Financial Community Meeting Ken Chenault Chairman and Chief - - PDF document

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Financial Community Meeting

Ken Chenault Chairman and Chief Executive Officer

February 7, 2007

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Agenda

2006 Company Performance Ken Chenault AXP Rewards Capabilities Membership Rewards Ralph Andretta Q&A Management

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Performance vs. Long Term Targets

18-20% Pre-Spin3 33-36%

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Post-Spin 12-15% 8% Target1 EPS ROE Net Revenue 31%

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25% 22%

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10% 2005 21% 12%2 8% 2003 22% 16%2 12% 2004 35%

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18%

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13% 2006

1. Targets are on average, over time. 2. Income from continuing operations. EPS growth on a net income basis was 14% in 2003, 17% in 2004, 11% in 2005 and 1% in 2006. 3. Calculated on a trailing 12-month basis using reported net income over average total shareholders’ equity (including discontinued operations). For 2005, trailing 12-months net income was $3.7B and average total shareholders’ equity (including discontinued operations) was $14.7B. 4. Revised from 28-30%, effective 11/7/06. 5. Pro forma ROE, is determined on a trailing 12-month basis using income from continuing operations (which excludes discontinued operations) of $3.2B over average month-end shareholders’ equity for the period from 9/30/05 through 12/31/05 of $10.2B. Source: 2003-2004 Revenue and EPS growth for AXP continuing operations based on data reported in Company’s 8-K reports dated 10/6/2005 and 4/5/06.

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Metric Trends

FY 2003 FY 2004 FY 2005

*Activities related to proprietary cards, including cash advances and certain insurance fees, and cards issued under network partnership agreements.

FY 2006 Billed Business* 13% 18% 16% 16%

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Worldwide Billed Business

7% 10% 4% 16% 13% 12% 11% 10%

AXP COF* JPM Citi Discover** 2006 vs. 2005 2005 vs. 2004

16%

*U.S. Card portfolio only. Not reported prior to Q4’04. ** Transaction volume, which includes cash advances. ***9/30/06 vs. 9/30/05. Credit and charge purchase volume, which excludes cash advances. Not reported prior to Q4’04. Source: Company reports.

13%

MasterCard***

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Metric Trends

FY 2003 FY 2004 FY 2005 FY 2006

• Mgd. Cardmember

Loans*** 14% 8% 15% 17% Billed Business* 13% 18% 16% 16% Cards In Force 6% 8% 9% 10%

• Avg. Basic Cardmember

Spending** 9% 13% 10% 7%

*Activities related to proprietary cards, including cash advances and certain insurance fees, and cards issued under network partnership agreements. **Computed from proprietary card activities only. *** Managed basis includes owned and securitized loans. On a GAAP basis, owned loan growth was 14% in 2003, 10% in 2004, 23% in 2005 and 31% in 2006.

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17% 7% 7% 6% 3% 8% AXP* COF** JPM Discover Citi BAC (w/MBNA)*** 17% 7% 7% 6% 3% 8% AXP* COF** JPM Discover Citi BAC (w/MBNA)***

Worldwide Managed Loans

*On a GAAP basis, owned loans increased 31%. **U.S. Card portfolio only. ***Credit Card segment, which represents U.S. and foreign consumer credit card only. Small business cards excluded. Source: Company reports.

12/31/06 vs. 12/31/05

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Metric Trends

FY 2003 Billed Business* 13% FY 2004 18% FY 2005 16% FY 2006

• Mgd. Cardmember

Loans*** 14% 8% 15% 17% 16% Cards In Force 6% 8% 9% 10% Credit Performance

• Avg. Basic Cardmember

Spending** 9% 13% 10% 7%

*Activities related to proprietary cards, including cash advances and certain insurance fees, and cards issued under network partnership agreements. **Computed from proprietary card activities only. *** Managed basis includes owned and securitized loans. On a GAAP basis, owned loan growth was 14% in 2003, 10% in 2004, 23% in 2005 and 31% in 2006.

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Relative Credit Quality

On a GAAP basis, the AXP USCS write-off rate on owned loans was 3.7%, 3.7%, 3.9%, 3.9%, 3.6%, 4.1%, 2.6%, 2.9%, 3.1%, and 3.5% in Q3’04-Q4’06, respectively. On a GAAP basis, the AXP USCS 30+ day past due rate

• n owned loans was 2.4%, 2.4%, 2.6%, 2.3%, 2.4%, 2.3%, 2.4%, 2.5%, 2.7%, and 2.7% in Q3’04-Q4’06, respectively.

AXP USCS Reported Industry

Note: Industry average calculations include COF (US), MS/Discover, BAC/MBNA, JPM and C (US). Both metrics are on a managed basis. Source: Company reports.

