American Express Company · NYSE:AXP
American Express — Debt Investor Presentation (August 2012)
42 slides from American Express's debt investor presentation, August 2012
Slide 1: American Express Company Fixed Income Presentation Q2'12
American Express Company Fixed Income Presentation Q2’12 August 2012
Slide 2: Agenda
Agenda AXP Overview Performance AXP Capital & Funding Management 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 ($ in millions) AMERICAN EXPRESS COMPANY H1’11 H1’12 2011 Revenues Net of Interest Exp. $14,649 $15,579 $29,962 Income from Continuing Operations $2,472 $2,595 $4,899 Net Income $2,508 $2,595 $4,935 Return on Average Equity* 28.2% 26.6% 27.7% U.S. Card Services International Card Gl
Slide 5: Payments Landscape
Payments Landscape Note: The trademarks, logos and service marks used on this slide and throughout this presentation are the property of their respective owners. 5
Slide 6: Spend-Centric Model
Spend-Centric Model The AXP spend-centric business model focuses primarily on generating revenues by driving spending on our cards, and secondarily finance charges and fees, allowing us to grow market share in the payments industry. Investments in Premium Value Attractive Premium Customer Base Econo
Slide 7: Agenda
Agenda AXP Overview Performance AXP Capital & Funding Management 7
Slide 8: Q2'12 Summary Financial Performance
Q2'12 Summary Financial Performance ($ in millions, except per share amounts) Q2'12 Q2'11 % Inc/(Dec) Total Revenues Net of Interest Expense $7,965 $7,618 5% FX Adjusted † $7,454 7% Income from Continuing Ops* $1,339 $1,295 3% Diluted EPS from Continuing Ops** $1.15 $1.07 7% Return on Average Equity
Slide 9: Q2'12 Metric Performance
Q2'12 Metric Performance 1Q'10 Q2'12 1Q'09 Q2'11 % Inc/Dec FX Adj.* Billed Business ($ in B)** $221.6 $207.6 7% 9% Total Cards In Force (MM) 100.1 94.0 6% Avg. Basic Cardmember Spending (Dollars)† $3,948 $3,767 5% 6% Cardmember Loans ($ in B) $61.0 $58.7†† 4% 5% WW Travel Sales ($ in B) $6.5 $6.6 (1
Slide 10: Metric Trends
Metric Trends % increase/(decrease) vs. prior year: Q2'11 Q3'11 Q4'11 Q1’12 Q2’12 Billed Business* 18% 16% 11% 12% 7% Billed Business FX Adjusted** 15% 13% 11% 13% 9% Total Cards In Force 6% 8% 7% 7% 6% Avg. Basic Cardmember Spending † 15% 12% 8% 10% 5% Cardmember Loans 2% 2% 3% 4% 4% Worldwide Lend
Slide 11: 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%) Q2'09 Q4'09 Q2'10 Q4'10 Q2'11 Q4'11 Q2'12 Ending Receivables $31.4 $33.7 $34.6 $37.3 $40.1
Slide 12: Lending Billed Business vs. Managed Loan Growth
Lending Billed Business vs. Managed Loan Growth $ in billions; % increase/(decrease) vs. prior year: 25% 15% 5% (5%) (15%) (25%) Q2'09 Q4'09 Q2'10 Q4'10 Q2'11 Q4'11 Q2'12 Proprietary Credit Card Billed Business* Ending Loans - Managed** Ending Loans Managed** $62.9 $61.8 $57.3 $60.9 $58.7 $62.6 $61.
