Member Receivables

    Total Ending Loans Total Ending Card Member Receivables ($ in billions) ($ in billions) $92.2 $82.9 $74.6 $76.2 $73.1 $57.4 $44.7 $40.8 $43.7 $37.6 YoY 8% (3%) (15%) (17%) (17%) Growth 3% (21%) (36%) (28%) (24%) Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Note: Total Loans reflects C

  12. Slide 12: Card Member Loans and Receivables credit metrics

    Card Member Loans Card Member Receivables* (Net Write-off $ in millions) (Adj. Net Write-off $ in millions*) FY’20 YoY FY’20 YoY $1,795 (3%) $593 (13%) $493 $518 $499 $432 $346 $188 $196 $176 $144 YoY $77 24% 13% 8% (3%) (30%) Growth 42% 20% 8% (15%) (59%) Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q4'19 Q1'20 Q

  13. Slide 13: Customer relief program enrollment and delinquencies

    ($ in billions) $11.5 $8.5* Customer $5.0 Pandemic Relief $0.7 $4.2 $4.0 (CPR) Program Enrolled ** $0.0 $0.0 $2.8 Financial Relief $2.4 $0.7 $0.9 $3.0 $3.0 Programs (FRP) Enrolled *** $2.1 $2.0 $1.9 Delinquent $1.2 $1.0 Dec'19 Apr'20 Jun'20 Sep'20 Dec'20 Total Loans $1.9 $7.1 $3.3 $3.1 $3.0 Card Mem

  14. Slide 14: US Unemployment Rate and GDP Growth scenarios

    US Unemployment Rate % US GDP Growth* % 18% 40% 16% 30% 14% 20% 12% 10% 10% 0% 8% 6% (10%) 4% (20%) 2% (30%) 0% (40%) Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q2'21 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q3 Baseline Scenario Q3 Do

  15. Slide 15: Provision for Credit Losses and Balance Sheet Credit Reserves

    Total Provision for Credit Losses Balance Sheet Credit Reserves** ($ in millions) ($ in billions) $2,621 $1.5 $5.8 $0.1 Charge $0.3 Receivables $4.3 $1.4 Reserve $1,555 $0.1 Build/ $1,703 (Release)* Total $628 $5.6 $665 Loans $4.2 Write-offs $918 $927 $781 $563 ($116) ($674) Q1'20 Beginning Q4'20 En

  16. Slide 16: Revenue Summary

    ($ in millions) Q4’20 Inc/(Dec) FY’20 Inc/(Dec) Discount Revenue $5,549 (19%) $20,401 (22%) Net Card Fees 1,222 13% 4,664 15% Other Fees & Commissions 516 (38%) 2,163 (34%) Other Revenue 167 (51%) 874 (39%) Net Interest Income 1,897 (17%) 7,985 (7%) Revenues Net of Interest Expense $9,351 (18%) $36,

  17. Slide 17: Net Card Fee Growth and Proprietary Cards Acquired

    Net Card Fee Growth* Proprietary Cards Acquired % Increase/(decrease) vs. Prior year (FX-adjusted): (in millions) 2.9 2.6 2.5 20% 20% 19% 17% 15% 1.7 12% 1.4 1.0 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 * Net card fees adjusted for FX and the related growth rates are n

  18. Slide 18: Net Interest Income and Net Interest Yield

    Net Interest Income WW Net Interest Yield on CM Loans * ($ in billions) ** 11.9% $2.3 $2.3 11.6% 11.6% $2.2 11.4% 11.2% 11.3% $1.9 $1.9 $1.9 YoY 12% 12% 13% (9%) (15%) (17%) Change 20 bps 40 bps 70 bps 70 bps 40 bps 10 bps Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 * See

  19. Slide 19: Discount Revenue Growth and Average Discount Rate

    Discount Revenue Growth* Average Discount Rate % Increase/(decrease) vs. Prior year (FX-adjusted): 2.39% 2.36% 2.34% 7% 6% 2.27% 2.25% 2.23% (5%) (19%) (24%) YoY Change 1 bps 0 bps (3 bps) (14 bps) (12 bps) (11 bps) (38%) Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 * Disc

  20. Slide 20: Revenue growth (FX-adjusted)

    % Increase/(decrease) vs. Prior year (FX-adjusted): 20% 9% 10% 9% 9% 10% 1% 0% (10%) (18%) (20%) (20%) (28%) (30%) (40%) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 * Total Revenue Net of Interest Expense adjusted for FX and the related growth rates are non-GAAP measures. See Annex 4 for total R