Write-off Rate 30+ Day Past Due Rate

2% 3% 4% 5% 6% 7% Q3'04 Q1'05 Q3'05 Q1'06 Q3'06 2% 3% 4% 5% Q3'04 Q1'05 Q3'05 Q1'06 Q3'06

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Metric Trends

FY 2003 Billed Business* 13% FY 2004 18% FY 2005 16% FY 2006

• Mgd. Cardmember

Loans*** 14% 8% 15% 17% 16% Cards In Force 6% 8% 9% 10% Credit Performance

• Avg. Basic Cardmember

Spending** 9% 13% 10% 7%

*Activities related to proprietary cards, including cash advances and certain insurance fees, and cards issued under network partnership agreements. **Computed from proprietary card activities only. *** Managed basis includes owned and securitized loans. On a GAAP basis, owned loan growth was 14% in 2003, 10% in 2004, 23% in 2005 and 31% in 2006.

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Metric Trends

FY 2003 Billed Business* 13% FY 2004 18% FY 2005 16% FY 2006

• Mgd. Cardmember

Loans*** 14% 8% 15% 17% 16% Cards In Force 6% 8% 9% 10% Credit Performance

• Avg. Basic Cardmember

Spending** 9% 13% 10% 7%

• Pvt. Bank Holdings

15% 16% 10% 11% Travel Sales 3% 25% 4% 6% Travelers Cheque and Prepaid Sales (13%) 4% (1%)

• *Activities related to proprietary cards, including cash advances and certain insurance fees, and cards issued under network partnership agreements.

**Computed from proprietary card activities only. *** Managed basis includes owned and securitized loans. On a GAAP basis, owned loan growth was 14% in 2003, 10% in 2004, 23% in 2005 and 31% in 2006.

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Expenses as a Percentage of Revenue

Note: Data for the periods from 1999-2001 derived from (i) total reported marketing & promotion expense for AXP less reported marketing & promotion expense for AEFA and (ii) reported rewards and cardmember services expense for AXP less rewards and cardmember services reported for AEFA. On a consolidated basis, reported marketing & promotion expense, was $1.4B, $1.5B and $1.3B, and rewards and cardmember services expense was $1.1B, $1.3B and $1.4B, for each year in 1999-2001. 2002-06 data derived from reported company data and internal company data.

Human Resources M&P, Rewards & CM Svces Provision Interest Other Opex

0% 5% 10% 15% 20% 25% 30%

1999 2000 2001 2002 2003 2004 2005 2006

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Expenses as a Percentage of Revenue

Note: Data for the periods from 1999-2001 derived from (i) total reported marketing & promotion expense for AXP less reported marketing & promotion expense for AEFA and (ii) reported rewards and cardmember services expense for AXP less rewards and cardmember services reported for AEFA. On a consolidated basis, reported marketing & promotion expense, was $1.4B, $1.5B and $1.3B, and rewards and cardmember services expense was $1.1B, $1.3B and $1.4B, for each year in 1999-2001. 2002-06 data derived from reported company data and internal company data.

Human Resources M&P, Rewards & CM Svces Provision Interest Other Opex

0% 5% 10% 15% 20% 25% 30%

1999 2000 2001 2002 2003 2004 2005 2006 $3.0B $6.5B

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2002 2003 2004 2005 2006 2002 2003 2004 2005 2006

AXP Spend Velocity

Note: Spend velocity is defined as annual billed business divided by average managed receivables. AXP spend velocity determined using average GAAP, owned, receivables was 6.8x, 7.1x, 7.6x, 8.0x, and 7.8x for 2002-2006, respectively. Source: Company data

5.0x 5.2x 5.6x 6.0x 6.1x

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2006 Spend Velocity

6.1x AXP JPM Citi Discover** COF* 6.1x AXP JPM Citi Discover** COF*

Note: Spend velocity is defined as annual billed business divided by average managed receivables. AXP spend velocity determined using average GAAP, owned, receivables was 7.8x for 2006. *U.S. Cards portfolio only. ** Based on net sales volume. Source: Company data and public filings.

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2006 Company Performance Ken Chenault AXP Rewards Capabilities Membership Rewards Ralph Andretta Q&A Management

Agenda

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High Average Spending Investments in Premium Value Premium Economics Attractive Customer Base

Spend-Centric Model

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Forecasted U.S. Consumer Spend Growth

Source: The Nilson Report.

The Spend-Centric View

2005: $6.8T 2010F: $8.8T Market: +5% Plastic: +12%

Plastic Electronic Cash & Checks

56% 29% 15% 40% 50% 10%

5 Year CAGR

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Forecasted U.S. Consumer Spend Growth

Source: The Nilson Report.

The Spend-Centric View

2005: $6.8T 2010F: $8.8T Market: +5% Plastic: +12%

Plastic Electronic Cash & Checks

56% 29% 15% 40% 50% 10%

5 Year CAGR

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The Spend-Centric View

% of Plastic Penetration

< 45% U.S. Consumer < 15% Global Middle Market < 15% U.S. Small Business < 25% Non-U.S. Consumer

Source: 2005/2006 internal data and The Nilson Report.

