agenda - american express€¦ · *see annex 2 for owned basis. **capital one us card. ***discover...
Post on 20-May-2020
1 Views
Preview:
TRANSCRIPT
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Agenda
1
2
Business Unit Overview
3
Payments Landscape
Note The trademarks logos and service marks used on this slide and throughout this presentation are the property of their respective owners
FY09 Business Performance
4 Represents Corporate amp Other segment which includes American Express Publishing Global Prepaid Corporate functions and other company operations
55
1518
12
USCS ICS GCS GNS
1214
18
42
14
USCS ICS GCS GNMS Other
Total = $620B Total = $21B
5
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
6
Weaker economic environment
Geographic concentration
Small business concentration
Growth in lending
High balance delinquencies
Drivers of US Lending Deterioration
USCS Managed Lending Net Write-off and 30 Day Past Due Rates
67
89
75
4Q 08 3Q 09 4Q 09
Note See Annex 2 for owned basis
4741
37
4Q 08 3Q 09 4Q 09
7
US Unemployment Rates and USCS Managed Lending Net Write-off Rates
8
0
12
Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09
Source Bureau of Labor Statistics Historical USCS managed lending net write-off rates are adjusted to exclude an estimate for interest and fees
US Unemployment Rate USCS Managed Lending Net Write-off Rate
Q409
USCS Managed Lending Net Write-off Rate vs Competitors
9
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q 08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
8
9
10
11
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
10
USCS Managed Lending Net Write-off Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual Net Write-Off rates are 56 for Q408 103 for Q309 and 93 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
67 71
56 53
7280
8996
8694
129
115
75
9688 86
119111
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
Dagger
dagger
USCS Managed Lending 30 Days Past Due Rate vs Competitors
11
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
12
USCS Managed Lending30 Days Past Due Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual 30 Day Past Due rates are 50 for Q408 60 for Q309 and 63 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
Dagger
dagger
47 48 4744
67
58
41
54 53 54
74
62
37
58 56 55
72
63
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
13
High Quality Customer Base
744
753
2005 2006 2007 2008 2009
For Lending accounts in US Consumer and OPEN portfolios Argus September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
754
722
AXP US ConsumerIndustry (excl AXP)
Recognized economic weakness early
Built new set of capabilities models
Developed new set of programs to manage high risk customers
Managed high balances
Risk Mitigation
14
Industry (excl AXP)
US Consumer Lending Credit Line Decrease vs Competitors
0
1
2
3
4
Jan08 May08 Sep08 Jan09 May09 Sep09
15Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
of accounts with a credit line decrease
US Consumer Lending
Customer Assistance and Relief ndash CARE
$ in millions
0
1500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
16
0
100
USCS Managed Loans in CARE
Rest of USCS Managed LoansLoans in CARE includes In-House loans only and excludes CARE loans managed by outside agencies
December 09
USCS High Balance Accounts
1Q 08 4Q 09
High Balance gt$10k Low Balance lt$10k
0
8
Jan 08 Jul 08 Jan 09 Jul 09
High Balance gt$10k Low Balance lt$10k
17Note Data reflect USCS Lending products including Lending on Charge
Dec 09
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
2
Business Unit Overview
3
Payments Landscape
Note The trademarks logos and service marks used on this slide and throughout this presentation are the property of their respective owners
FY09 Business Performance
4 Represents Corporate amp Other segment which includes American Express Publishing Global Prepaid Corporate functions and other company operations
55
1518
12
USCS ICS GCS GNS
1214
18
42
14
USCS ICS GCS GNMS Other
Total = $620B Total = $21B
5
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
6
Weaker economic environment
Geographic concentration
Small business concentration
Growth in lending
High balance delinquencies
Drivers of US Lending Deterioration
USCS Managed Lending Net Write-off and 30 Day Past Due Rates
67
89
75
4Q 08 3Q 09 4Q 09
Note See Annex 2 for owned basis
4741
37
4Q 08 3Q 09 4Q 09
7
US Unemployment Rates and USCS Managed Lending Net Write-off Rates
8
0
12
Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09
Source Bureau of Labor Statistics Historical USCS managed lending net write-off rates are adjusted to exclude an estimate for interest and fees
US Unemployment Rate USCS Managed Lending Net Write-off Rate
Q409
USCS Managed Lending Net Write-off Rate vs Competitors
9
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q 08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
8
9
10
11
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
10
USCS Managed Lending Net Write-off Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual Net Write-Off rates are 56 for Q408 103 for Q309 and 93 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
67 71
56 53
7280
8996
8694
129
115
75
9688 86
119111
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
Dagger
dagger
USCS Managed Lending 30 Days Past Due Rate vs Competitors
11
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
12
USCS Managed Lending30 Days Past Due Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual 30 Day Past Due rates are 50 for Q408 60 for Q309 and 63 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
Dagger
dagger
47 48 4744
67
58
41
54 53 54
74
62
37
58 56 55
72
63
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
13
High Quality Customer Base
744
753
2005 2006 2007 2008 2009
For Lending accounts in US Consumer and OPEN portfolios Argus September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
754
722
AXP US ConsumerIndustry (excl AXP)
Recognized economic weakness early
Built new set of capabilities models
Developed new set of programs to manage high risk customers
Managed high balances
Risk Mitigation
14
Industry (excl AXP)
US Consumer Lending Credit Line Decrease vs Competitors
0
1
2
3
4
Jan08 May08 Sep08 Jan09 May09 Sep09
15Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
of accounts with a credit line decrease
US Consumer Lending
Customer Assistance and Relief ndash CARE
$ in millions
0
1500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
16
0
100
USCS Managed Loans in CARE
Rest of USCS Managed LoansLoans in CARE includes In-House loans only and excludes CARE loans managed by outside agencies
December 09
USCS High Balance Accounts
1Q 08 4Q 09
High Balance gt$10k Low Balance lt$10k
0
8
Jan 08 Jul 08 Jan 09 Jul 09
High Balance gt$10k Low Balance lt$10k
17Note Data reflect USCS Lending products including Lending on Charge
Dec 09
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
