American Express Company · NYSE:AXP
American Express — Q3 2021 Earnings Presentation
48 slides from American Express's earnings presentation, Oct 22, 2021
Slide 1: American Express Earnings Conference Call Q3'21
American Express Earnings Conference Call Q3’21 OCTOBER 22, 2021
Slide 2: Summary Financial Performance
Summary Financial Performance ($ in millions; except per share amounts) YoY% Q3’21 Q3’20 Inc/(Dec) Total Revenues Net of Interest Expense $10,928 $8,751 25% FX-Adjusted* $8,784 24% Net Income $1,826 $1,073 70% Diluted EPS† $2.27 $1.30 75% Average Diluted Shares Outstanding 787 805 (2%) * Total Reven
Slide 3: Total Network Volumes Growth
Total Network Volumes Growth Q1’21 Q2’21 Q3’21 % of Total vs. ’19 % (12%) (2%) 4% Billed Business 85% YoY% (9%) 51% 31% Processed vs. ’19 % (9%) (2%) 3% 15% Volumes YoY% (1%) 26% 18% % Increase/(decrease) vs. 2019: Total Network vs. ’19 % (11%) (2%) 4% 20% 100% Volumes YoY% (8%) 46% 29% 10% Billed B
Slide 4: Billed Business
Billed Business G&S vs. T&E G&S vs. T&E Growth $ in Billions, % of Total % Increase/(decrease) vs. 2019 (FX-adjusted): $280 40% $266 20% G&S $214 Billed 0% Business 69% 79% (20%) G&S T&E (40%) 88% (60%) T&E 31% (80%) 21% 12% (100%) Q3'19 Q3'20 Q3'21 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q3’21 G&
Slide 5: Global Consumer Billed Business
Global Consumer Billed Business G&S vs. T&E Billed Business Growth by Age Cohort $ in Billions, % of Total % Increase/(decrease) vs. 2019 (FX-adjusted): Millennials vs. ’19 vs. ’19 vs. ’19 40% + Gen-Z 30% 4% $153 9% $147 20% Total $119 (8%) 10% Consumer Gen-X 0% 18% 74% 20% Baby 77% (10%) Boomer + G
Slide 6: Global Commercial Billed Business
Global Commercial Billed Business G&S vs. T&E SME vs. Large & Global Corporate $ in Billions, % of Total % Increase/(decrease) vs. 2019 (FX-adjusted): vs. ’19 vs. ’19 vs. ’19 30% $126 (1%) 20% SME G&S $120 (8%) 10% Total SME $104 (16%) 0% (10%) 86% 18% (20%) 88% 14% Large & G&S 90% 8% (30%) Global (
Slide 7: Goods & Services Billed Business
Goods & Services Billed Business G&S: Online vs. Offline G&S by Industry % Increase/(decrease) vs. 2019 (FX-adjusted): $ in Billions, % of total vs. ’19 40% $222 19% Online Total 20% G&S Offline Retail & 62% 25% 0% Wholesale (20%) Prof. Services 17% 14% (40%) Adv. & Media 7% 20% Q1'20 Q2'20 Q3'20 Q4
Slide 8: Travel & Entertainment Billed Business
Travel & Entertainment Billed Business T&E by Industry % Increase/(decrease) vs. 2019 (FX-adjusted): 20% Restaurants 0% (20%) Other Total T&E (40%) Lodging (60%) Airlines (80%) (100%) (120%) Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q3’21 Restaurants Lodging Airlines Other Total vs. ‘19 4% (33%) (57
Slide 9: Billed Business Growth by Region
Billed Business Growth by Region US vs. International G&S vs. T&E by Region % Increase/(decrease) vs. 2019 (FX-adjusted): % Increase/(decrease) vs. 2019 (FX-adjusted): 20% 20% US G&S US Total Intl G&S 0% 0% AXP (20%) Intl (20%) US T&E (40%) (40%) Intl T&E (60%) (60%) (80%) (80%) (100%) (100%) Q1'20
Slide 10: Worldwide Total Loans and Card Member Receivables
Worldwide Total Loans and Card Member Receivables Total Ending Loans (Q2-Q3) Total Ending CM Receivables (Q2-Q3) ($ in billions) ($ in billions) 2019 2020 2021 2019 2020 2021 $87.4 $88.1 $74.6 $73.1 $77.8 $79.4 $58.7 $56.6 $47.6 $48.8 $40.8 $37.6 YoY 11% 9% (15%) (17%) 4% 9% 7% 2% (36%) (28%) 27% 19
