Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

Business Introduction

We are a globally integrated payments company, providing customers with access to products, insights and experiences that enrich lives and build business success. Our principal products and services are credit and charge card products, along with travel and lifestyle related services, offered to consumers and businesses around the world. Our range of products and services includes:

Credit card, charge card, banking and other payment and financing products
Merchant acquisition and processing, servicing and settlement, and point-of-sale marketing and information products and services for merchants
Network services
Other fee services, including fraud prevention services and the design and operation of customer loyalty programs
Expense management products and services
Travel and lifestyle services

Our various products and services are offered globally to diverse customer groups, including consumers, small businesses, mid-sized companies and large corporations. These products and services are offered through various channels, including mobile and online applications, affiliate marketing, customer referral programs, third-party service providers and business partners, direct mail, telephone, in-house sales teams, and direct response advertising.

We compete in the global payments industry with card networks, issuers and acquirers, paper-based transactions (e.g., cash and checks), bank transfer models (e.g., wire transfers and Automated Clearing House (ACH)), as well as evolving and growing alternative payment and financing providers. As the payments industry continues to evolve, we face increasing competition from non-traditional players that leverage new technologies, business models and customer relationships to create payment or financing solutions.

Refer to the “Glossary of Selected Terminology” for the definitions of certain key terms and related information appearing within this Form 10-Q.

Forward-Looking Statements and Non-GAAP Measures

Certain of the statements in this Form 10-Q are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Refer to the “Cautionary Note Regarding Forward-Looking Statements” section. We prepare our Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (GAAP). However, certain information included within this Form 10-Q constitutes non-GAAP financial measures. Our calculations of non-GAAP financial measures may differ from the calculations of similarly titled measures by other companies.

Bank Holding Company

American Express is a bank holding company under the Bank Holding Company Act of 1956 and The Board of Governors of the Federal Reserve System (the Federal Reserve) is our primary federal regulator. As such, we are subject to the Federal Reserve’s regulations, policies and minimum capital standards.

Table 1: Summary of Financial Performance


	As of or for the Three Months Ended September 30,						Change 2023 vs. 2022						As of or for the Nine Months Ended September 30,						Change 2023 vs. 2022
(Millions, except percentages, per share amounts and where indicated)	2023			2022					2023			2022
Selected Income Statement Data
Total revenues net of interest expense	$	15,381		$	13,556		$	1,825		13	%		$	44,716		$	38,686		$	6,030	16	%
Provisions for credit losses	1,233			778			455			58			3,486			1,155			2,331		#
Total expenses	11,048			10,319			729			7			33,229			29,817			3,412		11
Pretax income	3,100			2,459			641			26			8,001			7,714			287		4
Income tax provision	649			580			69			12			1,560			1,772			(212)		(12)
Net income	2,451			1,879			572			30			6,441			5,942			499		8
Earnings per common share — diluted (a)	$	3.30		$	2.47		$	0.83		34	%		$	8.59		$	7.77		$	0.82	11	%

Common Share Statistics (b)
Cash dividends declared per common share	$	0.60		$	0.52		$	0.08		15	%		$	1.80		$	1.56		$	0.24	15	%
Average common shares outstanding:
Basic	732			748			(16)			(2)	%		738			752			(14)		(2)	%
Diluted	733			749			(16)			(2)	%		739			753			(14)		(2)	%

Selected Metrics and Ratios
Network volumes (Billions)	$	420.2		$	394.4		$	26		7	%		$	1,245.7		$	1,139.5		$	106	9	%
Return on average equity (c)	36.3		%	31.9		%							32.8		%	34.5		%
Net interest income divided by average Card Member loans	11.7		%	10.5		%							11.3		%	10.3		%
Net interest yield on average Card Member loans (d)	11.7		%	10.8		%							11.4		%	10.6		%
Effective tax rate	20.9		%	23.6		%							19.5		%	23.0		%
Common Equity Tier 1	10.7		%	10.6		%							10.7		%	10.6		%

Selected Balance Sheet Data
Cash and cash equivalents	$	43,908		$	31,182		$	12,726		41	%		$	43,908		$	31,182		$	12,726	41	%
Card Member receivables	58,825			55,275			3,550			6			58,825			55,275			3,550		6
Card Member loans	117,978			99,038			18,940			19			117,978			99,038			18,940		19
Customer deposits	124,439			103,463			20,976			20			124,439			103,463			20,976		20
Long-term debt	$	46,447		$	42,393		$	4,054		10	%		$	46,447		$	42,393		$	4,054	10	%
# Denotes a variance of 100 percent or more

(a)Represents net income, less (i) earnings allocated to participating share awards of $19 million and $14 million for the three months ended September 30, 2023 and 2022, respectively, and $50 million and $45 million for the nine months ended September 30, 2023 and 2022, respectively, and (ii) dividends on preferred shares of $14 million for both the three months ended September 30, 2023 and 2022, and $43 million for both the nine months ended September 30, 2023 and 2022.

(b)Our common stock trades principally on The New York Stock Exchange under the trading symbol AXP.

(c)Return on average equity (ROE) is calculated by dividing (i) annualized net income for the period by (ii) average shareholders’ equity for the period.

(d)Net interest yield on average Card Member loans reflects adjusted net interest income divided by average Card Member loans, computed on an annualized basis. Adjusted net interest income and net interest yield on average Card Member loans are non-GAAP measures. Refer to Table 8 for a reconciliation to Net interest income divided by average Card Member loans.

Business Environment

Our results for the third quarter reflect the continued momentum we have built in our business. Card Member spending, new account acquisitions and credit performance demonstrate the strength of our differentiated business model, which drove net income of $2.5 billion, or $3.30 per share, for the third quarter, compared with net income of $1.9 billion, or $2.47 per share, a year ago.

Worldwide network volumes for the third quarter increased 7 percent compared to the prior year. Billed business, which represented 87 percent of our total network volumes and is the most significant driver of our financial results, increased 8 percent year-over-year. Goods & Services (G&S) spend increased 6 percent year-over-year, and Travel & Entertainment (T&E) spend grew by 13 percent, reflecting continued demand for travel and dining experiences across geographies and customer types. U.S. Consumer Services billed business grew by 9 percent year-over-year, with the largest portion of this growth coming from our Millennial and Gen-Z Card Members. International Card Services billed business grew by 18 percent year-over-year (15 percent on an FX-adjusted basis1), driven by continued growth in spend across both consumer and commercial customers outside the U.S. Billed business in our Commercial Services segment grew by 1 percent on a year-over-year basis, reflecting continued slow growth from U.S. small and mid-sized enterprise (SME) Card Members and flat year-over-year billings for U.S. large and global corporate clients.

