Financial Community Meeting

Transcription

1 Financial Community Meeting Ken Chenault Chairman and Chief Executive Officer August 3, 2005

2 Agenda Company Performance and Growth Perspectives Legal and Regulatory Landscape Merchant Value Ken Chenault Louise Parent Bill Glenn Q and A

3 Financial Performance YTD 2005 Earnings Per Share Growth: 12%-15% Income Before Accounting Change 16% Net Income 21% Long-Term Objective Revenue Growth 10% 8%+ Return on Equity 23% 18%-20%

4 Metric Trends TRS FY 2003 FY 2004 YTD 2005 Billed Business 13% 18% 16%

5 Growth in WW Billings versus Peers YTD 2005 vs. YTD % 10% 9% 7% 6% AXP Citi JPM MBNA MWD

6 Metric Trends TRS FY 2003 FY 2004 YTD 2005 Billed Business CIF Cardmember Loans* 13% 18% 16% 6% 8% 8% 14% 8% 12% *Managed basis (includes owned and securitized loans); managed basis b for 2004 and YTD 2005 excludes the Q4 04 sale of the equipment leasing product line. On an unadjusted, GAAP AP basis A/R growth was 16% in 2003, 4% in 2004 and 8% as of 6/30/05.

7 Growth in WW Lending Balances versus Peers As of June 30, % 14% 7% 3% 2% 0% -1% AXP WW BAC JPM COF (U.S. Cards) Citi MWD MBNA Data presented on a managed basis (owned and securitized loans). AXP growth rate excludes the effect of the sale of the equipment leasing product line, which was completed in 4Q 04. On an unadjusted, GAAP basis loan growth was 8%. Source: Company reports.

8 Metric Trends TRS FY 2003 FY 2004 YTD 2005 Billed Business CIF Cardmember Loans* 13% 18% 16% 6% 8% 8% 14% 8% 12% Credit Performance * Managed basis (includes owned and securitized loans); managed basis for 2004 and YTD 2005 excludes the Q4 04 sale of the equipment leasing product line. On an unadjusted, GAAP AP basis A/R growth was 16% in 2003, 4% in 2004 and 8% as of 6/30/05.

9 Relative Credit Quality 6.5% 6.0% 5.5% 5.0% 4.5% Coincidental Write-Off Rates 4.0% 3.5% 3.0% 30+ days Past Due Rates 2.5% 2.0% 1Q '04 2Q '04 3Q '04 4Q '04 1Q '05 2Q '05 AXP: W/Off Rate 1 AXP: 30+Days Past Due 2 Industry: W/Off Rate Industry: 30+Days Past Due Note: Industry average write-off rate calculation includes COF, MWD, KRB, JPM and C (North America). The industry average 30+-day past due rate calculation includes COF, MWD, KRB, and JPM. Both metrics are calculated off of managed-basis Cardmember loans. 1 On a GAAP basis, the write-off rate on owned loans was 4.2% in 1Q 04, 4.1% in 2Q 04, 3.9% in 3Q 04 and 4Q 04, and 4.1% in 1Q 05 and 2Q The 30+ days past due rate on owned loans was 2.8% in 1Q 04, 2.5% 2 in 2Q 04 and 3Q 04, 2.4% in 4Q 04, 2.6% in 1Q 05, and 2.4% % in 2Q 05. Source: Company reports.

10 Metric Trends TRS FY 2003 FY 2004 YTD 2005 Billed Business CIF Cardmember Loans* 13% 18% 16% 6% 8% 8% 14% 8% 12% Credit Performance Travel Sales 3% 25% 7% Travelers Cheque and Prepaid Sales (13%) 4% (2%) -- *Managed basis (includes owned and securitized loans); managed basis b for 2004 and YTD 2005 excludes the Q4 04 sale of the equipment leasing product line. On an unadjusted GAAP basis A/R growth was 16% in 2003, 4% in 2004 and 8% as of 6/30/05.

11 Business Progress 2005

12 Metric Trends Financial Services FY 2003 FY 2004 AEB Private Banking Client Holdings 16% 15% AEFA Cash Sales 17% YTD % 9% Total Assets* 58% 13% 9% Planning and Advice Services Fees Advisors 6% 15% 4% 2% 25% 2% * Owned, managed and administered.