3
Payments Landscape
Note The trademarks logos and service marks used on this slide and throughout this presentation are the property of their respective owners
FY09 Business Performance
4 Represents Corporate amp Other segment which includes American Express Publishing Global Prepaid Corporate functions and other company operations
55
1518
12
USCS ICS GCS GNS
1214
18
42
14
USCS ICS GCS GNMS Other
Total = $620B Total = $21B
5
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
6
Weaker economic environment
Geographic concentration
Small business concentration
Growth in lending
High balance delinquencies
Drivers of US Lending Deterioration
USCS Managed Lending Net Write-off and 30 Day Past Due Rates
67
89
75
4Q 08 3Q 09 4Q 09
Note See Annex 2 for owned basis
4741
37
4Q 08 3Q 09 4Q 09
7
US Unemployment Rates and USCS Managed Lending Net Write-off Rates
8
0
12
Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09
Source Bureau of Labor Statistics Historical USCS managed lending net write-off rates are adjusted to exclude an estimate for interest and fees
US Unemployment Rate USCS Managed Lending Net Write-off Rate
Q409
USCS Managed Lending Net Write-off Rate vs Competitors
9
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q 08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
8
9
10
11
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
10
USCS Managed Lending Net Write-off Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual Net Write-Off rates are 56 for Q408 103 for Q309 and 93 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
67 71
56 53
7280
8996
8694
129
115
75
9688 86
119111
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
Dagger
dagger
USCS Managed Lending 30 Days Past Due Rate vs Competitors
11
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
12
USCS Managed Lending30 Days Past Due Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual 30 Day Past Due rates are 50 for Q408 60 for Q309 and 63 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
Dagger
dagger
47 48 4744
67
58
41
54 53 54
74
62
37
58 56 55
72
63
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
13
High Quality Customer Base
744
753
2005 2006 2007 2008 2009
For Lending accounts in US Consumer and OPEN portfolios Argus September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
754
722
AXP US ConsumerIndustry (excl AXP)
Recognized economic weakness early
Built new set of capabilities models
Developed new set of programs to manage high risk customers
Managed high balances
Risk Mitigation
14
Industry (excl AXP)
US Consumer Lending Credit Line Decrease vs Competitors
0
1
2
3
4
Jan08 May08 Sep08 Jan09 May09 Sep09
15Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
of accounts with a credit line decrease
US Consumer Lending
Customer Assistance and Relief ndash CARE
$ in millions
0
1500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
16
0
100
USCS Managed Loans in CARE
Rest of USCS Managed LoansLoans in CARE includes In-House loans only and excludes CARE loans managed by outside agencies
December 09
USCS High Balance Accounts
1Q 08 4Q 09
High Balance gt$10k Low Balance lt$10k
0
8
Jan 08 Jul 08 Jan 09 Jul 09
High Balance gt$10k Low Balance lt$10k
17Note Data reflect USCS Lending products including Lending on Charge
Dec 09
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
FY09 Business Performance
4 Represents Corporate amp Other segment which includes American Express Publishing Global Prepaid Corporate functions and other company operations
55
1518
12
USCS ICS GCS GNS
1214
18
42
14
USCS ICS GCS GNMS Other
Total = $620B Total = $21B
5
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
6
Weaker economic environment
Geographic concentration
Small business concentration
Growth in lending
High balance delinquencies
Drivers of US Lending Deterioration
USCS Managed Lending Net Write-off and 30 Day Past Due Rates
67
89
75
4Q 08 3Q 09 4Q 09
Note See Annex 2 for owned basis
4741
37
4Q 08 3Q 09 4Q 09
7
US Unemployment Rates and USCS Managed Lending Net Write-off Rates
8
0
12
Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09
Source Bureau of Labor Statistics Historical USCS managed lending net write-off rates are adjusted to exclude an estimate for interest and fees
US Unemployment Rate USCS Managed Lending Net Write-off Rate
Q409
USCS Managed Lending Net Write-off Rate vs Competitors
9
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q 08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
8
9
10
11
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
10
USCS Managed Lending Net Write-off Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual Net Write-Off rates are 56 for Q408 103 for Q309 and 93 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
67 71
56 53
7280
8996
8694
129
115
75
9688 86
119111
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
Dagger
dagger
USCS Managed Lending 30 Days Past Due Rate vs Competitors
11
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
12
USCS Managed Lending30 Days Past Due Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual 30 Day Past Due rates are 50 for Q408 60 for Q309 and 63 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
Dagger
dagger
47 48 4744
67
58
41
54 53 54
74
62
37
58 56 55
72
63
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
13
High Quality Customer Base
744
753
2005 2006 2007 2008 2009
For Lending accounts in US Consumer and OPEN portfolios Argus September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
754
722
AXP US ConsumerIndustry (excl AXP)
Recognized economic weakness early
Built new set of capabilities models
Developed new set of programs to manage high risk customers
Managed high balances
Risk Mitigation
14
Industry (excl AXP)
US Consumer Lending Credit Line Decrease vs Competitors
0
1
2
3
4
Jan08 May08 Sep08 Jan09 May09 Sep09
15Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
of accounts with a credit line decrease
US Consumer Lending
Customer Assistance and Relief ndash CARE
$ in millions
0
1500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
16
0
100
USCS Managed Loans in CARE
Rest of USCS Managed LoansLoans in CARE includes In-House loans only and excludes CARE loans managed by outside agencies
December 09
USCS High Balance Accounts
1Q 08 4Q 09
High Balance gt$10k Low Balance lt$10k
0
8
Jan 08 Jul 08 Jan 09 Jul 09
High Balance gt$10k Low Balance lt$10k
17Note Data reflect USCS Lending products including Lending on Charge
Dec 09
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
5
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
6
Weaker economic environment
Geographic concentration
Small business concentration
Growth in lending
High balance delinquencies
Drivers of US Lending Deterioration
USCS Managed Lending Net Write-off and 30 Day Past Due Rates
67
89
75
4Q 08 3Q 09 4Q 09
Note See Annex 2 for owned basis
4741
37
4Q 08 3Q 09 4Q 09
7
US Unemployment Rates and USCS Managed Lending Net Write-off Rates
