American Express Company Barclays 24th Annual Global Financial Services Conference

Welcome. Good morning. Thank you for having me.

Yeah. Good morning, everyone. If you go back over the last three, four quarters, you see a lot of strength in our billing numbers, 8%, 9% billing growth, a bit stronger in Q2. Despite the headlines, despite all the noise about inflation, the wars, we see a lot of strength in the spend of our card members, so feel very strong about that. Card fees was up 16% year to date. NII was in double digits. The building blocks of our financial model, if you want, are working really well. In Q2, we raised a little bit our guidance when it comes to revenue. We got it towards 10%, and we reaffirm our EPS range. Which, by the way, does not include the gain that we expect to make on the sale of our GBT shares, or how we're going to use the proceeds.

We'll come back to you later in the year to address that. The business is doing really well. You've seen the credit metrics that we published recently, very strong, very stable, very much within expectations. Billing, spend, NII, credit, all looking good.

I was just saying that the business is performing a bit better than what we had expected at the beginning of the year. Where that happens, consistent with what we've done in the past, we have a decision to make. Do we want to spend this, reinvest in future growth, or do we want to drop this over-performance to the bottom line, tax affected, and buy back a few shares? What we've done, and we've done it on a regular basis, if you study American Express over the last at least nine years since Steve is their Chief Executive Officer. We've decided to reinvest, which means for us to spend those dollars in two broad categories, right? As you said, new card member acquisition to keep the momentum going, and technology, because there is a huge demand for technology development.

When it comes to those card member acquisition expenses that are reported on the marketing line, these are more marketing campaigns, more activity. We have a very disciplined and robust process to measure those returns. We measure them with accuracy. We're very confident in terms of what it will yield, and we also monitor the actual performance, right? When something is not working, we actually move the money towards those channels, those products that are generating better returns. I feel really good about that. When it comes to technology, we invest a lot in technology, just like any financial institution. Just to give you example, I think yesterday we went public about the release of a new product, their Business Savings account.

You're familiar as well, maybe we're going to get to it, about the development we're making in terms of expense management and developing an expense management solution for our mid-size customers. It's those two things broadly, right? Technology and marketing. The question that we get from investors as well is about how profitable is it, how confident it is that those marginal kind of investments are just going to be profitable. I want to bring you back to maybe the ultimate measure of profitability, which is the return on equity. If you go back 10 years ago, this company was generating return on equity in the range of, like, 25%, 28%. Fast-forward to where we are now, and we are north of 30%, 32%, 33%, 34%. That's with a company that is just much bigger.

All these investments that we've made over the last 10 years with that marketing discipline, with that discipline around technology, is kind of manifesting itself in the ROE, which is getting stronger. I feel very strong about this decision. If we had to do it again, I would do the same. I think it's the right thing in terms of value creation for the shareholders and the wrong one.

Yeah. We did not put this ambition lightly. It is an ambition. It is not a forecast, let alone a guidance. But we wanted the 75,000 colleagues that we have at American Express to wake up every morning and think about what is it that I can do to support that growth ambition. The way it manifests itself is in the acceleration of product refreshes, maybe more innovation in those products. Accelerating the pace of technology development as we talked about, accelerating various projects. You've seen clearly the business accelerate. We used to grow in that 5%, 6%. We're now growing in that 10% range. For the last three years, we've been in that 10%. It's real, and it's creating a lot of momentum to the company. This ambition is sitting on our TAM, which is growing and expanding.

Remember that we are focused on the fastest-growing parts of the TAM, the younger card members, the fee-paying card members, call them premium card members, as well as international. All the building blocks, if you want, that lead to that 10% are in place. Let me be clear as well. There are many ways you can get to 10% plus revenue growth. One is actually to open up your credit box if you want. It is not something we did. We did just the opposite. Because we said we want to generate that growth in the premium space. That's the constraint in the system. But it's a very powerful model if you think about it, because we're growing, and you've seen what happened to card fees, 15%, 16%, 17% CAGR since 2019.

We made comments that it's going to pick up momentum in the balance of this year. So it's a remarkable story in terms of value creation that we've been able to do. I think that with the strength of the TAM, with the building blocks in place, we know exactly what we need to do. I feel confident and comfortable that it's the right aspiration for American Express.