American Express Co at Sanford C Bernstein Strategic Decisions Conference Summary

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

Question: Brian Foran - Autonomous Research - Analyst : Thank you everyone for joining. We're delighted to have Steve Squeri from American Express. I don't think the company needs much of an introduction. I would have bet at least half of you have an American Express card in your wallet. The other half, I would bet Steve will talk you into getting one by the end of the session.

Question: Brian Foran - Autonomous Research - Analyst : You teased me last year about not having one. I'm an overachiever so I got two. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 30, 2024 / 6:30PM, AXP.N - American Express Co at Sanford C Bernstein Strategic Decisions Conference

Question: Brian Foran - Autonomous Research - Analyst : The credit line is a little tight though.

Question: Brian Foran - Autonomous Research - Analyst : Well look, Steve has had a great run, going into his seventh year now as CEO, probably highlighted by a transformation of the growth ambitions and aspirations of the company and delivery, frankly, of 10%-plus revenue growth versus what historically, in and of itself, was a good revenue growth rate of 7% or so on average over time for American Express. I don't want to front run the strategies and tactics that have gotten us there. But maybe, Steve, I'll start. You did an Investor Day, it's a great deck for anyone that hasn't seen it. 150 pages of really good stuff. You really, kind of, gave the meat of why you think that 10% revenue growth is correct - 10%-plus, the mid-teen EPS growth. And one of the big pieces is the product refresh cycle, which I know is near and dear to your heart. So maybe we could start in a two-fold question for those not as close to the story, why is the product refresh cycle so core? And then for those of us who are living and breathe it, you're doing 40 this year, what are one or two things you'd highlight. Things that are working or learnings that you're putting into place with the most recent rounds?

Question: Brian Foran - Autonomous Research - Analyst : So maybe one of the other big changes is the resonance and market share with the younger generation of customers now versus 10 or 20-years ago. The thing about younger people is they always get older. So, A, when you think about the next generation, or the younger end of Gen Z and into Gen Alpha, how do you continue to stay relevant and gain share with them? And then, B, I thought one of the things that really stood out at the Investor Day was the discussion around lifetime value of these customers. So, when you think about the lifetime value of the younger customers you've acquired, what do you think the biggest upside and downside risk to that is?

Question: Brian Foran - Autonomous Research - Analyst : Let's talk about Small Business for a second. I mean, I think it's fair to call it a little bit of a sleeping giant right now. You've got 47% market share of US small business credit card spend but it's been stuck a little better than flat 1%, 2% growth in the recent quarters. I know it's difficult to forecast, maybe impossible. But like, when you think about what needs to change from an environment, from a macro standpoint, what do you think needs to happen for Small Business spend to start growing again?

Question: Brian Foran - Autonomous Research - Analyst : And I want to dig into Small Business a little bit more. But before I do, the comment that the stability in spend growth rate, some of my colleagues who cover other sectors have pointed out some of the potholes out there for me in terms of American or Kohl's or whatever. Are there any big shifts by category you're seeing or does the stability and growth rate kind of apply across the board? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 30, 2024 / 6:30PM, AXP.N - American Express Co at Sanford C Bernstein Strategic Decisions Conference

Question: Brian Foran - Autonomous Research - Analyst : And coming back to the broader Small Business discussion beyond the current, the great thing about having almost 50% share is you dominate. The tough thing is, at some point you become the market. So, talk to us about that balancing act, how do you have 47% share but continue to differentiate and to continue to acquire better than average customers in that segment?

Question: Brian Foran - Autonomous Research - Analyst : And maybe to round this out, there are a lot of fintechs going after B2B broadly. Small Business is part of that specifically. And I do sometimes hear from investors, you know, is somehow that part of the growth slowdown. So maybe talk to what you're seeing on the fintech side and how you react to that concern for people who are worried it's chipping away at your position? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 30, 2024 / 6:30PM, AXP.N - American Express Co at Sanford C Bernstein Strategic Decisions Conference

Question: Brian Foran - Autonomous Research - Analyst : So maybe shifting gears, one of the things you've talked about a lot is the flywheel for growth. And in some ways, the input to that in the P&L is the variable customer engagement expenses. VCE, as you term it, those expenses were kind of high-30s pre pandemic, they got up as high as 42% or so. I guess now they're more like 40%, 41%. How do you think about setting the right level VCE as a percentage of revenue going forward?

Question: Brian Foran - Autonomous Research - Analyst : And maybe kind of sticking with that, and I think you referenced it earlier with the Delta refresh and some of that being partner-funded. So, you talked a little bit recently about partner-funded value within AMEX Offers think you gave us the stat, it's $200 million or so today, and it could be $1 billion over time, $1 billion-plus. Maybe explain what AMEX Offers are and the broader opportunity for partner-funded value going forward. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 30, 2024 / 6:30PM, AXP.N - American Express Co at Sanford C Bernstein Strategic Decisions Conference

Question: Brian Foran - Autonomous Research - Analyst : So maybe shifting gears, I know it's always tempting to ask US questions. You mentioned International - think you used the word killing it. I think you've given us ¡ it's $13 billion of revenues now, growing faster than the overall company and talked about a lot of runway and a lot of opportunity going forward. What are the key things you want people to know. What's enabling the International to grow so much faster and why you're so confident in that future runway?

