AMERICAN EXPRESS CO MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A) (kind 10-Q)

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Enterprise Introduction


We're a globally built-in funds firm that gives our prospects with
entry to merchandise, insights and experiences that enrich lives and construct
enterprise success. Our principal services are credit score and cost card
merchandise, together with journey and life-style associated companies, provided to shoppers
and companies around the globe. Our vary of services contains:

•Bank card, cost card, banking and different cost and financing merchandise

•Service provider acquisition and processing, servicing and settlement, and
point-of-sale advertising and data services for retailers

•Community companies

•Different payment companies, together with fraud prevention companies and the design and
operation of buyer loyalty packages

•Expense administration services

•Journey and life-style companies


Our varied services are provided globally to numerous buyer
teams, together with shoppers, small companies, mid-sized corporations and huge
companies. These services are provided via varied channels,
together with cellular and on-line purposes, online marketing, buyer referral
packages, third-party service suppliers and enterprise companions, unsolicited mail,
phone, in-house gross sales groups, and direct response promoting.

We now have a major possession place in, and intensive industrial
preparations with, World Enterprise Journey Group, Inc. (GBTG). The industrial
preparations with GBTG embrace, amongst different issues, a long-term trademark
license settlement pursuant to which GBTG makes use of the American Categorical model, GBTG's
help of sure of our partnerships, joint negotiation with journey suppliers
and a strategic relationship between GBTG and our World Industrial Companies
(GCS) enterprise. In the course of the second quarter of 2022, GBTG turned a publicly traded
firm following the completion of a enterprise mixture between American
Categorical World Enterprise Journey and Apollo Strategic Progress Capital. In consequence
of the transaction, our financial curiosity was diminished to roughly 35
p.c from roughly 40 p.c.

We compete within the world funds trade with card networks, issuers and
acquirers, paper-based transactions (e.g., money and checks), financial institution switch
fashions (e.g., wire transfers and Automated Clearing Home (ACH)), in addition to
evolving and rising different cost and financing suppliers. Because the
funds trade continues to evolve, we face growing competitors from
non-traditional gamers that leverage new applied sciences, enterprise fashions and
buyer relationships to create cost or financing options.

Efficient for the primary quarter of 2022, we made the next reporting
presentation modifications to our Consolidated Statements of Revenue:

Inside Non-interest revenues:

•Processed income represents revenues earned from processed volumes, beforehand
reported in Low cost income, Different charges and commissions and Different income.

•Service charges and different income combines the remaining balances from Different charges
and commissions and Different income.

Inside Whole bills:

•Disaggregated Advertising and enterprise growth expense into Enterprise
growth expense and Advertising expense.

Prior interval quantities have been recast to adapt with present interval
presentation; there was no affect to Whole non-interest revenues or Whole
bills.

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Desk of Contents


Efficient July 1, 2022, we made modifications to our administration group
construction. Our monetary disclosures will replicate these organizational modifications
when our executives, together with our chief working resolution maker, start to
overview monetary data aligned to the brand new administration group. At that
time, we may even recast prior intervals to adapt to the brand new reportable
working segments. We anticipate our reportable working segments will likely be as
follows:

•U.S. Client Companies, together with our shopper card issuing enterprise and journey
and life-style companies within the U.S.;


•Worldwide Card Companies, together with our shopper card issuing enterprise and
journey and life-style companies outdoors the U.S., our industrial companies enterprise
outdoors the U.S. and our loyalty coalition companies;

•Industrial Companies, together with our industrial companies companies within the U.S.
and for world purchasers; and

•World Service provider and Community Companies, together with our service provider buying and card
community companies.

Discuss with the “Glossary of Chosen Terminology” for the definitions of sure
key phrases and associated data showing inside this Kind 10-Q.

Ahead-Wanting Statements and Non-GAAP Measures


Sure of the statements on this Kind 10-Q are forward-looking statements
inside the which means of the Non-public Securities Litigation Reform Act of 1995.
Discuss with the "Cautionary Be aware Concerning Ahead-Wanting Statements" part. We
put together our Consolidated Monetary Statements in accordance with accounting
rules usually accepted in the US of America (GAAP). Nevertheless,
sure data included inside this Kind 10-Q constitutes non-GAAP
monetary measures. Our calculations of non-GAAP monetary measures could differ
from the calculations of equally titled measures by different corporations.

