American Express Company Financial Community Meeting · ***Attributable to common shareholders. Excludes preferred share dividends and earnings allocated to participating share awards

American Express Company Financial Community Meeting

Kenneth ChenaultChairman and Chief Executive Officer

Dan SchulmanGroup President, Enterprise Growth

August 3, 2011

■ Financial Performance

■ AXP: A Digital Evolution

– Digital Relevance in Core Businesses

– Enterprise Growth Strategy and Progress

■ Q & A

2

Agenda

Financial Performance

*Net income, including results from discontinued operations, was $885MM in Q1’10 (up 103%), $1,017MM in Q2’10 (an increase of 202%), $1,093MM in Q3’10 (up 71%), $1,062MM in Q4’10 (up 48%), $1,177MM in Q1’11 (an increase of 33%) and 1,331MM in Q2’11 (up 31%). **Q4’10 results include a $113MM ($74MM after-tax) charge related to reengineering costs. Excluding this charge, Q4’10 EPS would have been $0.94. ***Attributable to common shareholders. Excludes preferred share dividends and earnings allocated to participating share awards. Diluted EPS on a net income basis was $0.73 in Q1’10, $0.84 in Q2’10, $0.90 in Q3’10, $0.88 in Q4’10, $0.97 inQ1’11 and $1.10 in Q2’11. †See Annex 1 for a reconciliation to GAAP basis.

Total Revenues Net of Interest Expense

Income from Continuing Operations*

Growth vs. Prior Year

Growth vs. Prior Year

($ in billions)

Return on Average Common Equity

11%

$6.6

100%

$0.9

17%

Q3'10Q2'10Q1'10

Diluted EPS from Continuing Ops***

3

Growth vs. Prior Year (Managed) (1%)†

12%

$6.8

197%

$1.0

23%

(1%)

17%

$7.0

70%

$1.1

26%

5%

$0.73 $0.84 $0.90

Q4'10

13%

$7.2

50%

$1.1

27%

4%

$0.88**

Q1'11

7%

$7.0

33%

$1.2

28%

$0.97

Q2'11

12%

$7.6

27%

$1.3

28%

$1.07

Metric Trends

Mgd. Cardmember Loans****

Credit Performance

Avg. Basic Cardmember Spending***

Total Cards In Force**

*Card billed business includes activities (including cash advances) related to proprietary cards, cards issued under network partnership agreements (non-proprietary billed business), and certain insurance fees charged on proprietary cards. ** Q3’10 cards-in-force (CIF) was reduced by 1.6MM cards due to a change in the definition of CIF for certain retail co-brand cards in GNS. Adjusted for this change, CIF would have increased YoY2%, 5%, 7% and 8% in Q3’10, Q4’10, Q1’11 and Q2’11, respectively.***Computed from proprietary card activities only.****Managed basis includes non-securitized and securitized loans. On a GAAP basis, loan growth increased/(decreased) by 57% in Q1’10, 76% in Q2’10 , 82% in Q3’10 and by 86% in Q4’10.

Billed Business*

% increase/(decrease) vs. prior year:

4

(4%)

(11%)

Q1'10

16%

23%

(9%)

Q2'10

16%

21%

0%

(6%)

Q3'10

14%

15%

1%

(1%)

Q4'10

15%

13%

4%

Q1'11

17%

14%

5%

0%

Q2'11

18%

15%

6%

2%


(20%)

(10%)

0%

10%

20%

30%

40%

Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11

USCSICS (FX Adj)*GCS (FX Adj)*GNS (FX Adj)*Total (FX Adj)*

Billed Business Growth by Segment

*See Annex 2 for reported billings growth rates.5

(25%)

(15%)

(5%)

5%

15%

25%

Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11

US

EMEA (FX Adj)*

JAPA (FX Adj)*

LACC (FX Adj)*


Billed Business Growth by Region

*See Annex 3 for reported billings growth rates.

6

2009 2010

Online Commerce – AXP Global Online Spend*

7

*Primarily includes spending at pure online merchants and spending through known online channels for merchants with both online and offline presence. Also includes an estimate of online spend for merchants in industries where external and internal benchmarks around online spend are available.

$60B+

Estimated Spending:June YTD Online SpendFull Year Online Spend

$100B+

1H'10 1H'11

$154

$131 $126

$63 $59$45

Citi* BofA*** JPM** Cap One AXP Discover

$396

$172 $163

$107$62 $49

AXP Citi* JPM** BofA*** Cap One Discover

First Half 2011 Relative Performance

Growth vs. PY 18% 5% 11% 4% 23% 8%

*Includes Citi-Branded Cards and Citi Holdings Retail Partners North America Cards. **Includes the impact of the Washington Mutual acquisition. Reported billings shown above reflects sales volume, which excludes balance transfers. ***Credit Card, includes US consumer and foreign credit card. †Global Card. ††Fiscal year ends November 30. Billed business is credit card sales volume; disclosed total credit card volume was $53B for the first half 2011 ended 5/31/11 and increased 10%.