Slide 13: First Half 2012 Relative Performance
First Half 2012 Relative Performance Total Billed Business Ending Loans ($ in billions) ($ in billions) $433 $145 $125 $94 $89 $183 $176 $61 $47 $94 $80 $52 AXP JPM** Citi* BofA*** Cap One† Discover †† Citi* JPM** BofA*** Cap One† AXP Discover† † Growth Growth vs. PY 9% 12% 3% 1% 29% 6% vs. PY (3%)
Slide 14: Charge Card Credit Performance
Charge Card Credit Performance USCS Net Write-off Rate ICS/GCS Net Loss Ratio 2.3% 1.9% 2.0% 1.8% 1.5% 0.09% 0.10% 0.10% 0.11% 0.10% Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Note: USCS Net write-off rates above include Principal only. See Statistical tables in Q2’12 Earnings Relea
Slide 15: AXP Lending Net Write-off Rates versus Competitors
AXP Lending Net Write-off Rates versus Competitors 7.3% 6.8% 5.8% 5.1% 5.3% 5.2% 5.0% 4.4% 3.1% 2.8% 3.1% 2.2% Q2'11 Q2'12 †† AXP* Discover** JPMorgan*** Cap One† Bank of America Citi ††† *Rates include principal only. See Statistical tables in Q2’12 Earnings Release for net write-off rates includin
Slide 16: AXP Lending 30 Days Past Due Rates versus Competitors
AXP Lending 30 Days Past Due Rates versus Competitors 4.1% 4.1% 3.6% 3.1% 3.2% 3.0% 3.0% 2.8% 2.1% 1.9% 1.6% 1.3% Q2'11 Q2'12 AXP Discover* JPMorgan** Cap One*** Bank of America† Citi †† *Fiscal year ends November 30. US Card. **Results exclude Commercial Card. ***Global Card. Includes impact of HSB
Slide 17: Peer Comparison - Trust FICO Distributions
Peer Comparison - Trust FICO Distributions* FICO <660 (“Sub-prime”)** FICO >720 (“Super-prime”) 26% 76% 63% 61% 18% 55% 52% 51% 15% 16% 16% 45% 11% 8% AXP AXP Citi JP Bank of Discover Cap One AXP AXP JP Citi Bank of Discover Cap One Charge Lending Morgan America Charge Lending Morgan America Trust†
Slide 18: Agenda
Agenda AXP Overview Performance AXP Capital & Funding Management 18
Slide 19: Capital Management
Capital Management (Regulatory Ratios, Debt Investor Expectations, Acquisition Capacity, CCAR) (Organic growth and acquisition, dividends, repurchases, and capital-raising) 19
Slide 20: Capital Ratios
Capital Ratios Q2'12 Q1'12 Tier 1 Common Risk-Based* 12.8% 13.4% Tier 1 Leverage 10.7% 10.8% Tier 1 Risk-Based Capital 12.8% 13.4% Total Risk-Based Capital 14.8% 15.4% Tangible Common Equity to Risk- Weighted Assets (“TCE/RWA”)** 12.6% 13.2% Note: These ratios represent a preliminary estimate as of
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 ■ ABS Securities ■ Unsecured Term Debt ■ Discount Window ■ Term Bank Facility ■ Committed Bank Credit ■ Commercial Paper Facilities ■ Secured Borrowing through Conduit Facility* *Drawn balance of th
Slide 23: Q2'12 Liquidity Snapshot
Q2'12 Liquidity Snapshot ($ in billions) Resources Funding Maturities Cash* $16 Q3‘12 4 Readily Marketable 1 Q4'12 4 Securities Liquidity Portfolio 17 Q1'13 1 Commercial Paper (1) Q2‘13 6 Outstanding Twelve Month Excess Cash & Securities $16 Maturities $15** * Includes $22.1B classified as Cash and
Slide 24: US Retail Deposit Programs
US Retail Deposit Programs ($ in billions) Third Party Third Party Total Direct * CDs Sweep Deposits March 31, 2012 Balance $16.7 $9.7 $11.1 $37.5 Maturities (0.3) (0.6) (0.8) (1.7) Amount Raised - - - - June 30, 2012 Balance $16.4 $9.1 $10.3 $35.8 Weighted Avg., Retail CD 19.8 Months Remaining Matu
Slide 25: American Express Primary Issuance Structure
American Express Primary Issuance Structure American Express Company (AXP) Total Assets*: $151.8B Credit Ratings † † : A3/BBB+/A+/A(High) Regulated By: FRB & SEC American Express Travel Related Services (TRS) American Express Total Assets*: $149.6B Issuance Trust (AEIT) Credit Ratings † †: A2/A-/A+/
Slide 26: AXP & TRS
AXP & TRS AXP and TRS are Bank and Financial Holding Companies • Leading global payments and travel company American Express • Sources of funding: Company (AXP) • Dividends from subsidiaries Credit Ratings*: A3/BBB+/A+/A(High) • Unsecured long-term notes • Issues corporate charge cards and prepaid p
Slide 27: Credco
Credco • Funds the following products: American Express • US and Non-US charge cards Travel Related Services (TRS) • Non-US revolving cards • Sources of funding: • Issuance of US and non-US unsecured long term debt • Asset backed securities (ABS) issued by American Express Issuance Trust American Ex