8
0
12
Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09
Source Bureau of Labor Statistics Historical USCS managed lending net write-off rates are adjusted to exclude an estimate for interest and fees
US Unemployment Rate USCS Managed Lending Net Write-off Rate
Q409
USCS Managed Lending Net Write-off Rate vs Competitors
9
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q 08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
8
9
10
11
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
10
USCS Managed Lending Net Write-off Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual Net Write-Off rates are 56 for Q408 103 for Q309 and 93 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
67 71
56 53
7280
8996
8694
129
115
75
9688 86
119111
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
Dagger
dagger
USCS Managed Lending 30 Days Past Due Rate vs Competitors
11
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
12
USCS Managed Lending30 Days Past Due Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual 30 Day Past Due rates are 50 for Q408 60 for Q309 and 63 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
Dagger
dagger
47 48 4744
67
58
41
54 53 54
74
62
37
58 56 55
72
63
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
13
High Quality Customer Base
744
753
2005 2006 2007 2008 2009
For Lending accounts in US Consumer and OPEN portfolios Argus September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
754
722
AXP US ConsumerIndustry (excl AXP)
Recognized economic weakness early
Built new set of capabilities models
Developed new set of programs to manage high risk customers
Managed high balances
Risk Mitigation
14
Industry (excl AXP)
US Consumer Lending Credit Line Decrease vs Competitors
0
1
2
3
4
Jan08 May08 Sep08 Jan09 May09 Sep09
15Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
of accounts with a credit line decrease
US Consumer Lending
Customer Assistance and Relief ndash CARE
$ in millions
0
1500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
16
0
100
USCS Managed Loans in CARE
Rest of USCS Managed LoansLoans in CARE includes In-House loans only and excludes CARE loans managed by outside agencies
December 09
USCS High Balance Accounts
1Q 08 4Q 09
High Balance gt$10k Low Balance lt$10k
0
8
Jan 08 Jul 08 Jan 09 Jul 09
High Balance gt$10k Low Balance lt$10k
17Note Data reflect USCS Lending products including Lending on Charge
Dec 09
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
6
Weaker economic environment
Geographic concentration
Small business concentration
Growth in lending
High balance delinquencies
Drivers of US Lending Deterioration
USCS Managed Lending Net Write-off and 30 Day Past Due Rates
67
89
75
4Q 08 3Q 09 4Q 09
Note See Annex 2 for owned basis
4741
37
4Q 08 3Q 09 4Q 09
7
US Unemployment Rates and USCS Managed Lending Net Write-off Rates
8
0
12
Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09
Source Bureau of Labor Statistics Historical USCS managed lending net write-off rates are adjusted to exclude an estimate for interest and fees
US Unemployment Rate USCS Managed Lending Net Write-off Rate
Q409
USCS Managed Lending Net Write-off Rate vs Competitors
9
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q 08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
8
9
10
11
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
10
USCS Managed Lending Net Write-off Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual Net Write-Off rates are 56 for Q408 103 for Q309 and 93 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
67 71
56 53
7280
8996
8694
129
115
75
9688 86
119111
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
Dagger
dagger
USCS Managed Lending 30 Days Past Due Rate vs Competitors
11
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
12
USCS Managed Lending30 Days Past Due Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual 30 Day Past Due rates are 50 for Q408 60 for Q309 and 63 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
Dagger
dagger
47 48 4744
67
58
41
54 53 54
74
62
37
58 56 55
72
63
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
13
High Quality Customer Base
744
753
2005 2006 2007 2008 2009
For Lending accounts in US Consumer and OPEN portfolios Argus September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
754
722
AXP US ConsumerIndustry (excl AXP)
Recognized economic weakness early
Built new set of capabilities models
Developed new set of programs to manage high risk customers
Managed high balances
Risk Mitigation
14
Industry (excl AXP)
US Consumer Lending Credit Line Decrease vs Competitors
0
1
2
3
4
Jan08 May08 Sep08 Jan09 May09 Sep09
15Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
of accounts with a credit line decrease
US Consumer Lending
Customer Assistance and Relief ndash CARE
$ in millions
0
1500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
16
0
100
USCS Managed Loans in CARE
Rest of USCS Managed LoansLoans in CARE includes In-House loans only and excludes CARE loans managed by outside agencies
December 09
USCS High Balance Accounts
1Q 08 4Q 09
High Balance gt$10k Low Balance lt$10k
0
8
Jan 08 Jul 08 Jan 09 Jul 09
High Balance gt$10k Low Balance lt$10k
17Note Data reflect USCS Lending products including Lending on Charge
Dec 09
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
USCS Managed Lending Net Write-off and 30 Day Past Due Rates
67
89
75
4Q 08 3Q 09 4Q 09
Note See Annex 2 for owned basis
4741
37
4Q 08 3Q 09 4Q 09
7
US Unemployment Rates and USCS Managed Lending Net Write-off Rates
8
0
12
Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09
Source Bureau of Labor Statistics Historical USCS managed lending net write-off rates are adjusted to exclude an estimate for interest and fees
US Unemployment Rate USCS Managed Lending Net Write-off Rate
Q409
USCS Managed Lending Net Write-off Rate vs Competitors
9
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q 08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
8
9
10
11
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
10
USCS Managed Lending Net Write-off Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual Net Write-Off rates are 56 for Q408 103 for Q309 and 93 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
67 71
56 53
7280
8996
8694
129
115
75
9688 86
119111
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
Dagger
dagger
USCS Managed Lending 30 Days Past Due Rate vs Competitors
11
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
12
USCS Managed Lending30 Days Past Due Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual 30 Day Past Due rates are 50 for Q408 60 for Q309 and 63 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
Dagger
dagger
47 48 4744
67
58
41
54 53 54
74
62
37
58 56 55
72
63
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
13
High Quality Customer Base
744
753
2005 2006 2007 2008 2009