Slide 11: Card Member Credit Metrics
Card Member Credit Metrics Card Member Loans Net Write-off Rates Card Member Receivables Net Write-off Rates (excluding GCP) 2.8% 2.5% 2.5% 1.9% 2.0% 1.4% 1.0% 1.0% 0.6% 0.5% 0.3% 0.2% Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 30+ Days 30+ Days Past Due 1.6% 1.2% 1.0% 0
Slide 12: Total Provision
Total Provision ($ in millions) $2,621 $1,703 $1,555 $628 $665 ($111) ($675) Total Provision $918 $927 ($606) ($191) $781 $563 $379 Write-offs $260 $202 ($116) ($393) Reserve ($674) ($866) ($1,054) Build/(Release)* Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 See Variance Commentary in the appendix sec
Slide 13: Total Reserves
Total Reserves Balance Sheet Credit Reserves* ($ in billions) $1.5 $5.8 ($1.8) $0.1 $0.3 ($0.2) Card Member $1.4 Receivables ($1.7) $4.3 $0.1 $4.0 ($0.4) $5.6 $0.1 ($0.1) $3.6 Total ($0.3) $4.2 $0.0 Loans $3.9 $3.6 Q1'20 Q4'20 Ending Q2'21 Ending Q3'21 Ending Beginning Reserves Reserves Reserves Res
Slide 14: Revenue Performance
Revenue Performance ($ in millions) Q3’21 YoY% vs. ’19% Q3’21 Q3’20 % of Total Inc/(Dec) Inc/(Dec) Revenue Discount Revenue $6,676 $4,999 34% 2% 61% Net Card Fees $1,312 $1,191 10% 27% 12% Other Fees & Commissions $632 $478 32% (23%) 6% Other Revenue $314 $209 50% (13%) 3% Net Interest Income $1,994
Slide 15: Discount Revenue
Discount Revenue Discount Revenue* (Q2-Q3) Average Discount Rate (Q2-Q3) $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): 2019 2020 2021 2019 2020 2021 $6.6 $6.6 $6.7 2.37% 2.39% $6.3 2.27% 2.30% 2.32% 2.23% $5.0 $4.0 YoY 7% 7% (38%) (24%) 56% 33% 0 bps 1 bps
Slide 16: Net Card Fees
Net Card Fees Net Card Fees* $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): $1.3 $1.3 $1.2 $1.3 $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% 10% 10% Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Note:
Slide 17: Net Interest Income and Net Interest Yield
Net Interest Income and Net Interest Yield Net Interest Income* (Q2-Q3) WW Net Interest Yield on CM Loans** (Q2-Q3) $ in billions (on a reported basis) - % Increase/(decrease) vs. Prior year (FX-adjusted): 2019 2020 2021 2019 2020 2021 $2.2 11.6% 11.6% $2.1 $2.0 $1.9 11.2% $1.9 $1.8 10.9% 10.6% 10.8
Slide 18: Total Revenue Net of Interest Expense
Total Revenue Net of Interest Expense Total Revenue Growth FX-Adjusted* % inc/(dec) YoY 45% % inc/(dec) vs. 2019 35% 31% 24% 25% 15% 9% 10% 9% 9% 5% 1% (5%) (1%) (15%) (6%) (13%) 10% 9% 9% 1% (28%) (20%) (18%)(18%) (13%) 29% (25%) (20%) (35%) (28%) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'
Slide 19: Expense Performance
Expense Performance ($ in millions) YoY% Q3’21 Q3’20 Inc/(Dec) Card Member Rewards $3,020 $2,004 51% Card Member Services $579 $259 124% Business Development $944 $700 35% Variable CM Engagement Expenses $4,543 $2,963 53% Marketing $1,411 $1,122 26% Operating Expenses* $2,715 $2,637 3% Total Expense
Slide 20: Marketing Investments and New Cards Acquired
Marketing Investments and New Cards Acquired Marketing Proprietary New Cards Acquired ($ in billions) (in millions) Value 2.6 Injection 2.4 2.1 1.7 $1.3 $1.4 1.4 $1.1 $1.0 $1.0 1.0 $0.7 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 20
Slide 21: Capital
Capital Common Equity Tier 1 Capital Return ($ in billions) $3.6 14.8% 14.2% 13.6% 13.9% 13.5% 12.6% 11.9% $1.2 $1.3 $0.7 $0.3 $0.3 $0.3 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Payout Ratio 409% 111% 31% 23% 35% 54% 195% Note: Payout Ratio is calculated by