Total revenues net of interest expense increased 13 percent year-over-year. The growth in billed business drove a 7 percent increase in Discount revenue, our largest revenue line. Net card fees increased 20 percent year-over-year, reflecting the high levels of new card acquisition and Card Member retention over the past several quarters, as well as our cycle of product refreshes. Net interest income increased 34 percent versus the prior year, primarily reflecting an increase in the interest-bearing portion of our total loans and Card Member receivables.

Total loans and Card Member receivables increased 15 percent year-over-year, as our Card Members continue to spend and rebuild balances. Provisions for credit losses increased, primarily driven by higher net write-offs, as write-off rates were near historic lows in the prior-year period, and reflected the strong growth in total loans and Card Member receivables, partially offset by a lower net reserve build in the current period. Net write-off and delinquency rates remained best-in-class, supported by our premium global customer base and our strong focus on risk management.

Card Member rewards, Card Member services and Business development expenses are generally correlated to volumes or are variable based on usage and increased year-over-year primarily due to network volume growth and higher usage of travel-related benefits. Marketing expense decreased 15 percent for the three month period, due to management decisions impacting the timing of spend on customer acquisition and engagement through the full year. We continue to invest in acquiring high spending, high quality Card Members while driving efficiencies in marketing spend. Operating expenses increased 10 percent year-over-year, primarily driven by higher compensation expense and technology costs to support business growth. We remain focused on driving operating expense efficiencies, while continuing to invest in our growth strategy.

During the third quarter, we maintained our capital ratios within our current target range of 10 to 11 percent and returned $1.7 billion of capital to our shareholders through share repurchases and common stock dividends. We plan to continue to return to shareholders the excess capital we generate while managing our CET1 capital ratio within our target range and supporting our balance sheet growth. Our robust capital, funding and liquidity positions provide us with significant flexibility to maintain a strong balance sheet.

While we recognize the uncertainty of the geopolitical and macroeconomic environment, our performance continues to give us confidence in our business model, and we remain committed to executing on our strategy to deliver sustainable and profitable long-term growth.

See “Certain Legislative, Regulatory and Other Developments” and “Risk Factors” for information on certain matters that could have a material adverse effect on our results of operations and financial condition.

1The foreign currency adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency conversion into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the current period apply to the corresponding prior year period against which such results are being compared). FX-adjusted revenues is a non-GAAP measure. We believe the presentation of information on a foreign currency adjusted basis is helpful to investors by making it easier to compare our performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates.

Results of Operations

The discussions in both “Consolidated Results of Operations” and “Business Segment Results of Operations” provide commentary on the variances for the three and nine months ended September 30, 2023 compared to the same periods in the prior year, as presented in the accompanying tables.

Consolidated Results of Operations

Table 2: Total Revenues Net of Interest Expense Summary


	Three Months Ended September 30,				Change 2023 vs. 2022						Nine Months Ended September 30,				Change 2023 vs. 2022
(Millions, except percentages)	2023		2022				2023			2022
Discount revenue	$	8,408	$	7,848	$	560		7	%		$	24,836	$	22,556	$	2,280	10	%
Net card fees	1,846		1,541		305			20			5,348		4,445		903		20
Service fees and other revenue	1,261		1,169		92			8			3,711		3,340		371		11
Processed revenue	424		420		4			1			1,291		1,208		83		7
Total non-interest revenues	11,939		10,978		961			9			35,186		31,549		3,637		12
Total interest income	5,240		3,374		1,866			55			14,431		8,693		5,738		66
Total interest expense	1,798		796		1,002			#			4,901		1,556		3,345		#
Net interest income	3,442		2,578		864			34			9,530		7,137		2,393		34
Total revenues net of interest expense	$	15,381	$	13,556	$	1,825		13	%		$	44,716	$	38,686	$	6,030	16	%
# Denotes a variance of 100 percent or more

Total Revenues Net of Interest Expense

Discount revenue increased for both the three and nine month periods, primarily driven by increases in billed business. See Tables 5 and 6 for more details on billed business performance.

Net card fees increased for both the three and nine month periods, primarily driven by growth in our premium card portfolios.

Service fees and other revenue increased for both the three and nine month periods, primarily due to foreign exchange related revenues associated with Card Member cross-currency spending and growth in delinquency fees.

Processed revenue increased for both the three and nine month periods, primarily driven by increases in network partner volumes, partially offset for the three month period by a decrease in volumes associated with the decommission of one of our alternative payment solutions. See Tables 5 and 6 for more details on processed volume performance.

Interest income increased for both the three and nine month periods, primarily driven by higher interest rates and growth in revolving loan balances.

Interest expense increased for both the three and nine month periods, primarily driven by higher interest rates paid on customer deposits.

Table 3: Provisions for Credit Losses Summary


	Three Months Ended September 30,				Change 2023 vs. 2022						Nine Months Ended September 30,				Change 2023 vs. 2022
(Millions, except percentages)	2023		2022				2023			2022
Card Member loans
Net write-offs	$	639	$	259	$	380		# %			$	1,722	$	721	$	1,001	# %
Reserve build (release) (a)	343		337		6			2			969		36		933		#
Total	982		596		386			65			2,691		757		1,934		#
Card Member receivables
Net write-offs	241		122		119			98			714		284		430		#
Reserve (release) build (a)	(35)		43		(78)			#			(56)		99		(155)		#
Total	206		165		41			25			658		383		275		72
Other
Net write-offs - Other loans (b)	29		6		23			#			73		12		61		#
Net write-offs - Other receivables (c)	3		4		(1)			(25)			10		13		(3)		(23)
Reserve build (release) - Other loans (a)(b)	10		8		2			25			49		(6)		55		#
Reserve build (release) - Other receivables (a)(c)	3		(1)		4			#			5		(4)		9		#
Total	45		17		28			#			137		15		122		#
Total provisions for credit losses	$	1,233	$	778	$	455		58	%		$	3,486	$	1,155	$	2,331	# %
# Denotes a variance of 100 percent or more

(a)Refer to the “Glossary of Selected Terminology” for a definition of reserve build (release).

(b)Relates to Other loans of $6.6 billion and $5.4 billion, less reserves of $108 million and $59 million, as of September 30, 2023 and December 31, 2022, respectively, and $4.8 billion and $2.9 billion, less reserves of $46 million and $52 million, as of September 30, 2022 and December 31, 2021, respectively.

(c)Relates to Other receivables included in Other assets on the Consolidated Balance Sheets of $4.4 billion and $3.1 billion, less reserves of $27 million and $22 million, as of September 30, 2023 and December 31, 2022, respectively, and $3.0 billion and $2.7 billion, less reserves of $22 million and $25 million, as of September 30, 2022 and December 31, 2021, respectively.

Provisions for Credit Losses

Card Member loans provision for credit losses increased for both the three and nine month periods, primarily due to higher net write-offs and higher reserve builds in the current periods. The reserve builds in the current periods were primarily driven by increases in loans outstanding and higher delinquencies. The reserve builds in the prior periods were primarily driven by increases in loans outstanding and deterioration in the macroeconomic outlook at that time, partially offset, for the prior nine month period, by a reduction in COVID-19 pandemic-driven reserves.