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14 AXPn Financial Characteristics LT Growth 1 ROE 2 LTM Payout Ratio 3 P/E 4 P/B 4 American Express 12-15% 23% 87% 18x 4x AXPn Target 12 15% 28 30% 65% GE 11% 17% 48% 19x Wal-Mart 14% 24% 63% 19x Johnson & Johnson 11% 29% 49% 18x Dell 20% 55% 95% 25x 3m 11% 33% 78% 18x Group Mean 13% 32% 71% 20x 3x 4x 6x 18x 6x 7x 1 Excluding AXP and AXPn Target, which are the Company s s long-term, on average and over time targets, Long-term Growth is based on an average of analysts EPS estimates for the next 3 5 years. Source: First Call. 2 Source: First Call; Reflects most recent publicly available data. 3 Reflects fiscal year Closing prices on 7/29/05; Earnings and Book Value reflect most recent publicly available data.

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16 Industry Dynamics: Card Outstandings U.S., $ Billions Citigroup MBNA First USA AXP Discover JP Morgan Providian Capital One 2001: $619B Top 10 Issuers = 80% Share B of A Household $28 $16 $41 $33 $32 $51 $48 $75 $68 $100 Share 16% 12% 11% 8% 8% 7% 5% 5% 5% 3% Source: The Nilson Report (Credit and Charge Card Outstandings) BofA/MBNA* JP Morgan Citigroup AXP Capital One Discover HSBC Household Providian Wells Fargo US Bancorp 2004: $707B Top 10 Issuers = 88% Share $23 $19 $14 $11 $64 $53 $46 $116 $143 $135 Share 20% * Combined to anticipate the 2005 merger of BofA and MBNA. 19% 16% 9% 8% 6% 3% 3% 2% 2%

17 Industry Dynamics: Volumes U.S., $ Billions AXP Citi First USA/One MBNA Discover JPM B of A Capital One US Bancorp Household 2001: $1,340B Top 10 Issuers = 77% Share Share $59 $48 $43 $35 $91 $72 $140 $119 $225 $197 17% 15% 11% 9% 7% 5% 4% 4% 3% 3% JPM BofA/MBNA* Citi Cap One Discover US Bancorp HSBC/Hshld Wells Fargo USAA 2004: $1,677B Top 10 Issuers = 85% Share Share AXP $305 $43 $29 $19 $53 $96 $94 $230 $281 $281 18% 17% 17% 14% 6% 6% 3% 3% 2% 1% Source: The Nilson Report (General Purpose Credit and Charge Volumes). * Combined to anticipate the 2005 merger of BofA and MBNA.

18 AXP Spend Centric Model Investments in Premium Value Attractive Customer Base Premium Economics High Average Spending Customer Experience

19 Spend Velocity 4.8x 5.2x AXP US Charge and Lend AXP US Lend JPM C North MWD BAC MBNA COF America FY 2003 FY 2004 Note: Spend velocity is defined as annual billed business divided d by average managed receivables. Source: Company reports, Carddata.

20 AXP Spend Centric Model Investments in Premium Value Attractive Customer Base Premium Economics High Average Spending Customer Experience

21 U.S. Card Share General Purpose Plastic Excl.Debit bp B/(W) (96) Incl. Debit bp B/(W) (146) (99) (95) (6) (7) Source: The Nilson Report.

22 Average Spend Per Basic Account U.S., $ in 000s $12,000 $10,000 $10.7 $8,000 $6,000 $4,000 $2,000 $0 AXP* VISA $2.9 $2.0 MC *Proprietary cards only. Source: Internal data and The Nilson Report.

23 From The Archives The Nilson Report November, 1997 Worldcard and Signature products indicate the determination of both associations to penetrate the upscale market that has always been the stronghold of American Express. Amex will inevitably lose charge volume as current customers move their spending to new bank card products.

24 From The Archives Visa s Website July, 2004 We re now at the point where many of our issuers are reaching critical mass with their Signature portfolios. We ve known for some time that we re leading in the [premium] space.

25 AXP Premium Products Cards in Force Includes Gold, Platinum and Centurion products; Indexed to 2001

26 AXP Premium Products Average Spending per CIF (Annualized) Includes Gold, Platinum and Centurion products; Indexed to 2001

27 AXP Premium Products Service Satisfaction* Platinum Centurion * Customer ratings of Excellent or Very Good on internal surveys.

28 Blue from American Express Card Growth* % of New Cards With FICO Scores > % 73% 64% January, 2003 May, 2005 January, 2003 May, 2005 *Indexed to 2003

29 AXP Spend Centric Model Investments in Premium Value Attractive Customer Base Premium Economics High Average Spending Customer Experience

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