American Express Co at Barclays Global Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Terry Ma - Barclays - Analyst : Yeah. Thank you for coming. So, I think we'll just jump right into it. Maybe just to start off with the consumer, I wanted to get maybe a mark-to-market on what you're seeing on Consumer spend quarter-to-date. The US Consumer Services grew network volumes about 8% in the first quarter, but that did decelerate modestly to about 6% in the second quarter. So, how is Consumer spend shaping up in the third quarter?

Question: Terry Ma - Barclays - Analyst : Got it. Maybe just to dig in a little bit more, are you seeing any differences in T&E versus Goods and Services? And what about also -- obviously, you're more levered to the higher-end consumer, but are you seeing any differences between generational cohorts?

Question: Terry Ma - Barclays - Analyst : Got it. So, just to touch on SME, that's an area of softness the last couple of quarters. You mentioned in the second quarter you saw a slight improvement in US SME. So, maybe just an update there and maybe just talk more broadly about what it's going to take for this segment to fully elapse some of the organic softness that you've kind of called out?

Question: Terry Ma - Barclays - Analyst : Got it. And now maybe just turning to the product refresh cycle, you guys refreshed the Delta portfolio cards earlier this year in February. And more recently, the Gold Card you guys mentioned, about 40 of the planned product refreshes for 2024 have been implemented. Maybe just talk about what you're seeing with respect to card acquisitions and also attrition so far? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2024 / 1:00PM, AXP.N - American Express Co at Barclays Global Financial Services Conference

Question: Terry Ma - Barclays - Analyst : Yeah.

Question: Terry Ma - Barclays - Analyst : Got it. And you called out the growth in that card fee and the guidance there. Maybe just talk about what the longer-term growth runway is for the net card fee line item? And then maybe just talk more broadly about -- is there any sort of limit where consumers will say no to annual fee increases?

Question: Terry Ma - Barclays - Analyst : Got it. And maybe just to follow up on that, historically, you've kind of injected value in the form of merchant-funded credits. With the recent Gold Card refresh, it seems like Dunkin's merchant funded, but you also added a Resy credit, which AMEX owns. So how should we kind of think about that? Can that be viewed as a rebate on the price increase?

Question: Terry Ma - Barclays - Analyst : Got it. That's helpful. So now, just to turn to loan growth, we see both growth remains in double digits. AMEX has made an effort over the years to recapture, or to capture, a larger portion of your customers' lend, and it seems you've had success. Just some stats from your Investor Day; you have 1.3 times the revolving growth versus the industry since 2019, more than 70% of your revolving loan growth comes from existing customers, and you're capturing 24% of your customers' borrowing. So, can you talk about the things you've kind of done to generate this incremental share of the lend and how much higher can that share grow?

Question: Terry Ma - Barclays - Analyst : Got it. Makes sense. So, let me just turn to NII. The growth rate in NII has decelerated. Can you just talk about the drivers of NII growth, and at what point should we expect the growth rate of NII to kind of converge with the growth rate of loans?

Question: Terry Ma - Barclays - Analyst : Got it. That's helpful. So, let's turn into the topic of revenue growth. You guys have got it to 9% to 11% revenue growth for this year. First half averaged about 10% on an FX-adjusted basis, but it did decelerate to 9% in the second quarter from 11% in the first quarter. Can you maybe just REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2024 / 1:00PM, AXP.N - American Express Co at Barclays Global Financial Services Conference remind investors the assumptions that kind of went into the guide? And maybe just talk about how you're tracking for the rest of the year and what can maybe get you closer to the high end versus the low end?

Question: Terry Ma - Barclays - Analyst : Got it. Maybe this is a good time to maybe just pause for the first polling question. Can you just prompt the question? So, question one, do you expect AMEX revenue growth for 2024 to come in below 9%, between 9% to 10%, 10% to 11%, or above 11%? We'll just register the responses using the controllers. So 36% think between 9% to 10% and 39% between 10% to 11%, so pretty fairly evenly split.

Question: Terry Ma - Barclays - Analyst : Got it. So, on the topic of marketing, you got it to $6 billion of marketing expense in 2024. Maybe just talk about kind of the areas you're going to spend that on? And are you still kind of tracking toward that number?

Question: Terry Ma - Barclays - Analyst : Got it. And just to follow up, the $6 billion is a pretty big number. It's about 15% higher year-over-year. So that's a sizable budget. Is that kind of the level of marketing expense we should kind of think about going forward?

Question: Terry Ma - Barclays - Analyst : Great. I'll pause here and just queue up that last polling question. So, over the next year, would you expect your position in AMEX to: one, increase; two, decrease; or three, stay the same? So, 43% stay the same, 30% decrease, and 28% increase.

Question: Terry Ma - Barclays - Analyst : Okay. I'll pause right here. We have about seven or eight minutes left. I'll open it up to the audience for Q&A, if there are any. We have one here in the middle. Unidentified Participant One of the things that stuck out in Q2 results, I don't want to dwell on quarters, but there was some slowing by older spenders, and also travel. I know you covered travel already, but can you talk about what trends you're seeing among older consumers?

Question: Terry Ma - Barclays - Analyst : Any other questions from the audience? Maybe we'll just -- I'll keep going. Let's maybe touch on credit. So, AMEX's credit performance has outperformed the industry. It's done very well this cycle. Maybe can you just talk about what's driving the strength in your credit performance? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2024 / 1:00PM, AXP.N - American Express Co at Barclays Global Financial Services Conference

Question: Terry Ma - Barclays - Analyst : Okay. Great. I think we're pretty much at time. And with that, we'll just wrap it up. Thank you.