American Express Co at UBS Financial Services Conference Summary

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

Question: Erika Najarian - UBS - Analyst : <_ALACRA_META_ABSTRACT>Absolutely. So, let's dive right in, if you don't mind. So, there was a lot of chatter preceding your fourth-quarter earnings, anticipating that maybe the top end of your revenue growth range in '25 may not have a double-digit handle on it. Of course, not only did you put out a guide for 8% to 10% revenue growth for this year, but Q4 spend re-accelerated. And you also noted during the call that January spend had been tracking at that time in line with the Q4 trend. And if this is sustained, it'd be at the top end of the 8% to 10% range. The question number one, you did note in the earnings call that '25 will be a Billings story. Do you think that the year for the Amex customer is shaping up to be a high-single digit Billings growth this year, which Steve noted at the December conference would be needed to hit that 10% aspirational level of revenue growth?

Question: Erika Najarian - UBS - Analyst : To that end, travel and discretionary are significant contributors to acceleration in the fourth quarter, particularly airline spend. In your experience, how sustainable is travel spend at that level, assuming that '25 is a good year for the economy and the US consumer?

Question: Erika Najarian - UBS - Analyst : Great. So, you've seen investor expectations reset following your earnings print. Is there anything about investor expectations that surprised you? And what's the Street missing that you think we ought to be spending more time understanding?

Question: Erika Najarian - UBS - Analyst : Got it. Well, thank you for that update. I'm sure people appreciate that. Pulling back up, net interest income has contributed nicely as consumer balances normalized. How should we think about Card Member Loans and Receivables growth in '25, especially as many investors think revolve growth is peaking? You did speak of the lending opportunity at Investor Day. Maybe remind us where you think American Express can penetrate the lend wallet more deeply. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2025 / 3:30PM, AXP.N - American Express Co at UBS Financial Services Conference

Question: Erika Najarian - UBS - Analyst : So, maybe, I wanted to dive into the other side of the balance sheet, the quarter, you also highlighted how your High-Yield Savings account balances grew 17% in 2024, and your funding mix continues to shift towards a more deposit-heavy mix. You also have some newer initiatives like Small Business Checking and Rewards Checking. Can you talk about the uptake across your deposit products and the potential tailwinds that you see there over time?

Question: Erika Najarian - UBS - Analyst : So, let's talk about the young people, Millennials and Gen Z, continue to be a strong tailwind for American Express. And I think the spend in the fourth quarter for this cohort was more than twice that of Gen X and 4 times that of the Baby Boomers. I think at Investor Day, you shared that they're about 75% of your new acquisitions in Gold and Platinum. What's the story for this cohort in '25? Is it that of a continued acquisition or an acceleration of organic growth?

Question: Erika Najarian - UBS - Analyst : Wanted to follow up on that. You talked about a more engaged customer in your ecosystem. At the same time, there's no question that competition in the premium fee-paying space has always been fierce, but it feels like, as well, as a consumer and an analyst, that it continues to get hotter. American Express has always been very front footed at building the ecosystem of value proposition. Another example, you acquired Tock, a restaurant reservation platform. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2025 / 3:30PM, AXP.N - American Express Co at UBS Financial Services Conference As you think about future investments and partnerships, what value propositions have you learned premium consumers engage with the most? And is there a difference between this growing new cohort that has 20 years of lifetime value in front of it versus some of your longer-standing members?

Question: Erika Najarian - UBS - Analyst : And even below the airlift in Bali I remember when Eleven Madison Park had a pop-up in The Hamptons, and they only took American Express, and I literally had friends opening up accounts because they couldn't be -- the others -- the jargon of it is FOMO. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2025 / 3:30PM, AXP.N - American Express Co at UBS Financial Services Conference

Question: Erika Najarian - UBS - Analyst : You're going to get left out or you're not eating at EMP over the summer. So, I thought that was kind of interesting. Your International card momentum has also been a very strong part of the story. Can you unpack the efforts on the International side? What's been driving the Billings and Receivables growth here?

Question: Erika Najarian - UBS - Analyst : So, sticking to International, you have talked about continued runway to increase coverage outside of the United States. That said, there are geographies like Europe where perhaps there's a bit more reticence for merchants to pay higher discount rates. How do you think about optimal parity coverage or optimal coverage internationally versus how you've thought about it and approached in the US?

Question: Erika Najarian - UBS - Analyst : That's a great explanation on how you tackle the tail actually.

Question: Erika Najarian - UBS - Analyst : Talk a little bit more about Small Business at American Express. On one hand, we've heard a lot about animal spirits that could translate into business activity. And while spend did accelerate here in the fourth quarter, you noted there was still significant runway to improve. How is the environment in '25 shaping up for that Small Business spend?

Question: Erika Najarian - UBS - Analyst : So, speaking of your spend share in Small Business, that's something that fintechs are trying to peck away at, so, actively. Tell us a little bit about how your technology value proposition to small businesses are holding up relative to this fintech competition? And do you think your spend share here can be sustained or even expand over the next few years? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2025 / 3:30PM, AXP.N - American Express Co at UBS Financial Services Conference

Question: Erika Najarian - UBS - Analyst : Maybe switching gears for a little bit. As I spoke to investors on your results, I think part of the initial less positive reaction, despite the acceleration in spend and the Street's sensitivity to your revenue outlook, was on expenses. And the concern boiled down to, given the competition in the premium space, are customer acquisition and retention costs rising relative to the relative lifetime value produced? How would you respond to this concern?

Question: Erika Najarian - UBS - Analyst : So Christophe, just on this topic, you did mention on the call that marketing spend will moderate for the company this year. What does that mean for you guys? And further, how fixed is your budget? And the reason I ask it this way is we have competition from someone like JPMorgan, they generate a massive amount of revenue in their other businesses and they're sitting on tons of excess capital, implying a war chest of marketing dollars. And of course, you have the Capital One-Discover deal coming at the pipeline. If your best competitors amp up their marketing programs, how will you respond?

Question: Erika Najarian - UBS - Analyst : I'm going to put a pin on that because I do want to ask a little bit more about data science. But going back to what you said about defaults and how that's part of the value proposition for shareholders in terms of your ROE

Question: Erika Najarian - UBS - Analyst : For your customer set, where are we in terms of credit normalization for this cycle? So credit trends continue to be below pre-COVID levels, portfolio continues to shift towards more premium customers, gap versus peers continue to widen. If '25 continues to be a strong economic year, how should we think about the path of delinquencies and losses?

Question: Erika Najarian - UBS - Analyst : And just to unpack what you mentioned about your data science team and optimizing offers, clearly, AI has been a general theme for everything. How is your company using AI now? And what do you think are the best use cases for American Express?

Question: Erika Najarian - UBS - Analyst : And we do have time for one question that came through the iPad from the audience. It's really a broad question on the Trump deregulation agenda. Maybe talk about the competitive dynamics, if it changes at all? And maybe broad comments on what's been happening in Washington.

Question: Erika Najarian - UBS - Analyst : (Laughter)

Question: Erika Najarian - UBS - Analyst : Got it. Christophe, I think it's a good way to end.

Question: Erika Najarian - UBS - Analyst : Thank you for joining us.