For Lending accounts in US Consumer and OPEN portfolios Argus September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
754
722
AXP US ConsumerIndustry (excl AXP)
Recognized economic weakness early
Built new set of capabilities models
Developed new set of programs to manage high risk customers
Managed high balances
Risk Mitigation
14
Industry (excl AXP)
US Consumer Lending Credit Line Decrease vs Competitors
0
1
2
3
4
Jan08 May08 Sep08 Jan09 May09 Sep09
15Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
of accounts with a credit line decrease
US Consumer Lending
Customer Assistance and Relief ndash CARE
$ in millions
0
1500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
16
0
100
USCS Managed Loans in CARE
Rest of USCS Managed LoansLoans in CARE includes In-House loans only and excludes CARE loans managed by outside agencies
December 09
USCS High Balance Accounts
1Q 08 4Q 09
High Balance gt$10k Low Balance lt$10k
0
8
Jan 08 Jul 08 Jan 09 Jul 09
High Balance gt$10k Low Balance lt$10k
17Note Data reflect USCS Lending products including Lending on Charge
Dec 09
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
US Unemployment Rates and USCS Managed Lending Net Write-off Rates
8
0
12
Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09
Source Bureau of Labor Statistics Historical USCS managed lending net write-off rates are adjusted to exclude an estimate for interest and fees
US Unemployment Rate USCS Managed Lending Net Write-off Rate
Q409
USCS Managed Lending Net Write-off Rate vs Competitors
9
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q 08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
8
9
10
11
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
10
USCS Managed Lending Net Write-off Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual Net Write-Off rates are 56 for Q408 103 for Q309 and 93 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
67 71
56 53
7280
8996
8694
129
115
75
9688 86
119111
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
Dagger
dagger
USCS Managed Lending 30 Days Past Due Rate vs Competitors
11
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
12
USCS Managed Lending30 Days Past Due Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual 30 Day Past Due rates are 50 for Q408 60 for Q309 and 63 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
Dagger
dagger
47 48 4744
67
58
41
54 53 54
74
62
37
58 56 55
72
63
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
13
High Quality Customer Base
744
753
2005 2006 2007 2008 2009
For Lending accounts in US Consumer and OPEN portfolios Argus September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
754
722
AXP US ConsumerIndustry (excl AXP)
Recognized economic weakness early
Built new set of capabilities models
Developed new set of programs to manage high risk customers
Managed high balances
Risk Mitigation
14
Industry (excl AXP)
US Consumer Lending Credit Line Decrease vs Competitors
0
1
2
3
4
Jan08 May08 Sep08 Jan09 May09 Sep09
15Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
of accounts with a credit line decrease
US Consumer Lending
Customer Assistance and Relief ndash CARE
$ in millions
0
1500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
16
0
100
USCS Managed Loans in CARE
Rest of USCS Managed LoansLoans in CARE includes In-House loans only and excludes CARE loans managed by outside agencies
December 09
USCS High Balance Accounts
1Q 08 4Q 09
High Balance gt$10k Low Balance lt$10k
0
8
Jan 08 Jul 08 Jan 09 Jul 09
High Balance gt$10k Low Balance lt$10k
17Note Data reflect USCS Lending products including Lending on Charge
Dec 09
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
USCS Managed Lending Net Write-off Rate vs Competitors
9
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q 08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
8
9
10
11
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
10
USCS Managed Lending Net Write-off Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual Net Write-Off rates are 56 for Q408 103 for Q309 and 93 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
67 71
56 53
7280
8996
8694
129
115
75
9688 86
119111
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
Dagger
dagger
USCS Managed Lending 30 Days Past Due Rate vs Competitors
11
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
12
USCS Managed Lending30 Days Past Due Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual 30 Day Past Due rates are 50 for Q408 60 for Q309 and 63 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
Dagger
dagger
47 48 4744
67
58
41
54 53 54
74
62
37
58 56 55
72
63
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
13
High Quality Customer Base
744
753
2005 2006 2007 2008 2009
For Lending accounts in US Consumer and OPEN portfolios Argus September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
754
722
AXP US ConsumerIndustry (excl AXP)
Recognized economic weakness early
Built new set of capabilities models
Developed new set of programs to manage high risk customers
Managed high balances
Risk Mitigation
14
Industry (excl AXP)
US Consumer Lending Credit Line Decrease vs Competitors
0
1
2
3
4
Jan08 May08 Sep08 Jan09 May09 Sep09
15Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
of accounts with a credit line decrease
US Consumer Lending
Customer Assistance and Relief ndash CARE
$ in millions
0
1500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
16
0
100
USCS Managed Loans in CARE
Rest of USCS Managed LoansLoans in CARE includes In-House loans only and excludes CARE loans managed by outside agencies
December 09
USCS High Balance Accounts
1Q 08 4Q 09
High Balance gt$10k Low Balance lt$10k
0
8
Jan 08 Jul 08 Jan 09 Jul 09
High Balance gt$10k Low Balance lt$10k
17Note Data reflect USCS Lending products including Lending on Charge
Dec 09
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
10
USCS Managed Lending Net Write-off Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual Net Write-Off rates are 56 for Q408 103 for Q309 and 93 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
67 71
56 53
7280
8996
8694
129
115
75
9688 86
119111
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
Dagger
dagger
USCS Managed Lending 30 Days Past Due Rate vs Competitors
11
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
12
USCS Managed Lending30 Days Past Due Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual 30 Day Past Due rates are 50 for Q408 60 for Q309 and 63 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
Dagger
dagger
47 48 4744
67
58
41
54 53 54
74
62
37
58 56 55
72
63
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
13
High Quality Customer Base
744
753
2005 2006 2007 2008 2009
For Lending accounts in US Consumer and OPEN portfolios Argus September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
754
722
AXP US ConsumerIndustry (excl AXP)
Recognized economic weakness early
Built new set of capabilities models