Growth vs. PY (4%) (9%) (12%) 1% 2% (1%)

($ in billions) ($ in billions)

† ††† ††

8

10%

4%

(1%) (3%)

(9%)

(19%)

AXP Discover Capital One

Citi** JPMorgan Bank of America*

Total Revenues YoY Growth

†AXP Bank of America*

Discover JPMorgan CapitalOne

Discount Revenue and Fees Net Interest Income

NOTE: Discount revenue and fees include discount revenue, interchange, card fees and all other non-interest revenues. *Card Services Segment. **Citi –Branded Cards. †Fiscal year ends November 30. Consolidated. ‡Consolidated. ††Card Services.

† ††

First Half 2011 Worldwide Revenue

9

‡ ‡

††

*Rates include principal only. See Statistical tables in Q2’11 Earnings Release for net write-off rates including interest and/or fees. **Fiscal year ends November 30. US Card. *** Includes the impact of the Washington Mutual acquisition. †Global Card. ††Credit Card, includes US consumer and foreign credit card. ††† Citi-Branded Cards.

AXP Lending Net Write-off Rates versus Competitors

10

6.0%

8.6%

10.2%9.4%

12.2%

9.7%

3.1%

5.0%5.8%

5.1%

7.1%6.2%

AXP* Discover** JPMorgan*** Cap One Bank of America CitiQ2’10 Q2’11

† †† †††

Investment Process

12

12-15% EPS Target

MasterCard & Visa Settlement Proceeds

Improving Credit Drives Reserve Releases

Acquisition

Brand PartnershipsRevenue Growth

Technology Development

New Business Initiatives

Loyalty

Investments by Category

% of Total Investment Spending as of June 30, 2011 YTD:


Brand

Merchant & Network

Loyalty Acquisition


13

Global Proprietary New Cards and First Year Spend Acquired

*First Year Spend reflects the first 12 months of spending for a new card acquired. For cards acquired less than 12 months prior, internal estimates have been used for their expected spending over the 12 month period, i.e. a new card acquired on 2/1/11 includes 5 months of actual spend and 7 months of internally forecasted spend.

New Cards Acquired by Product Type

1H'10 1H'11

Charge Co-Brand Prop Lending

32%

1%

10%

YOY Growth

First Year Spend* by Product Type

Cards Acquired in 1H'10

Cards Acquired in 1H'11

40%

8%

10%

YOY Growth

14




Brand

Merchant & Network

Loyalty Acquisition


15

Investments Driving Loyalty

16

0.6x

0.4x

0.6x

0.8x

1.0x

1.2x

Q1'05 Q1'06 Q1'07 Q1'08 Q1'09 Q1'10 Q1'11 Q2'11

USCS Cardmember Non-credit Attrition*; Indexed to Q1’05 levels:

Note: Q4’08, Q1’09 and Q2’09 were normalized for inactive card cancellations of 300K cards in Q4’08, 500K cards in Q1’09 and 2.6MM cards in Q2’09. *Non-Credit attrition includes voluntary attrition (cardmember initiated) and involuntary attrition (Amex initiated for non-activity, death, or the supplemental card cancellation by the basic cardmember).

17

Global Network & Merchant Services

Increase in 1H’2011 versus 1H’2010:

Generating 62% Return on Segment Capital with 41% PTI margins…

New Signings

Total New Booked Charge Volume Billed Business

Total Cards in Force

New Partner Banks

http://www.google.com/imgres?imgurl=http://ceo2010.homeip.net/drupal/sites/default/files/images/la-2520caixa-2dlogo.jpg&imgrefurl=http://ceo2010.homeip.net/drupal/&usg=__X3jcINesNY08YH20qRMUffJRyh8=&h=400&w=400&sz=15&hl=en&start=1&um=1&itbs=1&tbnid=MRRqP5t6fJy9zM:&tbnh=124&tbnw=124&prev=/images?q=la+caixa&um=1&hl=en&sa=N&tbs=isch:1

19.9%20.6%

19.9% 19.5%20.4%

21.2%22.2%

23.0%23.7% 24.0% 23.8%

25.4%26%+

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Q1'11

General Purpose Charge and Credit*

AXP Share of U.S. Purchase Volume

Source: The Nilson Report. *Excludes cash advances.