Card Member receivables provision for credit losses increased for both the three and nine month periods, primarily due to higher net write-offs, partially offset by reserve releases in the current periods versus reserve builds in the prior periods. The reserve releases in the current periods were primarily driven by lower delinquencies. The reserve builds in the prior periods were primarily driven by higher delinquencies and, for the prior nine month period, an increase in receivables outstanding.

Other provision for credit losses increased for both the three and nine month periods, primarily due to higher net write-offs and reserve builds in the current periods. The reserve builds in the current periods were primarily driven by increases in other loans outstanding.

Table 4: Expenses Summary


	Three Months Ended September 30,				Change 2023 vs. 2022						Nine Months Ended September 30,				Change 2023 vs. 2022
(Millions, except percentages)	2023		2022				2023			2022
Card Member rewards	$	3,794	$	3,571	$	223		6	%		$	11,516	$	10,273	$	1,243	12	%
Business development	1,393		1,194		199			17			4,174		3,641		533		15
Card Member services	973		774		199			26			2,905		2,078		827		40
Marketing	1,236		1,458		(222)			(15)			3,985		4,184		(199)		(5)
Salaries and employee benefits	2,047		1,748		299			17			5,936		5,218		718		14
Other, net	1,605		1,574		31			2			4,713		4,423		290		7
Total expenses	$	11,048	$	10,319	$	729		7	%		$	33,229	$	29,817	$	3,412	11	%

Expenses

Card Member rewards expense increased for both the three and nine month periods, primarily driven by increases in Membership Rewards and cash back rewards expenses, collectively, of $50 million and $691 million, and cobrand rewards expense of $174 million and $552 million for the three and nine month periods, respectively, all of which were primarily driven by higher billed business, partially offset in the three month period by the impact of changes in expected redemption behavior associated with certain products.

The Membership Rewards Ultimate Redemption Rate (URR) for current program participants was 96 percent (rounded down) at both September 30, 2023 and 2022.

Business development expense increased for both the three and nine month periods, primarily due to increased partner payments driven by higher contractual rates and network volumes.

Card Member services expense increased for both the three and nine month periods, primarily due to higher usage of travel-related benefits.

Marketing expense decreased for both the three and nine month periods, reflecting lower levels of spending on customer acquisitions and other growth initiatives.

Salaries and employee benefits expense increased for both the three and nine month periods, primarily driven by higher compensation costs reflecting an increase in our colleague base to support business growth, with the three month period also driven by higher incentive compensation expenses.

Other expenses increased for both the three and nine month periods, primarily driven by higher technology costs and, for the nine month period, higher net losses on Amex Ventures investments.

Income Taxes

The effective tax rate was 20.9 percent and 23.6 percent for the three months ended September 30, 2023 and 2022, respectively, and 19.5 percent and 23.0 percent for the nine months ended September 30, 2023 and 2022, respectively. The lower effective tax rates for the three and nine month periods primarily reflected discrete tax benefits in the current periods and changes in the geographic mix of income.

Table 5: Selected Card-Related Statistical Information


	As of or for the Three Months Ended September 30,				Change 2023 vs. 2022			As of or for the Nine Months Ended September 30,					Change 2023 vs. 2022
	2023		2022				2023			2022
Network volumes (billions)	$	420.2	$	394.4	7	%		$	1,245.7		$	1,139.5	9	%
Billed business	$	366.2	$	339.0	8			$	1,079.8		$	980.9	10
Processed volumes	$	54.0	$	55.4	(3)			$	165.9		$	158.6	5
Cards-in-force (millions)	138.2		131.4		5			138.2			131.4		5
Proprietary cards-in-force	79.6		75.6		5			79.6			75.6		5
Basic cards-in-force (millions)	115.9		109.9		5			115.9			109.9		5
Proprietary basic cards-in-force	61.2		58.2		5			61.2			58.2		5
Average proprietary basic Card Member spending (dollars)	$	6,000	$	5,886	2			$	17,879		$	17,399	3
Average fee per card (dollars)(a)	$	93	$	82	13	%		$	91		$	81	12	%
Discount revenue as a % of Billed business	2.30%		2.32%					2.30%			2.30%

(a)Average fee per card is computed on an annualized basis based on proprietary Net card fees divided by average proprietary total cards-in-force.

Table 6: Network Volumes-Related Statistical Information


	Three Months Ended September 30, 2023				Nine Months Ended September 30, 2023
	Year over Year Percentage Increase (Decrease)		Year over Year Percentage Increase (Decrease) Assuming No Changes in FX Rates (a)		Year over Year Percentage Increase (Decrease)		Year over Year Percentage Increase (Decrease) Assuming No Changes in FX Rates (a)
Network volumes	7	%	6	%	9	%	10	%
Total billed business	8		7		10		10
U.S. Consumer Services	9				12
Commercial Services	1		1		4		4
International Card Services	18		15		18		20
Processed volumes	(3)		(1)		5		9

Merchant industry billed business metrics
G&S spend (73% and 72% of billed business for the three and nine months ended September 30, 2023, respectively)	6		6		7		7
T&E spend (27% and 28% of billed business for the three and nine months ended September 30, 2023, respectively)	13		13		20		21
Airline spend (6% and 7% of billed business for the three and nine months ended September 30, 2023, respectively)	13	%	12	%	25	%	25	%

(a)The foreign currency adjusted information assumes a constant exchange rate between the periods being compared for purposes of conversion into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the current period apply to the corresponding prior year period against which such results are being compared).

Table 7: Selected Credit-Related Statistical Information


	As of or for the Three Months Ended September 30,						Change 2023 vs. 2022			As of or for the Nine Months Ended September 30,							Change 2023 vs. 2022
(Millions, except percentages and where indicated)	2023			2022					2023				2022
Card Member loans and receivables:
Net write-off rate — principal, interest and fees (a)	2.0		%	1.0		%				1.9		%		0.9		%
Net write-off rate — principal only - consumer and small business (a)(b)	1.8		%	0.9		%				1.7		%		0.8		%
30+ days past due as a % of total - consumer and small business (c)	1.2		%	0.9		%				1.2		%		0.9		%

Card Member loans:
Card Member loans (billions)	$	118.0		$	99.0		19	%		$	118.0			$	99.0		19	%
Credit loss reserves:
Beginning balance	$	4,390		$	2,997		46			$	3,747			$	3,305		13
Provisions - principal, interest and fees	982			596			65			2,691				757			#
Net write-offs — principal less recoveries	(525)			(203)			#			(1,412)				(560)			#
Net write-offs — interest and fees less recoveries	(114)			(56)			#			(310)				(161)			93
Other (d)	(12)			(15)			20			5				(22)			#
Ending balance	$	4,721		$	3,319		42			$	4,721			$	3,319		42
% of loans	4.0		%	3.4		%				4.0		%		3.4		%
% of past due	316		%	393		%				316		%		393		%
Average loans (billions)	$	116.6		$	97.7		19			$	112.4			$	92.3		22
Net write-off rate — principal, interest and fees (a)	2.2		%	1.1		%				2.0		%		1.0		%
Net write-off rate — principal only (a)	1.8		%	0.8		%				1.7		%		0.8		%
30+ days past due as a % of total	1.3		%	0.9		%				1.3		%		0.9		%