Developed new set of programs to manage high risk customers
Managed high balances
Risk Mitigation
14
Industry (excl AXP)
US Consumer Lending Credit Line Decrease vs Competitors
0
1
2
3
4
Jan08 May08 Sep08 Jan09 May09 Sep09
15Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
of accounts with a credit line decrease
US Consumer Lending
Customer Assistance and Relief ndash CARE
$ in millions
0
1500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
16
0
100
USCS Managed Loans in CARE
Rest of USCS Managed LoansLoans in CARE includes In-House loans only and excludes CARE loans managed by outside agencies
December 09
USCS High Balance Accounts
1Q 08 4Q 09
High Balance gt$10k Low Balance lt$10k
0
8
Jan 08 Jul 08 Jan 09 Jul 09
High Balance gt$10k Low Balance lt$10k
17Note Data reflect USCS Lending products including Lending on Charge
Dec 09
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
USCS Managed Lending 30 Days Past Due Rate vs Competitors
11
Competitors include Bank of America Credit Card JPMorgan (excluding Washington Mutual) Citi Branded North America Citi Holdings North America Retail Partners Capital One US Card Discover US Card and Wells Fargo Credit Card Excludes Wells Fargo and Citi prior to 1Q08 See Annex 2 for owned basis
0
1
2
3
4
5
6
7
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Competitors US Card Services
12
USCS Managed Lending30 Days Past Due Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual 30 Day Past Due rates are 50 for Q408 60 for Q309 and 63 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
Dagger
dagger
47 48 4744
67
58
41
54 53 54
74
62
37
58 56 55
72
63
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
13
High Quality Customer Base
744
753
2005 2006 2007 2008 2009
For Lending accounts in US Consumer and OPEN portfolios Argus September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
754
722
AXP US ConsumerIndustry (excl AXP)
Recognized economic weakness early
Built new set of capabilities models
Developed new set of programs to manage high risk customers
Managed high balances
Risk Mitigation
14
Industry (excl AXP)
US Consumer Lending Credit Line Decrease vs Competitors
0
1
2
3
4
Jan08 May08 Sep08 Jan09 May09 Sep09
15Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
of accounts with a credit line decrease
US Consumer Lending
Customer Assistance and Relief ndash CARE
$ in millions
0
1500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
16
0
100
USCS Managed Loans in CARE
Rest of USCS Managed LoansLoans in CARE includes In-House loans only and excludes CARE loans managed by outside agencies
December 09
USCS High Balance Accounts
1Q 08 4Q 09
High Balance gt$10k Low Balance lt$10k
0
8
Jan 08 Jul 08 Jan 09 Jul 09
High Balance gt$10k Low Balance lt$10k
17Note Data reflect USCS Lending products including Lending on Charge
Dec 09
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
12
USCS Managed Lending30 Days Past Due Rate vs Competitors
See Annex 2 for owned basis Capital One US Card Discover US Card Fiscal year ends November 30 Excludes impacts of the Washington Mutual acquisition Including Washington Mutual 30 Day Past Due rates are 50 for Q408 60 for Q309 and 63 for Q409 Includes some international volumes daggerCredit Card DaggerCitiHoldings North America Retail Partners and Citi Branded North America
Dagger
dagger
47 48 4744
67
58
41
54 53 54
74
62
37
58 56 55
72
63
AXP US Card Services
Capital One Discover JPMorgan Bank of America
Citi
Q4 08 Q3 09 Q4 09
13
High Quality Customer Base
744
753
2005 2006 2007 2008 2009
For Lending accounts in US Consumer and OPEN portfolios Argus September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
754
722
AXP US ConsumerIndustry (excl AXP)
Recognized economic weakness early
Built new set of capabilities models
Developed new set of programs to manage high risk customers
Managed high balances
Risk Mitigation
14
Industry (excl AXP)
US Consumer Lending Credit Line Decrease vs Competitors
0
1
2
3
4
Jan08 May08 Sep08 Jan09 May09 Sep09
15Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
of accounts with a credit line decrease
US Consumer Lending
Customer Assistance and Relief ndash CARE
$ in millions
0
1500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
16
0
100
USCS Managed Loans in CARE
Rest of USCS Managed LoansLoans in CARE includes In-House loans only and excludes CARE loans managed by outside agencies
December 09
USCS High Balance Accounts
1Q 08 4Q 09
High Balance gt$10k Low Balance lt$10k
0
8
Jan 08 Jul 08 Jan 09 Jul 09
High Balance gt$10k Low Balance lt$10k
17Note Data reflect USCS Lending products including Lending on Charge
Dec 09
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
13
High Quality Customer Base
744
753
2005 2006 2007 2008 2009
For Lending accounts in US Consumer and OPEN portfolios Argus September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
754
722
AXP US ConsumerIndustry (excl AXP)
Recognized economic weakness early
Built new set of capabilities models
Developed new set of programs to manage high risk customers
Managed high balances
Risk Mitigation
14
Industry (excl AXP)
US Consumer Lending Credit Line Decrease vs Competitors
0
1
2
3
4
Jan08 May08 Sep08 Jan09 May09 Sep09
15Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
of accounts with a credit line decrease
US Consumer Lending
Customer Assistance and Relief ndash CARE
$ in millions
0
1500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
16
0
100
USCS Managed Loans in CARE
Rest of USCS Managed LoansLoans in CARE includes In-House loans only and excludes CARE loans managed by outside agencies
December 09
USCS High Balance Accounts
1Q 08 4Q 09
High Balance gt$10k Low Balance lt$10k
0
8
Jan 08 Jul 08 Jan 09 Jul 09
High Balance gt$10k Low Balance lt$10k
17Note Data reflect USCS Lending products including Lending on Charge
Dec 09
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
Recognized economic weakness early
Built new set of capabilities models
Developed new set of programs to manage high risk customers
Managed high balances
Risk Mitigation
14
Industry (excl AXP)
US Consumer Lending Credit Line Decrease vs Competitors
0
1
2
3
4
Jan08 May08 Sep08 Jan09 May09 Sep09
15Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
of accounts with a credit line decrease
US Consumer Lending
Customer Assistance and Relief ndash CARE
$ in millions
0
1500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
16
0
100
USCS Managed Loans in CARE
Rest of USCS Managed LoansLoans in CARE includes In-House loans only and excludes CARE loans managed by outside agencies
December 09
USCS High Balance Accounts
1Q 08 4Q 09
High Balance gt$10k Low Balance lt$10k
0
8
Jan 08 Jul 08 Jan 09 Jul 09
High Balance gt$10k Low Balance lt$10k
17Note Data reflect USCS Lending products including Lending on Charge
Dec 09
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
Industry (excl AXP)
US Consumer Lending Credit Line Decrease vs Competitors
0
1
2
3