18

Preliminary



Technology DevelopmentNew Business Initiatives

■ Digital Capabilities

■ Core Infrastructure

■ Workplace Efficiencies

19

Investment Process

20

12-15% EPS Target

MasterCard & Visa Settlement Proceeds

Improving Credit Drives Reserve Releases

Acquisition

Brand PartnershipsRevenue Growth



Loyalty

Investment Process

21

As we exit 2011 and into 2012…

Investments

MasterCard & Visa Settlement Proceeds Expire

Reserve Releases

Revenues – Core Businesses

Revenues – New Initiatives

12-15% EPS Target





■ Q & A

22

Agenda

AXP Financial Targets

8% + 12-15% 25% +

On average and over time:

23





■ Q & A

24

Agenda

Digital Strategy

25

■ Retain AXP Leadership Position

■ Improve value for customers and partners

■ Fully leverage assets and capabilities

Objectives:

Digital Strategy

26

■ Go where our Customers go

■ Be Embedded in the Payment Path

■ Retain Optionality

Guiding Principles:

Mobile Payments – Recent Announcements

27

Visa Digital Wallet With One-Click Buying To Launch This Fall

MasterCard Starts Mobile Provisioning for NFC

Pay-by-Phone Dialed Back: Carriers Scrap Plans for Their Own Network, Look to Big Credit Card Companies

Wells Fargo, Chase, Bank of America jointly launch PayPal rival

Google, Citi, MasterCard, First Data and Sprint Team up to

Make Your Phone Your Wallet

Visa Going Mobile with Fundamo Deal

Note: The trademarks, logos and service marks used on this slide and throughout this presentation are property of their respective owners.

Digital Strategy

28

■ Go where our Customers go

■ Be Embedded in the Payment Path

■ Retain Optionality

■ Expand Franchise

Guiding Principles:

Competitive Advantages

■ Brand

■ Premium Positioning

■ Channels

■ Closed Loop Data

■ Travel Network

■ Processing Infrastructure

■ Rewards Bank

■ Marketing / Sales

■ Risk Management

■ Info Management

■ Servicing

■ Rewards/Loyalty

■ Ability to Partner

■ Reengineering

■ Affluent Customers

■ Merchants

■ Corporate Clients

■ Business Partners

■ GNS Partners

29


Closed Loop

Information

30

■ Cardmembers

■ Loyalty program collectors

■ Travel clients

■ Serve users

■ Prepaid card users

Information

Digital Closed Loop

31

■ Industry

■ Sub Industry

■ Merchant

■ Geography

■ Time

Insights


Cardmembers, merchants and

partners

32

Rewards Bank


Loyalty Marketing

33


Ability to Partner

34

Valuable Partnerships

35

http://www.google.com/imgres?imgurl=http://kara.allthingsd.com/files/2009/05/opentablejpg.jpeg&imgrefurl=http://allthingsd.com/20090518/will-opentable-be-just-what-silicon-valley-ordered-this-week/&usg=__5L8xwwhpfpeOHvAof4RrQoyzLJE=&h=166&w=314&sz=6&hl=en&start=1&zoom=1&itbs=1&tbnid=k7C3Mve9930lQM:&tbnh=62&tbnw=117&prev=/search?q=open+table&hl=en&sa=G&biw=1259&bih=850&gbv=2&tbm=isch&ei=GykWTr3DMMyp8QPkoqwH

http://www.commbank.com.au/


Brand

36


■ Brand

■ Premium Positioning

■ Channels

■ Closed Loop Data

■ Travel Network

■ Processing Infrastructure

■ Rewards Bank

■ Marketing / Sales

■ Risk Management

■ Info Management

■ Servicing

■ Rewards/Loyalty

■ Ability to Partner

■ Reengineering

■ Affluent Customers

■ Merchants

■ Corporate Clients

■ Business Partners

■ GNS Partners

37





■ Q & A

38

Agenda

Shop with Points

Servicing App Launch

OPEN Forum App Launch

Zynga / MR Partnership

Small Business Saturday

Real-Time Card Offers

Search-Manager Launch

Smart Offer API

Digital Initiatives – Core Businesses

Insurance-Edge Launch

Instant Customer Notification

iTunes Promotion

South by Southwest

Refresh of americanexpress.com

Social Currency Advertising Campaign

‘Big Break for Small Businesses’

Launch of NEXTPEDITION

Apr’10 May’10 Jun’10 Aug’10 Sept’10 Nov’10 Feb’11 Mar’11 Apr’11 May’11 Jun’11 Jul’11