Financial institution Holding Firm

American Categorical is a financial institution holding firm underneath the Financial institution Holding Firm Act of
1956 and The Board of Governors of the Federal Reserve System (the Federal
Reserve
) is our major federal regulator. As such, we’re topic to the
Federal Reserve’s rules, insurance policies and minimal capital requirements.

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Desk of Contents

Desk 1: Abstract of Monetary Efficiency

                                        As of or for the Three Months                                              As of or for the Six Months
                                                    Ended                                                                     Ended
                                                  June 30,                                                                  June 30,
(Hundreds of thousands, besides percentages,
per share quantities and the place                                                             Change                                                                    Change
indicated)                                     2022              2021                2022 vs. 2021                       2022              2021                2022 vs. 2021
Chosen Revenue Assertion Information
Whole revenues internet of curiosity
expense                                 $    13,395       $    10,243       $       3,152             31  %       $    25,130       $    19,307       $       5,823             30  %
Provisions for credit score losses                    410             (606)               1,016                 #               377           (1,281)               1,658                 #
Bills                                     10,442             7,909               2,533             32               19,498            14,655               4,843             33
Pretax revenue                                 2,543             2,940                (397)           (14)               5,255             5,933                (678)           (11)
Revenue tax provision                            579               660                 (81)           (12)               1,192             1,418                (226)           (16)
Internet revenue                                    1,964             2,280                (316)           (14)               4,063             4,515                (452)           (10)
Earnings per frequent share -
diluted (a)                             $      2.57       $      2.80       $       (0.23)            (8) %       $      5.30       $      5.54       $       (0.24)            (4)

Frequent Share Statistics (b)
Money dividends declared per
frequent share                            $      0.52       $      0.43       $        0.09             21  %       $      1.04       $      0.86       $        0.18             21
Common frequent shares
excellent:
Fundamental                                           752               801                 (49)            (6) %               755               802                 (47)            (6)
Diluted                                         753               802                 (49)            (6) %               756               803                 (47)            (6)

Chosen Metrics and Ratios
Community volumes (Billions)              $     394.8       $     316.1       $          79             25  %       $     745.1       $     585.4       $         160             27  %
Return on common fairness (c)               34.4   %          36.5   %                                                36.0   %          37.1   %
Internet curiosity revenue divided by
common Card Member loans                  10.2   %          10.0   %                                                10.2   %          10.1   %
Internet curiosity yield on common
Card Member loans (d)                      10.4   %          10.6   %                                                10.5   %          10.9   %
Efficient tax price                         22.8   %          22.4   %                                                22.7   %          23.9   %
Frequent Fairness Tier 1                       10.3   %          14.2   %                                                10.3   %          14.2   %

Chosen Stability Sheet Information
Money and money equivalents               $    26,277       $    30,796       $      (4,519)           (15) %       $    26,277       $    30,796       $      (4,519)           (15) %
Card Member receivables                      56,019            47,585               8,434             18               56,019            47,585               8,434             18
Card Member loans                            95,437            75,610              19,827             26               95,437            75,610              19,827             26
Buyer deposits                            96,411            84,905              11,506             14               96,411            84,905              11,506             14
Lengthy-term debt                          $    40,495       $    37,363       $       3,132              8  %       $    40,495       $    37,363       $       3,132              8  %

# Denotes a variance of one hundred pc or extra



(a)Represents internet revenue, much less (i) earnings allotted to collaborating share
awards of $15 million and $16 million for the three months ended June 30, 2022
and 2021, respectively, and $31 million for each the six months ended June 30,
2022 and 2021, and (ii) dividends on most well-liked shares of $15 million for each
the three months ended June 30, 2022 and 2021, and $29 million for each the six
months ended June 30, 2022 and 2021.

(b)Our frequent inventory trades principally on The New York Inventory Alternate underneath the
buying and selling image AXP.


(c)Return on common fairness (ROE) is calculated by dividing (i) annualized internet
revenue for the interval by (ii) common shareholders' fairness for the interval.
Efficient for the primary quarter of 2022, the interim interval calculation
methodology for ROE was modified to current the returns for the interval on an
annualized foundation quite than the previous twelve months. Prior interval quantities
have been recast to adapt with present interval presentation.