  21. Slide 21: Expense Summary

    ($ in millions) Q4’20 Inc/(Dec) FY’20 Inc/(Dec) Card Member Rewards $2,296 (16%) $8,041 (23%) Card Member Services 307 (44%) 1,230 (45%) Business Development 828 (15%) 3,051 (14%) Variable CM Engagement Expenses 3,431 (19%) 12,322 (24%) Marketing 1,030 6% 3,696 3% Operating Expenses* 3,143 0% 11,043

  22. Slide 22: Common Equity Tier 1 and Cash and Investments

    Common Equity Tier 1 Cash and Investments* ($ in billions) $62.0 13.6% 13.9% 13.5% $58.1 $54.6 11.9% $43.6 Q1'20 Q2'20 Q3'20 Q4'20 Q1'20 Q2'20 Q3'20 Q4'20 Note: The CET1 ratio for Q4’20 represents a preliminary estimate and may be revised in the company’s Form 10-K for the year ended December 31, 20

  23. Slide 23: 2021 Scenarios and 2022 Aspiration

    2021 Scenarios Scenario 1 Scenario 2 Macro Environment (vs. Q4’20 reserve assumptions) Provision & Credit (vs. Q4’20 reserve assumptions) EPS ~$5.00 ~$7.00 2022 Aspiration “Back to our original EPS expectations for 2020” 23

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  25. Slide 25: Additional Commentary: revenue and provision variances

    . The following summary provides selected variance information for the three months ended December 31, 2020 compared to the same period in the prior year. It should be read in conjunction with the statistical tables for Q4’20, available at ir.americanexpress.com. • Discount Revenue: Decreased 19% ve

  26. Slide 26: Additional Commentary: expense variances

    Card Member Engagement (the aggregate of rewards, Card Member services, and marketing and business development expenses): Decreased 15% versus Q4 ‘19. In January 2020, we re-launched our Delta cobrand products following the renewal extending our cobrand relationship with Delta Air Lines on March 31,

  27. Slide 27: Non-T&E Proprietary Billed Business mix

    Q4’19 Non-T&E Prop (62% of WW Total) Q4’20 Non-T&E Prop (76% of WW Total) Q4’19 Non-T&E Proprietary Billed Business: $202B Q4’20 Non-T&E Proprietary Billed Business: $211B 37% 31% Online Offline Offline 63% Online 69% % of Prop Non-T&E % of Prop Non-T&E 52% 48% 52% 47% Online 25% Online 31% 38% 38%

  28. Slide 28: Billings growth by customer type

    % Increase/(decrease) vs. Prior year (FX-adjusted): % of AXP Global Consumer: Global Commercial: Global Network Services: billings 47% 39% 14% Excluding EU (14%) and Australia (11%) (8%) (13%) (15%) (20%) (51%) Customer US Int’l US Int’l Large & Global Global Network Type % of AXP Consumer Consumer*

  29. Slide 29: Q4'20 Total Loan Mix and Card Member Receivables Mix

    Q4’20 Total Loan Mix Q4’20 Card Member Receivables Mix* Intl. Small Business Small Business Consumer 19% 15% 32% Intl. Consumer 12% U.S. 27% Consumer 69% U.S. Consumer 25% Corporate Card Note: Total Loans reflects Card Member loans and Other loans.* % of Card Member Receivables mix may not foot due

  30. Slide 30: Card Member Receivables Net Write-offs

    Card Member Receivables Net Write-offs ($ in millions) $105* FY’20 YoY $226 54% $60 $43 $37 $18 YoY Growth (24%) 19% # 40% (51%) Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Net Write-off rates 0.8% 1.0% 4.0% 2.4% 0.7% # Denotes a variance greater than 100%. * Includes Client bankruptcy impact of $53M partially of

  31. Slide 31: Billed Business and Revenue FX impact

    Billed Business Revenue Net of Interest Expense % Increase/(decrease) vs. Prior year: 10% 10% (40%) (40%) Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Reported FX Adj. Reported FX Adj. Euro € UK £ Japan ¥ Australia $ Canada $ Mexico $ Approximate Q4’20 BB 4% 4% 6% 3% 2% 1% as a % of T