Question: Brian Foran - Autonomous Research - Analyst : So favourite topic regulation, let's just go through every individual regulation out there. There's a lot on the table. There is this stress test coming up. There is the late fee changes that may or may not come up. I don't even know what court it's in anymore. Liquidity rules coming through Basel III Endgame. When you look at all the stuff out there. Maybe you can just highlight, what are the ones that stand out to you as important for AMEX, where you are well positioned and where might there be a little lifting to do?

Question: Brian Foran - Autonomous Research - Analyst : And maybe one I'll sneak in, and I should have mentioned it at the top. Hopefully everyone's used to this pigeonhole system by now. I think at some point a QR code will pop up on the screen if you're not, and they show up here for me. Interchange rates and what it's applied to, we had the Visa, MasterCard settlement early this year. There was the Illinois budget thing on taxes and tips, I guess, two days ago. Though, I don't know, maybe it was last week, Friday. Is all this, kind of, in the normal noise around interchange rates in your mind or anything that's maybe bubbling up a little?

Question: Brian Foran - Autonomous Research - Analyst : Maybe on credit, you've got the best credit both on an absolute level and relative to pre-pandemic in the industry, a pretty decent margin. No good deed goes unpunished, it leads to constant conversations about when will AMEX's credit finally crack? You know, A, what makes your advantage versus the industry sustainable, in your mind? And then B, there's always going to be risks out there. Any parts of the book right now that you're watching a little bit more closely?

Question: Brian Foran - Autonomous Research - Analyst : And I should know this, but when you say credit margin, are you saying NIM minus charge-offs, or what are you saying there?

Question: Brian Foran - Autonomous Research - Analyst : Okay. So, you mentioned part of its where you play in the ecosystem. I thought one of the most interesting slides in the Investor Day deck was the one where you also overlaid the delinquencies of customers on their AMEX card versus those customers, delinquency, same customers, delinquency on non-AMEX cards they might have. And you've also widened the gap there. So, even within your customers --

Question: Brian Foran - Autonomous Research - Analyst : So I've got a few teed up here from investors. Maybe before I go to that one. When we talk about 10%-plus revenue growth and mid-teens EPS, obviously, it's more than just revenue growth driving the EPS. It seems like you've talked about operating leverage on the non-VCE expenses, and you've talked about ongoing capital deployment. And maybe you could just talk about the latest thoughts onto those two.

Question: Brian Foran - Autonomous Research - Analyst : Don't talk about (multiple speakers)

Question: Brian Foran - Autonomous Research - Analyst : At a competitor industry conference.

Question: Brian Foran - Autonomous Research - Analyst : And maybe to dig in one follow-up on each side. On the capital side. Presumably once we someday get finalization of Basel III and clarity on everything as you move back to "what do we do with the next round of capital?" What are the priorities? Is M&A on the list at all?

Question: Brian Foran - Autonomous Research - Analyst : And then back to operating leverage, you'll probably hate that I link it to technology, but maybe you can give us one example: how is technology enabling operating leverage at AMEX? And then I'll give you a nod to what you'd probably prefer to talk about: how is technology enabling some of the top line growth?

Question: Brian Foran - Autonomous Research - Analyst : Maybe jumping around some of the investor topics back to Small Business. Can you talk about the opportunity to do more with software invoicing, get deeper into the customer base to help take share on B2B transaction?

Question: Brian Foran - Autonomous Research - Analyst : You talked about the journey through regulatory category classifications. When you think about category two how much incremental costs could that create? How long would it take to digest the toughest requirements of being a cat two bank?

Question: Brian Foran - Autonomous Research - Analyst : You talked about the $200 million going to $1 billion on the AMEX Offer side. Can you touch a little bit more on the - whoa just moved. Sorry, it's moving on me. How do you continue to drive higher, and can you drive - continue to drive higher - the proportion of the merchant funded rewards on the other side?

Question: Brian Foran - Autonomous Research - Analyst : Going back to International coverage, something you highlighted quite a bit at Investor Day as well. The question here is, as you move to greater coverage outside the US, is there a trade-off on your premium discount rate that you have to make? And if so, how do you find the sweet spot in that trade-off?

Question: Brian Foran - Autonomous Research - Analyst : Partnership question. Partners are great in this business, but they sometimes drive a hard bargain and make a lot of money themselves. Can you talk about any recent trends with large partners? Anything we need to watch out for in terms of shifts in industry dynamics?

Question: Brian Foran - Autonomous Research - Analyst : So a couple of questions on competition I'll combine in the interest of time: A, given your success, a lot of people copy what you do, so how do you keep the competitive moat? And then, B, anywhere just in the broad competitive environment you're seeing things get a little over its skis or chipping away at margins?

Question: Brian Foran - Autonomous Research - Analyst : So as we wrap up, I know you're a large shareholder and you're passionate about both the company and the stock for the people in the room who might be looking at it as an investment, what's the main takeaway you want them to have?

Question: Brian Foran - Autonomous Research - Analyst : Good. Thank you.