Card Member receivables:
Card Member receivables (billions)	$	58.8		$	55.3		6			$	58.8			$	55.3		6
Credit loss reserves:
Beginning balance	$	210		$	119		76			$	229			$	64		#
Provisions - principal and fees	206			165			25			658				383			72
Net write-offs — principal and fees less recoveries	(241)			(122)			98			(714)				(284)			#
Other (d)	(1)			(3)			67			1				(4)			#
Ending balance	$	174		$	159		9	%		$	174			$	159		9	%
% of receivables	0.3		%	0.3		%				0.3		%		0.3		%
Net write-off rate — principal and fees (a)	1.7		%	0.9		%				1.7		%		0.7		%
Net write-off rate — principal only - consumer and small business (a)(b)	1.9		%	1.0		%				1.9		%		0.8		%
30+ days past due as a % of total - consumer and small business (c)	1.1		%	1.1		%				1.1		%		1.1		%
# Denotes a variance of 100 percent or more

(a)We present a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, as our practice is to include uncollectible interest and/or fees as part of our total provision for credit losses, a net write-off rate including principal, interest and/or fees is also presented.

(b)A net write-off rate based on principal losses only is not available for corporate receivables due to system constraints.

(c)For corporate receivables, delinquency data is tracked based on days past billing status rather than days past due. Refer to Table 12 for 90+ days past billing metrics for corporate receivables.

(d)Other includes foreign currency translation adjustments.

Table 8: Net Interest Yield on Average Card Member Loans


	Three Months Ended September 30,						Nine Months Ended September 30,
(Millions, except percentages and where indicated)	2023			2022			2023			2022
Net interest income	$	3,442		$	2,578		$	9,530		$	7,137
Exclude:
Interest expense not attributable to our Card Member loan portfolio (a)	770			374			2,122			743
Interest income not attributable to our Card Member loan portfolio (b)	(767)			(300)			(2,072)			(572)
Adjusted net interest income (c)	$	3,445		$	2,652		$	9,580		$	7,308
Average Card Member loans (billions)	$	116.6		$	97.7		$	112.4		$	92.3
Net interest income divided by average Card Member loans (c)	11.7		%	10.5		%	11.3		%	10.3		%
Net interest yield on average Card Member loans (c)	11.7		%	10.8		%	11.4		%	10.6		%

(a)Primarily represents interest expense attributable to maintaining our corporate liquidity pool and funding Card Member receivables.

(b)Primarily represents interest income attributable to Other loans, interest-bearing deposits and the fixed income investment portfolios.

(c)Adjusted net interest income and net interest yield on average Card Member loans are non-GAAP measures. Refer to “Glossary of Selected Terminology” for the definitions of these terms. We believe adjusted net interest income is useful to investors because it represents the interest expense and interest income attributable to our Card Member loan portfolio and is a component of net interest yield on average Card Member loans, which provides a measure of profitability of our Card Member loan portfolio. Net interest yield on average Card Member loans reflects adjusted net interest income divided by average Card Member loans, computed on an annualized basis. Net interest income divided by average Card Member loans, computed on an annualized basis, a GAAP measure, includes elements of total interest income and total interest expense that are not attributable to the Card Member loan portfolio, and thus is not representative of net interest yield on average Card Member loans.

Business Segment Results of Operations

Effective as of the second quarter of 2023, our U.S. travel and lifestyle services (TLS) results, which were previously reported within the U.S. Consumer Services (USCS) segment, are now reported within both the USCS and Commercial Services (CS) segments, allocated based on customer usage.

U.S. Consumer Services

Table 9: USCS Selected Income Statement Data


	Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change
(Millions, except percentages)	2023		2022		2023 vs. 2022				2023		2022		2023 vs. 2022
Revenues
Non-interest revenues	$	4,680	$	4,233	$	447	11	%	$	13,682	$	12,024	$	1,658	14	%
Interest income	3,228		2,251		977		43		8,937		5,880		3,057		52
Interest expense	700		274		426		#		1,898		513		1,385		#
Net interest income	2,528		1,977		551		28		7,039		5,367		1,672		31
Total revenues net of interest expense	7,208		6,210		998		16		20,721		17,391		3,330		19
Provisions for credit losses	752		403		349		87		1,995		479		1,516		#
Total revenues net of interest expense after provisions for credit losses	6,456		5,807		649		11		18,726		16,912		1,814		11
Total expenses	4,872		4,498		374		8		14,762		12,798		1,964		15
Pretax segment income	$	1,584	$	1,309	$	275	21	%	$	3,964	$	4,114	$	(150)	(4)	%
# Denotes a variance of 100 percent or more

U.S. Consumer Services issues a wide range of proprietary consumer cards and provides services to U.S. consumers, including travel and lifestyle services as well as banking and non-card financing products.

TOTAL REVENUES NET OF INTEREST EXPENSE

Non-interest revenues increased for both the three and nine month periods, primarily driven by higher Discount revenue and Net card fees.

Discount revenue increased 9 percent and 12 percent for the three and nine month periods, respectively, primarily driven by increases in U.S. consumer billed business. See Tables 5, 6 and 10 for more details on billed business performance.

Net card fees increased 20 percent and 23 percent for the three and nine month periods, respectively, primarily driven by growth in our premium card portfolios.

Service fees and other revenue was flat for the three month period and increased 6 percent for the nine month period. The increase in the nine month period was primarily driven by higher travel commissions and fees from our consumer travel business, as well as growth in delinquency fees, partially offset by the change in the allocation of TLS revenues described above, which wholly offset the increase in revenues for the three month period.

Interest income increased for both the three and nine month periods, primarily driven by higher interest rates and growth in revolving loan balances.

Interest expense increased for both the three and nine month periods, primarily driven by a higher cost of funds.

PROVISIONS FOR CREDIT LOSSES

Card Member loans provision for credit losses increased for both the three and nine month periods. The increase in the three month period was primarily due to higher net write-offs and a higher reserve build in the current period. The increase in the nine month period was primarily due to a reserve build in the current period versus a reserve release in the prior period and higher net write-offs. The reserve builds in the current periods were primarily driven by increases in loans outstanding and higher delinquencies. The reserve build in the prior three month period was driven by an increase in loans outstanding and deterioration in the macroeconomic outlook at that time. The reserve release in the prior nine month period was primarily driven by reduction in COVID-19 pandemic-driven reserves, partially offset by an increase in loans outstanding and deterioration in the macroeconomic outlook at that time.