  32. Slide 32: 2020 Billed Business – Reported & FX-Adjusted

     2020 Billed Business – Reported & FX-Adjusted* % Increase/(decrease) vs. prior year Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 FY’20 Int’l Consumer Proprietary Reported 8% 10% 10% 11% (6%) (41%) (21%) (17%) (21%) FX-Adjusted 16% 15% 14% 11% (2%) (39%) (23%) (20%) (21%) Global Consumer Proprie

  33. Slide 33: 2020 Billed Business – Reported & FX-Adjusted

     2020 Billed Business – Reported & FX-Adjusted* % Increase/(decrease) vs. prior year Q1’20 Q2’20 Q3’20 Q4’20 Large & Global Corporate Reported (20%) (64%) (54%) (50%) FX-Adjusted (19%) (64%) (54%) (51%) Int’l SME Reported 2% (29%) (16%) (10%) FX-Adjusted 7% (26%) (17%) (13%) SME Reported (1%) (27%)

  34. Slide 34: Card Member Receivables Net Write-off Rate Components

     Card Member Receivables Net Write-off Rate Components ($ in millions, except percentages and where indicated) Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 FY’20 Net Write-offs Card Member Receivables Net Write-offs – Principal and Fees $243 $258 $299 $219 $105 $881 GCP Net Write-offs – Principal and Fees* (37) (

  35. Slide 35: Troubled Debt Restructurings (TDR) balance

     Troubled Debt Restructurings (TDR) balance ($ in billions) Dec’19 Apr’20 Jun’20 Sep’20 Dec’20 In-Program TDR Balance $0.8 $1.0 $2.6 $3.1 $3.1 Delinquent Financial Relief Programs 0.1 0.1 0.2 0.1 0.1 (FRP) balance Non-delinquent FRP balance $0.7 $0.9 $2.4 $3.0 $3.0 35

  36. Slide 36: Revenues Net of Interest Expense - Reported & FX-Adjusted

     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 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 FX-Adjusted Revenues Net of Interest* $9.5 $9

  37. Slide 37: Net Card Fees - Reported & FX-Adjusted

     Net Card Fees- Reported & FX-Adjusted* ($ in billions) Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 GAAP Net Card Fees $0.9 $0.9 $0.9 $1.0 $1.0 $1.1 $1.1 $1.1 $1.2 $1.2 FX-Adjusted Net Card Fees* $0.9 $0.9 $0.9 $1.0 $1.0 $1.1 YoY% Inc/(Dec) in GAAP Net Card Fees 19% 20% 18% 15% 15%

  38. Slide 38: Net Interest Income - Reported & FX-Adjusted

     Net Interest Income - Reported & FX-Adjusted* ($ in billions) Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 GAAP Net Interest Income $2.0 $2.0 $2.1 $2.1 $2.2 $2.3 $2.3 $1.9 $1.9 $1.9 FX-Adjusted Net Interest Income* $1.9 $2.0 $2.0 $2.1 $2.2 $2.3 YoY% Inc/(Dec) in GAAP Net Interest In

  39. Slide 39: Consolidated Net Interest Yield on Average Card Member Loans

     Consolidated Net Interest Yield on Average Card Member Loans ($ in millions, except percentages and where indicated) Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Net interest income $2,203 $2,284 $2,330 $1,884 $1,874 $1,897 Exclude: Interest expense not attributable to our Card $461 $421 $395 $350 $296 $25

  40. Slide 40: Discount Revenue - Reported & FX-Adjusted

     Discount Revenue - Reported & FX-Adjusted* ($ in billions) Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 GAAP Discount Revenue $6.2 $6.4 $6.2 $6.6 $6.6 $6.8 $5.8 $4.0 $5.0 $5.5 FX-Adjusted Discount Revenue* $6.1 $6.4 $6.1 $6.5 $6.6 $6.9 YoY% Inc/(Dec) in GAAP Discount Revenue 6% 6% (

  41. Slide 41: 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 regarding business and financi

  42. Slide 42: Forward-looking statements: credit performance

    • 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; macroeconomic factors such a

  43. Slide 43: Forward-looking statements: operating expenses

    • 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 technology, business and product d

  44. Slide 44: Forward-looking statements: Card Member acquisition

    • the company’s ability to increase Card Member acquisition activities, provide additional value to Card Members and refresh its premium products, which will be impacted in part by competition, brand perceptions and reputation, and the ability of the company to develop and market value propositions

  45. Slide 45: Forward-looking statements: security and regulation

    • 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 operations, reduce the use and

  46. Slide 46: American Express

    AMERICAN EXPRESS

American Express Company — Q4 2020 Earnings Presentation on 6ix