4
Jan08 May08 Sep08 Jan09 May09 Sep09
15Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
of accounts with a credit line decrease
US Consumer Lending
Customer Assistance and Relief ndash CARE
$ in millions
0
1500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
16
0
100
USCS Managed Loans in CARE
Rest of USCS Managed LoansLoans in CARE includes In-House loans only and excludes CARE loans managed by outside agencies
December 09
USCS High Balance Accounts
1Q 08 4Q 09
High Balance gt$10k Low Balance lt$10k
0
8
Jan 08 Jul 08 Jan 09 Jul 09
High Balance gt$10k Low Balance lt$10k
17Note Data reflect USCS Lending products including Lending on Charge
Dec 09
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
Customer Assistance and Relief ndash CARE
$ in millions
0
1500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
16
0
100
USCS Managed Loans in CARE
Rest of USCS Managed LoansLoans in CARE includes In-House loans only and excludes CARE loans managed by outside agencies
December 09
USCS High Balance Accounts
1Q 08 4Q 09
High Balance gt$10k Low Balance lt$10k
0
8
Jan 08 Jul 08 Jan 09 Jul 09
High Balance gt$10k Low Balance lt$10k
17Note Data reflect USCS Lending products including Lending on Charge
Dec 09
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
USCS High Balance Accounts
1Q 08 4Q 09
High Balance gt$10k Low Balance lt$10k
0
8
Jan 08 Jul 08 Jan 09 Jul 09
High Balance gt$10k Low Balance lt$10k
17Note Data reflect USCS Lending products including Lending on Charge
Dec 09
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
18
$3000
$9000
Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09
US Consumer Managed LendingAverage Write-off Balance
US Consumer Lending
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
19
$3000
$9000
Oct 08 Jan 09 Apr 09 Jul 09 Sep09
US Consumer Managed Lending Average Write-off Balance vs Competitors
Industry (excl AXP)
US Consumer Lending
Argus March 2009 and September 2009 Credit Card Payments Study US Consumer Credit only Sample of consumer credit cards provided by 24 issuers including AXP
30
(16)
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
High balance customers continue to be important
ndash Represent affluent high spending base
Delinquency rates for segment improving
Percentage of high balance loans declining
High Balance Summary
20
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
10
18
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
25
50
Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
33
42
4853
57
70 71 71
1Q 08 4Q 08 2Q 09 4Q 09
US Card Services Customers x000
USCS Managed Lending Roll Rates and Bankruptcy Filings
Dec 09
Dec 0921
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
USCS Managed Lending Current to 30 Days Past Due
22
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
USCS Managed Lending Current to 30 Days Past Due
23
10
18
Apr 09 Jun 09 Aug 09 Oct 09 Dec 09
Write-off in Q1 10
Write-off in Q2 10
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
USCS Charge Card Net Write-off and 30 Days Past Due Rates
3532
19
4Q 08 3Q 09 4Q09
37
22
18
4Q 08 3Q 09 4Q 09
24
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
ICS Charge Card Net Loss Ratio and 90 Days Past Due Rates
0304 04
4Q 08 3Q 09 4Q 09
31
25
21
4Q 08 3Q 09 4Q 09
25
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
There are no off-balance sheet ICS securitizations Therefore the credit metrics for ICS are on an owned basis
ICS Lending Net Write-off and 30 Days Past Due Rates
51
71
61
4Q 08 3Q 09 4Q 09
36 3733
4Q 08 3Q 09 4Q 09
26
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
9
14
19
24
27
ICS Lending Net Write-off Rates by Market
2
4
6
8
Feb08 Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09
Australia
Canada
Mexico
UK
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
GCS amp GNMS Provision as a Percent of Total Revenues Net of Interest Expense
28
66
5053
4034
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
3842
36 34 34
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
29
High quality customer base
Quick action to change our models policies and procedures
Focus on high balance customers
Improving across the board
Credit Summary
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
30
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
Worldwide Billed Business
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Dec 09
YoY Growth - Reported YoY Growth - FX Adjusted
$ in billions
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc)
31
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
32
increase(decrease) vs prior year
Billings Growth by Business
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 3 for reported billings growth rates
(30)
(20)
(10)
0
10
20
30
40
50
Jan 08 Jul 08 Jan 09 Jul 09
GNS (FX Adj)
GCS (FX Adj)
AXP (FX Adj)
USCS
ICS (FX Adj)
Dec rsquo09
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
USCS Spending by Product
33
(30)
(20)
(10)
0
10
20
Charge Co-Brand Proprietary Lending
Q1 09 Q2 09 Q3 09 Q4 09
increase(decrease) vs prior year
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
34
USCS Spending by Product
Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
(15)
(10)
(5)
0
5
10
15
Charge Co-Brand Proprietary Lending
Oct 09 Nov 09 Dec 09
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
Dec 09 YOY +38
Dec 09 YOY +08
(30)
(20)
(10)
0
10
lt20K 20-30K 30-80K 80-200K 200K+
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Size of Wallet
Note Size of wallet is a customerrsquos total spend on plastic (excludes debit) Customer wallets are frozen as of December 2007 Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
increase(decrease) vs prior year
35
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
(20)
(15)
(10)
(5)
0
5
10
CA NY FL TX NJ GA IL PA
Q1 09 Q2 09 Q3 09 Q4 09
US Consumer Spending by Key States increase(decrease) vs prior year
36
Dec 09 YOY
+35 +25+63 +28 +38 +26 +49 +59
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09
Non-discretionary consists of spending in oil supermarket and warehouse Discretionary consists of spending in department store electronics restaurant fitness and wellness fashion lodging airline entertainment home improvement and home furnishing Note Spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
37
US Consumer Discretionary vs Non-Discretionary Spending
Dec 09
increase(decrease) vs prior year
Non-Discretionary
Discretionary
+114
+48
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
December 09 US Consumer Discretionary Spending by Industry
increase(decrease) vs prior year
of Transactions
Transaction size
Total spending
Source Global Merchant Services discount billed business Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period All transactions greater than $50
38
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
US Consumer Spending Highlights
(40)
(30)
(20)
(10)
0
10
20
Jan 09 Apr 09 Jul 09 Oct 09
39