Slide 22: 2021 Scenarios & 2022 Goal
2021 Scenarios & 2022 Goal 2021 Scenarios Scenario 1 Scenario 2 Macro Environment (vs. Q3’21 reserve assumptions) Provision & Credit (vs. Q3’21 reserve assumptions) EPS ~$8.90 ~$9.50 2022 Goal Within the high end of the range of original EPS expectations we had for 2020 in 2022 22
Slide 23: Appendix
Appendix AMERICA 8XBRESS
Slide 24: Q3'21 Network Volumes Growth by Customer Type
Q3’21 Network Volumes Growth by Customer Type % of Total US US Int’l Int’l Large & Global Processed Network Consumer SME Consumer* SME* Corporate* Volumes* Volumes 35% 28% 12% 5% 5% 15% % Increase/(decrease) vs. 2019 (FX-adjusted): 15% 13% 3% 3% (4%) (43%) 1 YoY% 37% 28% 24% 27% 25% 18% US Consumer
Slide 25: Billed Business T&E Growth
Billed Business T&E Growth T&E by Customer Type % Increase/(decrease) vs. 2019 (FX-adjusted): Q3’21 % of Q3’19 0% US Consumer 98% (20%) US SME 77% Total T&E 71% (40%) Intl Consumer 65% Intl SME 53% (60%) Large & Global 26% (80%) Corporate (100%) Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 US Intl Tota
Slide 26: Global Consumer G&S Growth
Global Consumer G&S Growth G&S: Online vs. Offline % Increase/(decrease) vs. 2019 (FX-adjusted): 40% Online 30% 20% G&S 10% Offline 0% (10%) (20%) (30%) (40%) Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q3’21 Online Offline Total vs. ’19 37% 4% 20% YoY 15% 20% 17% % of Total 55% 45% 100% 26 Note: All
Slide 27: Worldwide Total Loans and Card Member Receivables Mix
Worldwide Total Loans and Card Member Receivables Mix Q3’21 Total Loan Mix Q3’21 Card Member Receivables Mix Intl. Small Business Small Business Consumer 14% 21% 34% Intl. U.S. Consumer 11% 26% Consumer 68% U.S. Consumer 26% Corporate Card 27 Note: Total Loans reflects Card Member loans and Other lo
Slide 28: Delinquent and Financial Relief Program Balances
Delinquent and Financial Relief Program Balances ($ in billions) $11.5 $8.5* Customer Pandemic Relief $4.0 (CPR) Program Enrolled ** $2.8 $0.0 Financial Relief $2.5 $2.3 $0.7 $0.9 $3.0 Programs (FRP) $0.0 $0.0 $1.8 Enrolled *** $2.1 $2.0 $1.5 $1.0 Delinquent $0.7 $0.8 Dec'19 Apr'20 Dec'20 Jun'21 Sep
Slide 29: Global Corporate Payments Card Member Credit Metrics
Global Corporate Payments Card Member Credit Metrics GCP Card Member Receivables Client Bankruptcy Recovery Impact to Net Write-Offs Adjusted Net Write-off rates* Increase/(Decrease) Q2’20 Q2’21 Net Write-Off $53M ($37M) Amount/(Recovery) 2.4% Credit Insurance Claim 2.0% (Proceeds)/Repayment ($47M)
Slide 30: 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%) Q3'23 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q4'23 Q1'21 Q3'20 Q4'20 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q
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: 50% 50% (15%) (15%) Q1'21 Q2'21 Q3'21 Q1'21 Q2'21 Q3'21 Reported FX Adj. Reported FX Adj. Euro € UK £ Japan ¥ Australia $ Canada $ Mexico $ Approximate Q3’21 Network
Slide 32: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis The following summary provides selected variance information for the three months ended September 30, 2021 compared to the same period in the prior year. It should be read in conjunction with the statistical tables for Q3’21, available at ir.americanexpress.