Card Member receivables provision for credit losses increased for both the three and nine month periods. The increase in the three month period was primarily due to higher net write-offs, partially offset by a lower reserve build in the current period. The increase in the nine month period was primarily due to higher net write-offs, partially offset by a reserve release in the current period versus a reserve build in the prior period. The reserve build in the current three month period was primarily driven by higher delinquencies. The reserve release in the current nine month period was primarily driven by lower delinquencies. The reserve builds in the prior periods were primarily driven by higher delinquencies, partially offset in the prior three month period by a decrease in receivables outstanding.

EXPENSES

Total expenses increased for both the three and nine month periods. The increase in the three month period was primarily driven by higher Business development expense, as well as an increase in allocated service costs. The increase in the nine month period was primarily driven by higher Card Member rewards expense, an increase in allocated service costs and higher Card Member services expense.

Card Member rewards expense increased for both the three and nine month periods, primarily driven by higher billed business, partially offset by the impact of changes in expected redemption behavior associated with certain products.

Business development expense increased for both the three and nine month periods, primarily due to increased partner payments driven by higher contractual rates and increases in billed business.

Card Member services expense increased for both the three and nine month periods, primarily driven by higher usage of travel-related benefits.

Marketing expense decreased for both the three and nine month periods, reflecting lower levels of spending on customer acquisitions and other growth initiatives.

Salaries and employee benefits and other expenses increased for both the three and nine month periods, primarily due to an increase in allocated service costs.

Table 10: USCS Selected Statistical Information


	As of or for the Three Months Ended September 30,						Change 2023 vs. 2022			As of or for the Nine Months Ended September 30,							Change 2023 vs. 2022
(Millions, except percentages and where indicated)	2023			2022					2023				2022
Billed business (billions)	$	153.5		$	140.3		9	%		$	451.1			$	404.1		12	%
Proprietary cards-in-force	43.4			41.2			5			43.4				41.2			5
Proprietary basic cards-in-force	30.4			28.9			5			30.4				28.9			5
Average proprietary basic Card Member spending (dollars)	$	5,062		$	4,908		3			$	15,072			$	14,387		5
Total segment assets (billions)	$	98.2		$	84.8		16			$	98.2			$	84.8		16
Card Member loans:
Total loans (billions)	$	77.7		$	66.3		17			$	77.7			$	66.3		17
Average loans (billions)	$	77.1		$	65.3		18			$	74.4			$	61.7		21
Net write-off rate — principal, interest and fees (a)	2.2		%	1.1		%				2.0		%		1.1		%
Net write-off rate — principal only (a)	1.7		%	0.8		%				1.6		%		0.8		%
30+ days past due as a % of total	1.3		%	0.9		%				1.3		%		0.9		%
Calculation of Net Interest Yield on Average Card Member Loans:
Net interest income	$	2,528		$	1,977					$	7,039			$	5,366
Exclude:
Interest expense not attributable to our Card Member loan portfolio (b)	41			34						121				95
Interest income not attributable to our Card Member loan portfolio (c)	(101)			(61)						(274)				(155)
Adjusted net interest income (d)	$	2,468		$	1,950					$	6,886			$	5,306
Average Card Member loans (billions)	$	77.1		$	65.3					$	74.4			$	61.7
Net interest income divided by average Card Member loans (d)	13.0		%	12.0		%				12.6		%		11.6		%
Net interest yield on average Card Member loans (d)	12.7		%	11.9		%				12.4		%		11.5		%
Card Member receivables:
Total receivables (billions)	$	13.2		$	13.2		—	%		$	13.2			$	13.2		—	%
Net write-off rate — principal and fees (a)	1.3		%	0.6		%				1.3		%		0.5		%
Net write-off rate — principal only (a)	1.2		%	0.6		%				1.2		%		0.4		%
30+ days past due as a % of total	0.9		%	0.9		%				0.9		%		0.9		%

(a)Refer to Table 7 footnote (a).

(b)Refer to Table 8 footnote (a).

(c)Refer to Table 8 footnote (b).

(d)Refer to Table 8 footnote (c).

Commercial Services

Table 11: CS Selected Income Statement Data


	Three Months Ended September 30,				Change 2023 vs. 2022						Nine Months Ended September 30,				Change 2023 vs. 2022
(Millions, except percentages)	2023		2022				2023			2022
Revenues
Non-interest revenues	$	3,257	$	3,145	$	112		4	%		$	9,665	$	8,986	$	679	8	%
Interest income	881		552		329			60			2,379		1,435		944		66
Interest expense	391		201		190			95			1,076		409		667		#
Net interest income	490		351		139			40			1,303		1,026		277		27
Total revenues net of interest expense	3,747		3,496		251			7			10,968		10,012		956		10
Provisions for credit losses	323		196		127			65			945		294		651		#
Total revenues net of interest expense after provisions for credit losses	3,424		3,300		124			4			10,023		9,718		305		3
Total expenses	2,572		2,526		46			2			7,828		7,385		443		6
Pretax segment income	$	852	$	774	$	78		10	%		$	2,195	$	2,333	$	(138)	(6)	%
# Denotes a variance of 100 percent or more

Commercial Services issues a wide range of proprietary corporate and small business cards and provides services to U.S. businesses, including payment and expense management, banking and non-card financing products. CS also issues proprietary corporate cards and provides services to select global corporate clients.

TOTAL REVENUES NET OF INTEREST EXPENSE

Non-interest revenues increased for both the three and nine month periods. The increase in the three month period was primarily driven by higher Service fees and other revenue, as well as higher Net Card fees. The increase in the nine month period was primarily driven by higher Discount revenue and Service fees and other revenue.

Discount revenue increased 1 percent and 5 percent for the three and nine month periods, respectively, primarily driven by increases in commercial billed business. See Tables 5, 6 and 12 for more details on billed business performance.

Net card fees increased 15 percent and 19 percent for the three and nine month periods, respectively, primarily driven by growth in our premium card portfolios.

Service fees and other revenue increased 54 percent and 62 percent for the three and nine month periods, respectively, primarily driven by the change in the allocation of TLS revenues described above, as well as growth in delinquency fees.

Interest income increased for both the three and nine month periods, primarily driven by higher interest rates and growth in revolving loan balances.

Interest expense increased for both the three and nine month periods, primarily driven by a higher cost of funds.

PROVISIONS FOR CREDIT LOSSES

Card Member loans provision for credit losses increased for both the three and nine month periods, primarily due to higher net write-offs and higher reserve builds in the current periods. The reserve builds for the current periods were primarily driven by increases in loans outstanding and higher delinquencies. The reserve builds in the prior periods were primarily driven by increases in loans outstanding, deterioration in the macroeconomic outlook at that time and higher delinquencies. The reserve build in the prior nine month period was partially offset by reductions in COVID-19 pandemic-driven reserves.