December 2009 increase(decrease) vs prior year
increase(decrease) vs prior year
Dec 09 YOY +124
239
124106
23
Cruises Tours Airlines LodgingDec09
Note Monthly spending growth rates have been adjusted for days mix as spend volume can vary depending upon the specific day of the week and prior periods will have a different mix of days than the present period
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
40
International Card Services Spending
(15)
(10)
(5)
0
5
10
15
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year FX adjusted
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 4 for reported basis
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
41
Global Network Services Spending
increase(decrease) vs prior year FX adjusted
US
Intrsquol
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 5 for reported basis
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
International Card Services -FX adjusted
Global Network Services -FX adjusted
US Consumer
US Small Business
Global Corporate Services -FX adjusted
Improvement in Billed Business
42
increase(decrease) vs prior year
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for Dec09 applies to Dec08 and rate used for Nov09 applies to Nov08 etc) See Annex 1 for reported basis
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
43
Broad based spending improvements in fourth quarter
ndash Business segments
ndash Wallet sizes
ndash Regions
Global Spending Summary
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
44
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
45
Key Risks and Challenges
Consumer behavior evolving
Small business customers still challenged by current environment
Increasing focus on premium segments
New forms of payments emerging
CARD Act
Pressure on interchange
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
46
Strong Hand To Play
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
47
High Average Cardmember Spend
$9342
$2672$2300
AXP Visa MasterCard
Note Calculated using a five-point average of worldwide total basic cards in force for AXP and credit card and charge accounts for Visa and MasterCard (excludes debit) AXPrsquos reported average spending per proprietary basic cards for 2008 was $12025 Source Company reports based upon calendar year 2008 data
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
Stable Discount Rate
258 257 256 255 254
230
235
240
245
250
255
260
265
270
275
280
2005 2006 2007 2008 2009
48
Note Average discount rate represents the percentage of billed business (both proprietary and Global Network Services) retained by the Company from merchants it acquires prior to payments to third parties unrelated to merchant acceptance
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
49
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
Focus on premium customers Charge Card
Co-Brands
Proprietary Lending
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
50
Focus on Charge
Membership Rewards
World Class Service
Positive Credit History
No Preset Spend Limit
Charge A smart alternative to debit
Pay in Full
Purchase Protection
Fraud Protection
61
39
Charge Lend
Portion of 2009 USCS and ICS Billed Business
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
51
New Entry Level Charge Product
Customizable card benefits through Lifestyle Packs (Social Connect Go Eco)
Ongoing customer feedback into product design via Zync Tank
Low annual fee
ZyncBeta launched
December 8 2009
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
52
Premier Rewards Gold
Premier Rewards Gold Card
Launched October 8 2009
Richer rewards with simple 3-2-1 rewards structure
Bonus points for spend thresholds
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
53
Increasing Awareness of Charge
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
54
World Class Rewards Program
More than one million unique SKUs for point redemption
Over 150 redemption partners in the US
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
55
Everyday Redemptions
Greater redemption opportunities
Offset everyday charges on statement with MR points
Business Services
Communications
Merchandise amp Supplies
Utilities
Transportation
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
56
Continued Strength in Co-Brands
Americas EMEA JAPA
Loyal customer base
Global expansion
Access to partner distribution channel
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
57
Recent Co-Brand Highlights
Americas
EMEA
JAPA
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
Blue SkyBlue
Blue Cash Clear
58
USCS Proprietary Lending Portfolio Overview
13
87
2009
Proprietary Lending
Rest of USCS
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
59
$ in billions
Dec 08 Mar 09 Jun 09 Sep 09 Dec 09
USCS Managed Lending Balances
Ending Monthly CardmemberLoans
Average 2009 CardmemberLoans
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
9689 91
87
108
95 96 97
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09Increased Cost of Funds due to
spike in October 1M LIBOR rate
Repriced additional segments of US lending
portfolio
Loss of revenue due to August CARD Act implementation
Impact of Collections
Strategy
Lower revolve rate
See Annex 6 for owned basis
Improved Cost of Funds due to LIBOR
reversion
Re-priced 55 of US Lending Portfolio
USCS Net Interest Yield on Managed Cardmember Loans
60
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
61
Driving Growth
Drive new revenue by leveraging unique business model Fee-Based Services
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
LoyaltyEdge
Provide end-to-end loyalty program design and management for third partiesLaunched January 22 2010
62
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
Combines real behavioral data with powerful analytics to deliver insights that enable businesses to improve their performance
American Express Business Insights
Highly structured custom analysis
Competitive Focus
Local IQ
Industry IQ
Destination IQ
63
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
OPEN Forum
A community designed to help small businesses grow their business
Launched 20 in July
Since 20 launch
ndash Over 4M page views
ndash 17M unique visitors
64
Mixx Gold AwardBrand Awareness amp Positioning
2008
2009
2009
Webby HonoreeBest Business Blog
Best Branded WebsiteBest Branded Social Media
Community
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
65
OPEN AcceptPay
All-in-one online invoicing and payment acceptance solution
Faster payments
Improved efficiencies
Added financial control
Ease of use
Launched December 21 2009
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
66
Driving Growth
Drive network growth Grow merchant coverage
Drive GNS partner volume onto network
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
Expanding Global Footprint
67
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
Growing Coverage
68
Over 17000 new merchants signed for target cities in 2009
Memphis