Plastic Opportunity by Segment

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Defining Rewards

Proprietary to card issuer Product or program-specific Tied to spending Leverage AXP’s closed loop ISSUER REWARDS

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Defining Rewards

ISSUER REWARDS

Membership Rewards

Broad-based Earn: Points for all spending Redeem: Broad array of program partners

Co-brand

Partner-specific Earn: Points/ rebates for all spending Redeem: Through partner

Specialized

Targeted, product- specific points programs Value-added, partner savings programs Privileged access

Cash- back/Rebate

Earn: Cash rebates for all

• r category-

specific spend 23

Defining Rewards

NETWORK REWARDS AXP Network-wide Drive network brand loyalty High value, engaging offers Leverage AXP’s closed loop Proprietary to card issuer Product or program-specific Tied to spending Leverage AXP’s closed loop ISSUER REWARDS

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Experiences

Going Once

Defining Rewards

NETWORK REWARDS

Savings

American Express Selects

Merchandise

My WishList

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Defining Rewards

NETWORK REWARDS AXP Network-wide Drive network brand loyalty High value, engaging offers Leverage AXP’s closed loop Proprietary to card issuer Product or program-specific Tied to spending Leverage AXP’s closed loop ISSUER REWARDS

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AXP Rewards History

1992:

Membership Miles Expands to International Markets

1995:

First Co-Branded Card (Hilton Optima)

1997:

First International Co-Brand Card (Cheung Kong, HK)

1998:

First Cash- back Card

1990 1995 2000 2005

1995:

Membership Miles Renamed Membership Rewards

1996: 1999: 2001: 2005: 2004:

Launch of OPEN Savings at Work My WishList & American Express Selects

1991:

Launch of Membership Miles Costco Cash Rebate Card Starwood Co-Brand Card OPEN Cash-back Card

2006:

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AXP Unique Rewards Advantages

CLOSED LOOP NETWORK

Consumers Merchants

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Global Scope

Breadth of AXP Rewards Programs

43 Membership Rewards Programs in 98 Markets 13 Airline Co-brands Globally

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Depth of AXP Rewards Programs

U.S. Consumer Rewards Products, 2006

80% of total cards in force 90% of billed business

Membership Rewards Co-brand Cash Back/ Rebate Specialized

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Depth of AXP Rewards Programs

OPEN (U.S. Small Business) Rewards Products, 2006

80% of total cards in force* 90% of billed business* >$140MM saved since inception of OPEN Savings program**

*Excludes OPEN Savings which is available to all OPEN cards. **OPEN Savings program launched in May 2004.

Co-brand Membership Rewards Cash Back/ Rebate Specialized

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Non-U.S. Consumer & Small Business Rewards Products, 2006

Depth of AXP Rewards Programs

70% of basic cards in force 90% of billed business

Specialized Membership Rewards Co-brand Cash Back/ Rebate

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Breadth of AXP Rewards Programs

Global Middle Market Rewards Products, 2006

Membership Rewards Co-brand Cash Back/ Rebate

30% of total cards in force* 60% of billed business*

Specialized

*Excludes Savings at Work which is available to all Middle Market cards.

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Global Consumer & Small Business

Rewards Costs

CAGR: 28% 2002 2003 2004 2005 2006

MR Co-brand Cash rebate

2002 2003 2004 2005 2006

MR Co-brand Cash rebate

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Rewards Drive Spending

Rewards vs. non-Rewards Spend per Card*, 2006

*Defined as Billed Business divided by total cards in force. **Per basic card in force.

4.0x Global Middle Market 5.0x OPEN 3.0x Non-U.S. Consumer** 4.0x U.S. Consumer

35 0% 100% U.S. Non-Co-brand Credit Card Lending* U.S. Co-brand Lending** 0% 100% U.S. Non-Co-brand Credit Card Lending* U.S. Co-brand Lending**

Rewards Improve Credit Performance

Net Coincidental Write-off Rate, 2006 (Indexed)

*Excludes Lending on Charge and Co-brand activity. **Reflects Starwood, Hilton, Delta, Costco and JetBlue.

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Rewards Drive Cardmember Loyalty

MR vs. Non-MR Voluntary Attrition*, 2006

*Excludes all new basic cards acquired in 2005 and 2006.

U.S. Consumer Charge OPEN Charge

Non-MR MR Non-MR MR Non-MR MR Non-MR MR

15% 48%

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AXP as a Leader in the Rewards Space

Membership Rewards: Best Credit Card Rewards Program Global Traveler Magazine, January 2007 Blue Cash Card: Best Cash Rebate Card Kiplinger’s, November 2006 Platinum Business Credit Card & Blue Cash for Business: Top 10 Credit Cards for Small Business Forbes.com, September 2006 Starwood Card: Best Travel Rewards Cards Fortune, March 2006 Green Card: Best Rewards Card Smart Money, August 2005

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Spend-Centric Model

High Average Spending Investments in Premium Value Premium Economics Attractive Customer Base