Slide 28: US Banks
US Banks American Express Travel Related Services (TRS) American Express American Express Centurion Bank (AECB) Bank, Federal Savings Bank (AEFSB) 100% owned by TRS 100% owned by TRS Credit Ratings*: A2/A-/A+/A(High) Credit Ratings*: A2/A-/A+/A(High) • Incorporated in 1987 • Incorporated in 2000 • I
Slide 29: Outstanding Funding Composition
Outstanding Funding Composition ($ in billions) $105.4 2.3 $98.9 $100.9 $94.7 3.6 4.3 26.3 3.6 Short-term Debt* 29.7 37.9 36.0 Deposits 30.0 23.3 20.9 16.0 Card ABS** † 46.8 42.3 39.1 37.8 Unsecured Term† 12/31/09 12/31/10 12/31/11 6/30/12 *Short-term Debt as of 6/30/12 includes $0.5B of Commercial
Slide 30: Term Maturity Profile – Debt and LT CDs
Term Maturity Profile – Debt and LT CDs ($ in billions) 6/30/12 $16.6 $14.4 $12.9 4.9 0.2 2.6 Long-term CDs* $7.7 4.1 4.0 $6.8 $6.6 1.7 0.3 Card ABS** 1.3 0.6 1.9 11.0 Unsecured** 4.3 7.6 7.8 4.6 6.0 2.1 2012 2013 2014 2015 2016 Thereafter 12/31/11 $19.5 $14.3 4.8 $14.1 Long-term CDs* $11.0 3.2 2.4
Slide 31: 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 • US Consumer and Small Business • US Consumer, Small Business and Corporate cardmember loans cardmember receivables
Slide 32: Credit Account Master Trust - Performance Trend
Credit Account Master Trust - Performance Trend Days Delinquencies Past Due Rate vs. Default Rate $500 MM 6% $400 MM $300 MM 4% $200 MM 2% $100 MM $ MM 0% 6/11 7/11 8/11 9/11 10/11 11/11 12/11 1/12 2/12 3/12 4/12 5/12 6/12 6/11 7/11 8/11 9/11 10/11 11/11 12/11 1/12 2/12 3/12 4/12 5/12 6/12 31-60 61-
Slide 33: 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 6/11 7/11 8/11 9/11 10/11 11/11 12/1 1/12 2/12 3/12 4/12 5/12 6/12 0.0% 6/11 7/11 8/11 9/11 10/11 11/11 12/11 1/12 2/12 3/12 4/12 5/12 6/12 31-60 61-90 90+ Annual
Slide 34: Slide 34
Slide 35: Annex 1
Annex 1 Worldwide Cardmember Lending ($ in billions, except percentages) Total Worldwide Ending Loans Q2'09 Q3'09 Q4'09 GAAP $ 32.5 $31.5 $32.8 Growth vs PY (34%) (31%) (22%) Managed $ 62.9 $60.7 $61.8 Growth vs PY (18%) (20%) (14%) For periods ended on or prior to December 31, 2009, information pre
Slide 36: Annex 2
Annex 2 The Tier 1 Common Risk-Based Capital Ratio is calculated as Tier 1 Common Equity, a non-GAAP measure, divided by Risk-weighted assets. Tier 1 Common Equity is calculated by reference to Total Shareholders’ Equity as shown below: Tier 1 Common Equity Reconciliation as of June 30, 2012 ($ in M
Slide 37: Annex 3
Annex 3 The following table presents a comparison of the Company's Tier 1 and Tier 1 common risk-based capital under Basel I rules to its estimated Tier 1 and Tier 1 common risk-based capital under Basel III rules, for purposes of calculating the estimated Tier 1 and Tier 1, common capital ratios an
Slide 38: Total Payout Ratio
Total Payout Ratio Percentage of Capital Generated Returned to Shareholders 132% 105% 88% 56% 43% 35% 29% 30% 32% ($ in billions) 2007 2008 2009* 2010 2011 Q3'11 Q4'11 Q1'12 Q2'12 Share Repurchases $3.6 $0.2 - $0.6 $2.3 $1.2 $0.3 $0.2 $1.8 Note: Payout Ratio is calculated by dividing the total amoun
Slide 39: 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 40: Forward Looking Statements
Forward Looking Statements •the ability of the Company to generate its on-average and over-time growth targets for revenues net of interest expense, earnings per share and return on average equity, which will depend on the factors such as the Company’s success in implementing its strategies and init
Slide 41: Forward Looking Statements
Forward Looking Statements •uncertainty relating to the actual growth of operating expenses in 2012 and subsequent years, which will depend in part on the Company’s ability to balance the control and management of expenses and the maintenance of competitive service levels to its businesses and custo
Slide 42: Forward Looking Statements
Forward Looking Statements •changes affecting the Company’s ability or desire to repurchase up to $4 billion of its common shares in 2012 and up to $1 billion in the first quarter of 2013, such as acquisitions, results of operations and capital needs, among other factors, which will significantly im
American Express Company — Debt Investor Presentation (August 2012) on 6ix