Minneapolis Detroit
Over 18000 new merchants signed in 2009
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
Growing Small Merchant Coverage
29
71
OnePoint Other Sales Channels
113009 YTD
69
Proprietary Sales Force
Client Managers
External Sales Agents
Telesales
Want to Honor
Bank Partners
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$72B
Global Network Services Growth Trajectory
2004-08
1997-2009CAGR 32
CAGR 40
70
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
Network Growth in Emerging Markets
Key Partners in
Emerging Markets
Emerging markets defined as non-OECD (Organisation for Economic Co-operation and Development) countries and South Korea
0
20
40
60
80
100
FY09
Developed Markets
Emerging Markets
71
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
Broad Network of Partnerships
72
Americas EMEA JAPA
Note Fidelity and Merrill Lynch products are issued by FIA Card Services
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
73
Driving Growth Summary
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
74
Credit and spending showing signs of improvement and reflect high quality of our customer base
Unique business model gives us a strong hand to play
Great growth opportunities in which we are investing
ndash Focus on premium customers
ndash Drive new revenue by leveraging unique business model
ndash Drive network growth
Closing Thoughts
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
75
Agenda
2009 Performance
Unique Opportunities for Growth
Business Unit Overview
Why is our credit performance better than the competitionrsquos
Whatrsquos happening to spending
How will we grow
Question and Answer Session
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
Annex 1
77
FX adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into US dollars (eg assumes foreign exchange rate used for 4Qrsquo09 applies to 4Qrsquo08 rate used for 3Qrsquo09 applies to 3Qrsquo08 etc)
Billed Business Year-Over-Year Growth Rates
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
International Consumer amp Small Business
Reported 21 20 11 (14) (21) (20) (12) 14
FX Adjusted 9 10 8 1 (5) (7) (6) 0
International Corporate Services
Reported 22 25 13 (18) (30) (33) (19) 12
FX Adjusted 10 14 10 (3) (15) (21) (13) (1)
GNS
Reported 50 42 29 0 (6) (3) 2 34
FX Adjusted 40 35 27 11 8 6 7 22
Oct09 Nov09 Dec09 Q409
International Card Services
Reported 12 16 12 14
FX Adjusted (3) 0 3 0
Global Corporate Services
Reported 1 8 16 8
FX Adjusted (4) 2 13 3
Global Network Services
Reported 28 37 36 34
FX Adjusted 16 22 27 22
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
Annex 2
78
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Cardmember Lending Owned Basis
30 Days Past Due Loans as a of Total
USCS 23 21 24 28 34 35 39 47 51 44 42 37
AXP 25 22 25 28 33 34 37 44 49 43 40 36
Net Write-off Rate
USCS 29 29 30 35 45 58 61 70 85 103 98 80
AXP 34 34 34 37 45 55 58 65 80 96 91 74
Cardmember Lending Managed Basis
30 Days Past Due Loans as a of Total
USCS 24 21 24 28 32 33 39 47 51 44 41 37
AXP 25 23 25 28 32 33 38 46 50 43 40 36
Net Write-off Rate
USCS 29 29 30 34 43 53 59 67 85 100 89 75
AXP 33 33 32 36 43 51 57 65 82 97 86 73
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
79
increase(decrease) vs prior year
Annex 3
(30)
(20)
(10)
0
10
20
30
40
50
60
Jan 08 Jul 08 Jan 09 Jul 09
GNS (Reported)
GCS (Reported)
AXP (Reported)
USCS
ICS (Reported)
Dec rsquo09
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
80
Annex 4
(30)
(20)
(10)
0
10
20
30
Jan08 Jul08 Jan09 Jul09 Dec09
increase(decrease) vs prior year Reported
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
-20
-10
0
10
20
30
40
50
60
70
Jan08 Jul08 Jan09 Jul09 Dec09
81
Annex 5
increase(decrease) vs prior year Reported
US
Intrsquol
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
Annex 6($ in millions except percentages)
(A) Represents net interest income allocable to the Companys cardmember lending portfolio which excludes the impact of card fees on loans and balance transfer feesattributable to the Companys cardmember lending portfolio (B) Represents average loans excluding the impact of deferred card fees net of deferred direct acquisitioncosts for cardmember loans (C) Net interest yield on cardmember loans represents the net spread earned on cardmember loans Net interest yield on cardmember loans(both on an owned and managed basis) is computed by dividing adjusted net interest income by adjusted average loans computed on an annualized basis The calculationof net interest yield on cardmember loans (both on an owned and managed basis) includes interest and fees that are deemed uncollectible For the owned basispresentation reserves and net write-offs related to uncollectible interest and fees are recorded through provisions for losses - cardmember lending and for the managedbasis presentation reserves and net write-offs related to uncollectible interest and fees are included as a reduction to securitization income net therefore such reservesand net write-offs are not included in the net interest yield calculation The Company believes net interest yield on cardmember loans (on both an owned and managedbasis) is useful to investors because it provides a measure of profitability of the Companys cardmember lending portfolio (D) Includes on-balance sheet cardmember loansand off-balance sheet securitized cardmember loans Refer to the information set forth under US Card Services Selected Financial Information for further discussion of themanaged basis presentation (E) Includes the GAAP to managed basis securitization adjustments to interest income and interest expense as set forth under US CardServices Selected Financial Information managed basis presentation (F) Represents net interest income allocable to the Companys managed cardmember lendingportfolio which excludes the impact of card fees on managed loans and balance transfer fees attributable to the Companys managed cardmember lending portfolio (G)Represents average managed loans excluding the impact of deferred card fees net of deferred direct acquisition costs for managed cardmember loans
82
33108 63008 93008 123108 33109 63009 93009 123109
Owned Basis
Net interest income $699 $650 $662 $559 $728 $534 $565 $539
Average loans (bill ions) $396 $379 $363 $332 $302 $265 $234 $227
Adjusted net interest income (A) $855 $776 $787 $687 $763 $548 $521 $494
Adjusted average loans (bill ions) (B) $396 $380 $363 $333 $303 $266 $235 $228
Net interest yield on cardmember loans (C) 87 82 86 82 102 83 88 86
Managed Basis (D)
Net interest income (E) $1382 $1290 $1349 $1231 $1531 $1257 $1221 $1210
Average loans (bill ions) $645 $642 $646 $630 $591 $551 $529 $518
Adjusted net interest income (F) $1538 $1416 $1475 $1380 $1581 $1311 $1278 $1265
Adjusted average loans (bill ions) (G) $646 $642 $647 $631 $592 $552 $530 $519
Net interest yield on cardmember loans (C) 96 89 91 87 108 95 96 97
Quarters Ended
top related