OpenTable / MR Partnership

Return Protection on Merchant Partner sites

Redeem MR for Facebook ads

National foursquare rollout

Link, Like, Love: CM Offers on Facebook

‘Go Social’ program for merchants

Multi-city “couponless” loyalty offers pilot

39

http://www.google.com/url?q=http://www.clickz.com/clickz/news/2045630/amex-facebooks-boot-camp-contest-targets-smbs&sa=X&ei=o8S0TdKaOKTo0QHD-5mTCQ&ved=0CC0QpwIwAA&usg=AFQjCNErCv91eVN5Fakk42I4w7Hoe5QV-w

http://www.google.com/imgres?imgurl=http://stylefrizz.com/img/nextpedition-american-express-mystery-trip.jpg&imgrefurl=http://fashionistastravel.wordpress.com/2011/05/16/nextpedition-from-american-express-travel/&usg=__pEL3iXhVg3-U8ib8cbX-B2TmJwo=&h=317&w=470&sz=39&hl=en&start=1&zoom=1&itbs=1&tbnid=MZVMtbJVyiQEUM:&tbnh=87&tbnw=129&prev=/search?q=nextpedition&hl=en&gbv=2&biw=1406&bih=641&tbm=isch&ei=0LHmTcPqL8qAOvKE2N0J

http://www.google.com/imgres?imgurl=http://www.fgcu.edu/ComputingServices/images/dell2.jpg&imgrefurl=http://www.fgcu.edu/ComputingServices/NFSDiscounts.html&usg=__1q1r36gKHCDv1U6JUEayc6rMRME=&h=300&w=300&sz=17&hl=en&start=2&zoom=1&itbs=1&tbnid=5VNH3GpU7RMkyM:&tbnh=116&tbnw=116&prev=/images?q=dell.com&hl=en&gbv=2&tbm=isch&ei=-0KeTavqOM3itgeR57STAw

http://www.google.com/imgres?imgurl=http://pulse2.com/wp-content/uploads/2008/07/buy-logo1.png&imgrefurl=http://pulse2.com/2008/07/14/buycom-ebay-partnership-is-a-bad-idea/&usg=__ZHVki9hAvbwNPVdFucOIYWfaU1I=&h=59&w=178&sz=5&hl=en&start=1&zoom=1&um=1&itbs=1&tbnid=DARMlrrYKsnRgM:&tbnh=33&tbnw=101&prev=/search?q=buy.com+logo&um=1&hl=en&sa=N&biw=1420&bih=715&tbm=isch&ei=Q_DKTdjPEYPzsgaYo6DTAw

Digital Customer Service:Mobile Apps

Over one million downloads since US launch in April 2010; Launched in UK and Japan in November, Australia in February

Over 25,000 downloads since September launch

Developed 15 iPhone and 2 iPad apps in past year, including:

40



Smart Offer API

Shop with Points








iTunes Promotion

South by Southwest













41







Shop with Points


Smart Offer API







iTunes Promotion

South by Southwest













42





In just three weeks…

1.2 million Facebook Fans

2,500 PR placements in broadcast, print and online press

200,000 Registered Card enrollees

Over 150 partners

Connecting Cardmembers & Merchants:Small Business Saturday

43

Shop with Points







Smart Offer API




iTunes Promotion

South by Southwest













44





Connecting Cardmembers & Merchants:Partnering with Foursquare

45

National rollout of Smart Offer API with foursquare to provide couponless, location-based offers with select merchants

National Offers Available

Shop with Points







Smart Offer API




iTunes Promotion

South by Southwest













46





Digital Rewards:Membership Rewards in FacebookFirst ever rewards point redemption option for Facebook ads

47

Connecting Cardmembers & Merchants:“Link, Like, Love” on Facebook

48

Receive deals tailored to you…Register on “Link, Like, Love” Facebook page.

Cardmembers receive personalized couponless offers based their “Social Graph”, i.e. their likes, interests & social connections

21

Connecting Cardmembers & Merchants:Go Social

49

Connect social media accounts

Claim locations

Design an offer

Distribute through Facebook and foursquare

Couponless fulfillment

Track and measure outcomes

Social media tool for merchants to create, provide and track offers for Cardmembers through Facebook, foursquare and other social media sites

How It Works

Positive Industry Reactions

51

“160-Year-Old American Express Out-Innovates Google and Groupon.”

TechCrunch.com

"It's an inspired initiative. It will be the new retail and Amex has first mover advantage over Amazon Visa, Mastercard and every type of competitor on a 360 degree basis.“

Burt Flickinger, Strategic Resource Group in a Fox Business TV interview

“The Go Social area of the Amex site exudes the safety, security and gravitas of a mature financial institution.”