Slide 33: Additional Commentary – Variance Analysis
Additional Commentary – Variance Analysis • Marketing and Business Development: Increased 29% versus Q3’20, primarily due to an increase in marketing investments to continue building growth momentum and higher partner payments driven by higher spending volumes. • Card Member Rewards Expense: Increas
Slide 34: Annex 1 (1 of 2)
Annex 1 (1 of 2) Network Volumes – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q1’21 Q2’21 Q3’21 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 vs vs vs Q1’19 Q2’19 Q3’19 Int’l Consumer Reported 8% 10% 10% 11% (6%) (41%) (21%) (17%) (10%) 59% 27% (16%) (6%) 0% F
Slide 35: Annex 1 (2 of 2)
Annex 1 (2 of 2) Network Volumes – Reported & FX-Adjusted* % Increase/(decrease) vs. Prior year Q1’21 vs Q2’21 vs Q3’21 vs Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q1’19 Q2’19 Q3’19 Large & Global Corporate Reported (20%) (64%) (54%) (50%) (43%) 37% 26% (54%) (51%) (42%) FX-Adjusted (19%) (64%) (
Slide 36: Annex 2
Annex 2 Discount Revenue – Reported & FX-Adjusted* ($ in billions) 2018 2019 2020 2021 Q2’18 Q3’18 Q2’19 Q3’19 Q2’20 Q3’20 Q2’21 Q3’21 GAAP Discount Revenue $6.2 $6.2 $6.6 $6.6 $4.0 $5.0 $6.3 $6.7 FX-Adjusted Discount Revenue* $6.1 $6.1 $6.5 $6.6 $4.1 $5.0 YoY% Inc/(Dec) in GAAP Discount Revenue 6
Slide 37: Annex 3
Annex 3 Net Card Fees – Reported & FX-Adjusted* ($ 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 Q2’21 Q3’21 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 $1.3 $1.3 FX-Adjusted Net Card Fees* $0.8 $0.8 $0.9
Slide 38: Annex 4
Annex 4 Net Interest Income – Reported & FX-Adjusted* ($ in billions) 2018 2019 2020 2021 Q2’18 Q3’18 Q2’19 Q3’19 Q2’20 Q3’20 Q2’21 Q3’21 GAAP Net Interest Income $1.8 $2.0 $2.1 $2.2 $1.9 $1.9 $1.8 $2.0 FX-Adjusted Net Interest Income* $1.8 $1.9 $2.1 $2.2 $1.9 $1.9 YoY% Inc/(Dec) in GAAP Net Inter
Slide 39: Annex 5
Annex 5 Consolidated Net Interest Yield on Average Card Member Loans ($ in millions, except percentages and where indicated) 2019 2020 2021 Q2’19 Q3’19 Q2’20 Q3’20 Q2’21 Q3’21 Net interest income $2,074 $2,203 $1,884 $1,874 $1,818 $1,994 Exclude: Interest expense not attributable to our Card Membe
Slide 40: Annex 6 (1 of 2)
Annex 6 (1 of 2) Revenues Net of Interest Expense – Reported & FX-Adjusted* ($ 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 Q2’21 Q3’21 GAAP Revenues Net of $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 $10.2 $10.9 Interest E
Slide 41: Annex 6 (2 of 2)
Annex 6 (2 of 2) Revenues Net of Interest Expense comparison to 2019 – Reported & FX-Adjusted* ($ in billions) Q1’19 Q2’19 Q3’19 Q1’21 Q2’21 Q3’21 GAAP Revenues Net of Interest $10.3 $10.8 $11.0 $9.1 $10.2 $10.9 Expense FX-Adjusted Revenues Net of $10.4 $10.9 $11.1 Interest* 2021 vs. 2019 YoY% Inc
Slide 42: Annex 7
Annex 7 Troubled Debt Restructurings (TDR) Balance ($ in billions) Dec’19 Apr’20 Dec’20 Jun’21 Sep’21 In-Program TDR Balance $0.8 $1.0 $3.1 $1.9 $1.5 Delinquent Financial Relief Programs (FRP) 0.1 0.1 0.1 0.1 0.1 balance Non-delinquent FRP balance $0.7 $0.9 $3.0 $1.8 $1.5 42 Note: Totals may not f
Slide 43: Annex 8
Annex 8 GCP Card Member Receivables Net Write-Off rates ($ in millions) Q2’20 Q2’21 GCP Net Write-Offs - Principal and $105 ($24) Fees* Client Bankruptcy Recovery Impact ($53) $37 Adjusted Net Write-Offs $52 $13 GCP Average Card Member $10,481 $11,087 Receivables Reported Net Write-Off rates 4.0%
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 American Express Company’s current expectations reg
Slide 45: Forward Looking Statements
Forward Looking Statements • future credit performance, the level of future delinquency and write-off rates 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
Slide 46: 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, salary and benefit expenses to attract and retain talent; costs due to new hybr
Slide 47: Forward Looking Statements
Forward Looking Statements • changes affecting the company’s plans regarding the return of capital to shareholders, including the level of share repurchases over the next several quarters, which will depend on factors such as capital levels and regulatory capital ratios; changes in the stress testin
Slide 48: American Express
AMERICAN EXPRESS
American Express Company — Q3 2021 Earnings Presentation on 6ix