Card Member receivables provision for credit losses increased for both the three and nine month periods, primarily due to higher net write-offs, partially offset by reserve releases in the current periods versus reserve builds in the prior periods. The reserve releases in the current periods were driven by lower delinquencies and decreases in receivables outstanding. The reserve builds in the prior periods were primarily driven by higher delinquencies and, for the prior nine month period, an increase in receivables outstanding.

EXPENSES

Total expenses increased for both the three and nine month periods, primarily driven by an increase in allocated service costs. The increase in the nine month period was also driven by higher Card Member rewards expense.

Card Member rewards expense was relatively flat for the three month period and increased for the nine month period. The increase in the nine month period was primarily driven by a larger proportion of spend in categories that earn higher levels of rewards, as well as higher billed business.

Business development expense was relatively flat for the three month period and increased for the nine month period. The increase in the nine month period was primarily due to increased partner payments, primarily driven by higher billed business.

Card Member services expense increased for both the three and nine month periods, primarily driven by higher usage of travel-related benefits.

Marketing expense decreased for both the three and nine month periods, reflecting lower levels of spending on customer acquisitions and other growth initiatives.

Salaries and employee benefits and other expenses increased for both the three and nine month periods, primarily due to an increase in allocated service costs.

Table 12: CS Selected Statistical Information


	As of or for the Three Months Ended September 30,						Change 2023 vs 2022			As of or for the Nine Months Ended September 30,							Change 2023 vs 2022
(Millions, except percentages and where indicated)	2023			2022					2023				2022
Billed business (billions)	$	129.5		$	127.6		1	%		$	384.7			$	369.0		4	%
Proprietary cards-in-force	15.4			14.6			5			15.4				14.6			5
Average Card Member spending (dollars)	$	8,434		$	8,848		(5)			$	25,234			$	26,377		(4)
Total segment assets (billions)	$	56.6		$	51.3		10			$	56.6			$	51.3		10
Card Member loans:
Total loans (billions)	$	25.2		$	20.7		22			$	25.2			$	20.7		22
Average loans (billions)	$	24.4		$	20.1		21			$	23.3			$	18.7		25
Net write-off rate — principal, interest and fees (a)	2.0		%	0.8		%				1.8		%		0.8		%
Net write-off rate — principal only (a)	1.8		%	0.7		%				1.5		%		0.6		%
30+ days past due as a % of total	1.2		%	0.7		%				1.2		%		0.7		%
Calculation of Net Interest Yield on Average Card Member Loans:
Net interest income	$	490		$	351					$	1,303			$	1,026
Exclude:
Interest expense not attributable to our Card Member loan portfolio (b)	185			124						525				272
Interest income not attributable to our Card Member loan portfolio (c)	(55)			(24)						(139)				(57)
Adjusted net interest income (d)	$	620		$	451					$	1,689			$	1,241
Average Card Member loans (billions)	$	24.4		$	20.1					$	23.3			$	18.7
Net interest income divided by average Card Member loans (d)	8.0		%	6.9		%				7.5		%		7.4		%
Net interest yield on average Card Member loans (d)	10.1		%	8.9		%				9.7		%		8.9		%
Card Member receivables:
Total receivables (billions)	$	28.3		$	27.6		3	%		$	28.3			$	27.6		3	%
Net write-off rate — principal and fees (e)	1.5		%	0.7		%				1.5		%		0.6		%
Net write-off rate — principal only (a) - small business	2.1		%	0.9		%				2.1		%		0.7		%
30+ days past due as a % of total - small business	1.4		%	1.4		%				1.4		%		1.4		%
90+ days past billing as a % of total (e) - corporate	0.4		%	0.6		%				0.4		%		0.6		%

(a)Refer to Table 7 footnote (a).

(b)Refer to Table 8 footnote (a).

(c)Refer to Table 8 footnote (b).

(d)Refer to Table 8 footnote (c).

(e)For corporate receivables, delinquency data is tracked based on days past billing status rather than days past due. A Card Member account is considered 90 days past billing if payment has not been received within 90 days of the Card Member’s billing statement date. In addition, if we initiate collection procedures on an account prior to the account becoming 90 days past billing, the associated Card Member receivable balance is classified as 90 days past billing. Corporate receivables delinquency data for periods other than 90+ days past billing and the net write-off rate based on principal losses only are not available due to system constraints.

International Card Services

Table 13: ICS Selected Income Statement Data


	Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change
(Millions, except percentages)	2023		2022		2023 vs. 2022				2023		2022		2023 vs. 2022
Revenues
Non-interest revenues	$	2,390	$	2,066	$	324	16	%	$	7,006	$	6,065	$	941	16	%
Interest income	538		364		174		48		1,502		1,035		467		45
Interest expense	285		178		107		60		770		445		325		73
Net interest income	253		186		67		36		732		590		142		24
Total revenues net of interest expense	2,643		2,252		391		17		7,738		6,655		1,083		16
Provisions for credit losses	154		176		(22)		(13)		533		374		159		43
Total revenues net of interest expense after provisions for credit losses	2,489		2,076		413		20		7,205		6,281		924		15
Total expenses	2,102		1,910		192		10		6,376		5,688		688		12
Pretax segment income	$	387	$	166	$	221	# %		$	829	$	593	$	236	40	%
# Denotes a variance of 100 percent or more

International Card Services (ICS) issues a wide range of proprietary consumer, small business and corporate cards outside the United States. ICS also provides services to our international customers, including travel and lifestyle services, and manages certain international joint ventures and our loyalty coalition businesses.

TOTAL REVENUES NET OF INTEREST EXPENSE

Non-interest revenues increased for both the three and nine month periods, primarily driven by higher Discount revenue and Net card fees.

Discount revenue increased 17 percent and 18 percent for the three and nine month periods, respectively (14 percent and 20 percent on an FX-adjusted basis), primarily reflecting increases in billed business.2 See Tables 5, 6 and 14 for more details on billed business performance.

Net card fees increased 22 percent and 16 percent for the three and nine month periods, respectively (19 percent and 18 percent on an FX-adjusted basis), primarily driven by growth in our premium card portfolios.2

Service fees and other revenue increased 10 percent for both the three and nine month periods (3 percent and 8 percent on an FX-adjusted basis), primarily driven by foreign exchange related revenues associated with Card Member cross-currency spending and growth in delinquency fees.2

Interest income increased for both the three and nine month periods, primarily driven by growth in revolving loan balances and higher interest rates.

Interest expense increased for both the three and nine month periods, primarily driven by a higher cost of funds.