Paul Marsden, Social Commerce Today

Following the announcement of Link, Like, Love and Go Social…

Digital Closed Loop in Action

52

+

http://www.google.com/imgres?imgurl=http://www.jig.es/blog/wp-content/uploads/2010/03/foursquare_logo1.png&imgrefurl=http://www.jig.es/blog/2010/03/foursquare-viene-pegando-fuerte/&usg=__7jkeknN-G4AJXTBKnJCbXwVlFD8=&h=251&w=623&sz=20&hl=en&start=1&sig2=zUPDtmPcovrsS9fu7Kq1cw&itbs=1&tbnid=ch6N88tZGF0t6M:&tbnh=55&tbnw=136&prev=/images?q=foursquare+logo&hl=en&gbv=2&tbs=isch:1&ei=BD0WTK72LYKpnQeJ64H8Cw

http://www.google.com/imgres?imgurl=http://blog.ctnews.com/oconnell/files/2010/01/facebook_logo.jpg&imgrefurl=http://blog.ctnews.com/oconnell/&usg=__yBPzHuIE2ENVC_NUNq4KXDwG8S8=&h=790&w=2100&sz=135&hl=en&start=1&um=1&itbs=1&tbnid=WnsmOCuSOUlvmM:&tbnh=56&tbnw=150&prev=/images?q=facebook&um=1&hl=en&rlz=1G1GGLQ_ENUS268&tbs=isch:1

Shop with Points







Smart Offer API




iTunes Promotion

South by Southwest













53









■ Q & A

54

Agenda

Enterprise Growth Group Business Units

55

106

Annex 1

($ in millions) Q1'10 Q2'10 Q3'10 Q4'10

GAAP Total Revenues Net of Interest Expense $6,560 $6,805 $6,973 $7,244

Securitization Adjustments:

Discount revenue, net card fees and other NA NA NA NA

Interest income NA NA NA NA

Securitization income, net NA NA NA NA

Interest expense NA NA NA NA

Managed Total Revenues Net of Interest Expense $6,560 $6,805 $6,973 $7,244

($ in millions) Q1'09 Q2'09 Q3'09 Q4'09

GAAP Total Revenues Net of Interest Expense $5,891 $6,056 $5,968 $6,421

Securitization Adjustments:

Discount revenue, net card fees and other 99 79 82 71

Interest income 886 771 714 726

Securitization income, net (141) 2 (71) (190)

Interest expense (83) (48) (58) (55)

Managed Total Revenues Net of Interest Expense $6,652 $6,860 $6,635 $6,973

Increase/(Decrease) vs. prior year:

GAAP Basis 11% 12% 17% 13%

Managed Basis (1%) (1%) 5% 4%

Annex 2

107

*FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars. (e.g., assumes foreign exchange rate used for Q2'11 applies to Q2'10; rate used for Q1’11 applies to Q1’10, etc.)

Segment Billed Business - Reported & FX Adjusted*


Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11

ICS

Reported (20%) (12%) 14% 19% 12% 12% 12% 16% 24%

FX Adjusted (7%) (6%) 0% 6% 9% 10% 11% 10% 11%

GCS

Reported (23%) (14%) 8% 23% 21% 19% 16% 19% 19%

FX Adjusted (18%) (11%) 3% 18% 21% 19% 17% 17% 15%

GNS

Reported (3%) 2% 34% 36% 27% 24% 26% 29% 36%

FX Adjusted 6% 7% 22% 25% 23% 22% 24% 24% 25%

Total

Reported (16%) (11%) 8% 16% 16% 14% 15% 17% 18%

FX Adjusted (13%) (9%) 4% 12% 15% 14% 14% 15% 15%

Annex 3

108

*FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars. (e.g., assumes foreign exchange rate used for Q2'11 applies to Q2'10; rate used for Q1’11 applies to Q1’10, etc.)

Region Billed Business - Reported & FX Adjusted*


Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11

U.S. (15%) (11%) 2% 11% 14% 13% 14% 15% 14%

EMEA

Reported (24%) (15%) 11% 16% 5% 5% 4% 13% 23%

FX Adjusted (13%) (8%) 2% 11% 11% 11% 10% 10% 11%

JAPA

Reported (12%) (1%) 34% 44% 34% 31% 29% 28% 36%

FX Adjusted 0% 1% 12% 22% 23% 23% 20% 18% 19%

LACC

Reported (19%) (11%) 20% 26% 24% 19% 18% 21% 22%

FX Adjusted (5%) (1%) 7% 11% 15% 15% 15% 16% 15%

Documents

American Express Company Financial Community Meeting · ***Attributable to common shareholders. Excludes preferred share dividends and earnings allocated to participating share awards