(d)Internet curiosity yield on common Card Member loans displays adjusted internet
curiosity revenue divided by common Card Member loans, computed on an annualized
foundation. Adjusted internet curiosity revenue and internet curiosity yield on common Card
Member loans are non-GAAP measures. Discuss with Desk 9 for a reconciliation to Internet
curiosity revenue divided by common Card Member loans.
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Desk of Contents

Enterprise Setting


Our sturdy outcomes for the second quarter replicate the energy of our world
buyer base and enterprise mannequin, in addition to the investments we made throughout the
pandemic whereas navigating a posh macroeconomic setting. We proceed to
spend money on our model, worth propositions, prospects, colleagues, know-how and
protection which is driving sustainable progress throughout our companies.

Our worldwide community volumes for the second quarter elevated 25 p.c
year-over-year (28 p.c on an FX-adjusted basis1) and billed enterprise, which
represented 86 p.c of our whole community volumes and was essentially the most vital
driver of our monetary outcomes, elevated 27 p.c. Items & Companies spend,
which accounts for almost all of our billed enterprise, grew by 15 p.c on a
year-over-year foundation. Journey & Leisure spend elevated 80 p.c
year-over-year and surpassed pre-pandemic ranges, primarily pushed by U.S.
shoppers and small and medium dimension companies in addition to a seamless restoration
outdoors of the U.S.

Whole revenues internet of curiosity expense elevated 31 p.c year-over-year (33
p.c on an FX-adjusted basis1) reflecting sturdy progress in all our income
strains. The expansion in community volumes drove will increase in each Low cost income,
our largest income line, and Processed income. Service charges and different income
elevated year-over-year, pushed partially by larger travel-related revenues. Internet
card charges grew 15 p.c year-over-year, as new card acquisitions elevated and
Card Member retention remained excessive, demonstrating the affect of investments we
have made in our premium worth propositions. Internet curiosity revenue grew by 30
p.c year-over-year, primarily pushed by progress in loans, partially offset by
larger curiosity expense on account of larger charges.

Card Member loans grew 26 p.c year-over-year, pushed by ongoing sturdy
progress in billed enterprise. Provisions for credit score losses elevated, primarily
pushed by reserve builds within the present interval, as in comparison with reserve releases
within the prior yr. The reserve builds within the present interval mirrored the sturdy
progress in loans and a barely worse macroeconomic outlook, partially offset by
improved portfolio high quality. Whereas delinquency and write-off charges remained close to
historic lows, most of those charges continued to modestly improve on a
sequential foundation in comparison with the prior quarter.

Card Member rewards, Enterprise growth and Card Member companies elevated
year-over-year primarily on account of community quantity progress and better utilization of
travel-related advantages. Card Member rewards expense progress was additionally pushed by a
bigger proportion of billed enterprise in classes that earn incremental rewards
similar to journey. Advertising expense elevated 13 p.c year-over-year, on account of
larger investments to drive progress momentum and speed up new card
acquisitions. Working bills elevated 28 p.c year-over-year primarily
on account of prior-year internet features on our Amex Ventures investments and better
compensation prices within the present quarter.

In the course of the quarter, we maintained our capital ratios inside our goal vary and
returned $1.0 billion of capital to our shareholders via share buybacks and
dividends. We plan to proceed to return to shareholders the surplus capital we
generate whereas supporting our steadiness sheet progress.

Our sturdy efficiency continues to provide us confidence in our enterprise mannequin,
though we acknowledge the uncertainty of the geopolitical and macroeconomic
setting. We stay dedicated to executing on our technique for constructing
sustainable long-term progress.


See "Sure Legislative, Regulatory and Different Developments" and "Threat Elements"
for data on sure issues that would have a cloth opposed impact on
our outcomes of operations and monetary situation.

1 The international forex adjusted data assumes a relentless alternate price
between the intervals being in contrast for functions of forex translation into
U.S. {dollars} (i.e., assumes the international alternate charges used to find out outcomes
for the present interval apply to the corresponding prior yr interval in opposition to
which such outcomes are being in contrast). FX-adjusted revenues is a non-GAAP
measure. We imagine the presentation of data on a international forex
adjusted foundation is useful to traders by making it simpler to check our
efficiency in a single interval to that of one other interval with out the variability
attributable to fluctuations in forex alternate charges.
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Desk of Contents

                             Outcomes of Operations

The discussions in each the "Consolidated Outcomes of Operations" and "Enterprise
Phase Outcomes of Operations" present commentary on the variances for the three
and 6 months ended June 30, 2022 in comparison with the identical intervals within the prior
yr, as offered within the accompanying tables.

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