2 Refer to footnote 1 on page 3 for details regarding foreign currency adjusted information.

PROVISIONS FOR CREDIT LOSSES

Card Member loans provision for credit losses decreased for the three month period, primarily due to a reserve release in the current period versus a reserve build in the prior period, partially offset by higher net write-offs. The reserve release in the current period was primarily driven by the performance of portfolios in certain international markets. Card Member loans provision for credit losses increased for the nine month period, primarily due to higher net write-offs, partially offset by a lower reserve build in the current period. The reserve build in the current nine month period was primarily driven by an increase in loans outstanding, partially offset by the performance of portfolios in certain international markets. The reserve builds in the prior periods were primarily driven by higher delinquencies and deterioration in the macroeconomic outlook at that time.

Card Member receivables provision for credit losses decreased for the three month period, primarily due to a reserve release in the current period versus a reserve build in the prior period, partially offset by higher net write-offs. Card Member receivables provision for credit losses increased for the nine month period, primarily due to higher write-offs, partially offset by a reserve release in the current period versus a reserve build in the prior period. The reserve releases in the current periods were primarily driven by lower delinquencies, partially offset by increases in receivables outstanding. The reserve builds in the prior periods were primarily driven by higher delinquencies.

EXPENSES

Total expenses increased for both the three and nine month periods, primarily driven by higher Card Member rewards expense and an increase in allocated service costs.

Card Member rewards expense increased for both the three and nine month periods, primarily driven by higher billed business, partially offset in the three month period by the impact of changes in expected redemption behavior associated with certain products.

Business development expense increased for the three month period and decreased for the nine month period. Both the three and nine month periods reflect increases in client incentives and partner payment expenses driven by higher billed business, which was offset in the nine month period by a prior-year charge related to revenue allocated to a joint venture partner.

Card Member services expense increased for both the three and nine month periods, primarily driven by higher usage of travel-related benefits.

Marketing expense decreased for both the three and nine month periods, primarily due to elevated levels of spending on growth initiatives in the prior periods.

Salaries and employee benefits and other expenses increased for both the three and nine month periods, primarily due to an increase in allocated service costs.

Table 14: ICS Selected Statistical Information


	As of or for the Three Months Ended September 30,						Change 2023 vs. 2022			As of or for the Nine Months Ended September 30,							Change 2023 vs. 2022
(Millions, except percentages and where indicated)	2023			2022					2023				2022
Billed business (billions)	$	82.7		$	70.2		18	%		$	241.4			$	204.5		18	%
Proprietary cards-in-force	20.8			19.8			5			20.8				19.8			5
Proprietary basic cards-in-force	15.4			14.7			5			15.4				14.7			5
Average proprietary basic Card Member spending (dollars)	$	5,382		$	4,824		12			$	15,861			$	14,300		11
Total segment assets (billions)	$	38.6		$	32.9		17			$	38.6			$	32.9		17
Card Member loans - consumer and small business:
Total loans (billions)	$	15.1		$	12.0		26			$	15.1			$	12.0		26
Average loans (billions)	$	15.1		$	12.3		23			$	14.6			$	11.9		23
Net write-off rate - principal, interest and fees (a)	2.6		%	1.4		%				2.5		%		1.3		%
Net write-off rate - principal only (a)	2.1		%	1.2		%				2.1		%		1.1		%
30+ days past due as a % of total	1.4		%	1.0		%				1.4		%		1.0		%
Calculation of Net Interest Yield on Average Card Member Loans:
Net interest income	$	253		$	186					$	732			$	590
Exclude:
Interest expense not attributable to our Card Member loan portfolio (b)	121			72						319				187
Interest income not attributable to our Card Member loan portfolio (c)	(17)			(7)						(46)				(16)
Adjusted net interest income (d)	$	357		$	251					$	1,005			$	761
Average Card Member loans (billions)	$	15.1		$	12.4					$	14.6			$	12.0
Net interest income divided by average Card Member loans (d)	6.6		%	6.0		%				6.7		%		6.6		%
Net interest yield on average Card Member loans (d)	9.4		%	8.0		%				9.2		%		8.5		%
Card Member receivables:
Total receivables (billions)	$	17.3		$	14.5		19	%		$	17.3			$	14.5		19	%
Net write-off rate — principal and fees (e)	2.2		%	1.4		%				2.2		%		1.1		%
Net write-off rate — principal only (a) - consumer and small business	2.4		%	1.6		%				2.4		%		1.3		%
30+ days past due as a % of total - consumer and small business	1.1		%	1.2		%				1.1		%		1.2		%
90+ days past billing as a % of total (e) - corporate	0.6		%	0.5		%				0.6		%		0.5		%

(a)Refer to Table 7 footnote (a).

(b)Refer to Table 8 footnote (a).

(c)Refer to Table 8 footnote (b).

(d)Refer to Table 8 footnote (c).

Global Merchant and Network Services

Table 15: GMNS Selected Income Statement and Other Data


	Three Months Ended September 30,				Change 2023 vs. 2022						Nine Months Ended September 30,				Change 2023 vs. 2022
(Millions, except percentages and where indicated)	2023		2022				2023			2022
Revenues
Non-interest revenues	$	1,656	$	1,562	$	94		6	%		$	4,927	$	4,502	$	425	9	%
Interest income	14		6		8			#			42		13		29		#
Interest expense	(181)		(97)		(84)			(87)			(486)		(202)		(284)		#
Net interest income	195		103		92			89			528		215		313		#
Total revenues net of interest expense	1,851		1,665		186			11			5,455		4,717		738		16
Provisions for credit losses	6		3		3			#			13		6		7		#
Total revenues net of interest expense after provisions for credit losses	1,845		1,662		183			11			5,442		4,711		731		16
Total expenses	859		870		(11)			(1)			2,608		2,448		160		7
Pretax segment income	986		792		194			24			2,834		2,263		571		25
Network volumes (billions)	420.2		394.4		$	26		7			1,245.7		1,139.5		$	106	9
Total segment assets (billions)	$	20.8	$	15.4				35	%		$	20.8	$	15.4			35	%
# Denotes a variance of 100 percent or more

Global Merchant and Network Services (GMNS) operates a global payments network that processes and settles card transactions, acquires merchants and provides multi-channel marketing programs and capabilities, services and data analytics, leveraging our global integrated network. GMNS manages our partnership relationships with third-party card issuers (including our network partnership agreements in China), merchant acquirers and a prepaid reloadable and gift card program manager, licensing the American Express brand and extending the reach of the global network.

TOTAL REVENUES NET OF INTEREST EXPENSE

Non-interest revenues increased across all revenue categories for both the three and nine month periods, primarily driven by higher Discount revenue and Service fees and other revenues.

Discount revenue increased 6 percent and 9 percent for the three and nine month periods, respectively, primarily driven by increases in billed business. See Tables 5 and 6 for more details on billed business performance.

Service fees and other revenue increased 10 percent and 14 percent for the three and nine month periods, respectively, primarily due to higher foreign exchange related revenues associated with Card Member cross-currency spending.

Processed revenue increased 4 percent and 8 percent for the three and nine month periods, respectively, primarily driven by higher processed volumes.

GMNS receives an interest expense credit relating to internal transfer pricing due to its merchant payables. Net interest income increased for both the three and nine month periods, primarily due to higher interest expense credits, largely driven by higher interest rates.

EXPENSES

Total expenses decreased for the three month period and increased for the nine month period. The decrease in the three month period was primarily due to lower Business development expense, partially offset by higher Operating expenses. The increase in the nine month period was primarily driven by higher Operating expenses.

Business development expense decreased for the three month period and increased for the nine month period. The increase in the nine month period was due to increased partner payments driven by higher network volumes, which was more than offset in the three month period by certain discrete partner payments in the prior year.

Marketing expense decreased for the three month period and increased for the nine month period. The decrease in the three month period was driven by management decisions impacting the timing of spend to drive growth momentum and support merchant engagement. The increase in the nine month period was primarily driven by higher levels of spending on merchant engagement and other growth initiatives.

Salaries and employee benefits and other expenses increased for both the three and nine month periods, primarily due to higher compensation costs and higher allocated service costs.

Corporate & Other

Corporate functions and certain other businesses are included in Corporate & Other.

Corporate & Other pretax loss was $709 million for the three months ended September 30, 2023, compared to a pretax loss of $582 million for the same period in the prior year, and pretax loss was $1.8 billion for the nine months ended September 30, 2023, compared to a pretax loss of $1.6 billion for the same period in the prior year. The increase in pretax loss for the three month period was primarily driven by higher incentive compensation. The increase in pretax loss for the nine month period was primarily driven by higher deferred compensation costs and net losses on Amex Ventures investments.

CONSOLIDATED CAPITAL RESOURCES AND LIQUIDITY

Our balance sheet management objectives are to maintain:

A solid and flexible equity capital profile;
A broad, deep and diverse set of funding sources to finance our assets and meet operating requirements; and
Liquidity programs that enable us to continuously meet expected future financing obligations and business requirements for at least a twelve month period in the event we are unable to continue to raise new funds under our regular funding programs during a substantial weakening in economic conditions.

We continue to see volatility in the capital markets due to a variety of factors and manage our balance sheet to reflect evolving circumstances.

Capital

We believe capital allocated to growing businesses with a return on risk-adjusted equity in excess of our costs will generate shareholder value. Our objective is to retain sufficient levels of capital generated through net income and other sources, such as the exercise of stock options by colleagues, to maintain a strong balance sheet, provide flexibility to support future business growth, and distribute excess capital to shareholders through dividends and share repurchases. See “Dividends and Share Repurchases” below.

We seek to maintain capital levels and ratios in excess of our minimum regulatory requirements, specifically within a 10 to 11 percent target range for American Express Company’s Common Equity Tier 1 (CET1) risk-based capital ratio.

We maintain certain flexibility to shift capital across our businesses as appropriate. For example, we may infuse additional capital into subsidiaries to maintain capital at targeted levels in consideration of debt ratings and regulatory requirements. These infused amounts can affect the capital and liquidity positions at the American Express parent company level or at our subsidiaries.

We report our capital ratios using the Basel III capital definitions and the Basel III standardized approach for calculating risk-weighted assets.

On July 27, 2023, the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) issued a notice of proposed rulemaking that would significantly revise U.S. regulatory capital requirements for large banking organizations, including American Express Company and American Express National Bank (AENB). See “Certain Legislative, Regulatory and Other Developments ― Basel III Proposal” for more information.

The following table presents our regulatory risk-based capital and leverage ratios and those of our U.S. bank subsidiary, AENB, as of September 30, 2023:

Table 16: Regulatory Risk-Based Capital and Leverage Ratios


	Effective Minimum (a)		Ratios as of September 30, 2023
Risk-Based Capital
Common Equity Tier 1	7.0	%
American Express Company			10.7	%
American Express National Bank			11.4
Tier 1	8.5	%
American Express Company			11.5
American Express National Bank			11.4
Total	10.5	%
American Express Company			13.4
American Express National Bank			13.2
Tier 1 Leverage	4.0	%
American Express Company			10.0
American Express National Bank			9.3	%

(a)Represents Basel III minimum requirements and applicable regulatory buffers as defined by the federal banking regulators, which includes the stress capital buffer (SCB) for American Express Company and the capital conservation buffer for AENB.

The following table presents American Express Company’s regulatory risk-based capital and risk-weighted assets as of September 30, 2023:

Table 17: Regulatory Risk-Based Capital Components and Risk Weighted Assets


American Express Company ($ in Billions)	September 30, 2023
Risk-Based Capital
Common Equity Tier 1	$	22.5
Tier 1 Capital	24.0
Tier 2 Capital	4.0
Total Capital	28.0

Risk-Weighted Assets	209.4
Average Total Assets to calculate the Tier 1 Leverage Ratio	$	240.9

The following are definitions for our regulatory risk-based capital ratios and leverage ratio, which are calculated as per standard regulatory guidance:

Risk-Weighted Assets — Assets are weighted for risk according to a formula used by the Federal Reserve to conform to capital adequacy guidelines. On- and off-balance sheet items are weighted for risk, with off-balance sheet items converted to balance sheet equivalents, using risk conversion factors, before being allocated a risk-adjusted weight. Off-balance sheet exposures comprise a minimal part of the total risk-weighted assets.

Common Equity Tier 1 Risk-Based Capital Ratio — Calculated as CET1 capital, divided by risk-weighted assets. CET1 capital is common shareholders’ equity, adjusted for ineligible goodwill and intangible assets and certain deferred tax assets. CET1 capital is also adjusted for the Current Expected Credit Loss (CECL) final rules, as described below.

Tier 1 Risk-Based Capital Ratio — Calculated as Tier 1 capital divided by risk-weighted assets. Tier 1 capital is the sum of CET1 capital, preferred shares and third-party non-controlling interests in consolidated subsidiaries, adjusted for capital held by insurance subsidiaries. The minimum requirement for the Tier 1 risk-based capital ratio is 1.5 percent higher than the minimum for the CET1 risk-based capital ratio. We have $1.6 billion of preferred shares outstanding to help address a portion of the Tier 1 capital requirements in excess of common equity requirements.

Total Risk-Based Capital Ratio — Calculated as the sum of Tier 1 capital and Tier 2 capital, divided by risk-weighted assets. Tier 2 capital is the sum of allowance for credit losses adjusted for the CECL final rules (limited to 1.25 percent of risk-weighted assets) and $1,370 million of eligible subordinated notes, adjusted for capital held by insurance subsidiaries. The $1,370 million of eligible subordinated notes includes the $500 million subordinated debt issued in July 2023, the $750 million subordinated debt issued in May 2022, and the $120 million remaining Tier 2 capital credit for the $600 million subordinated debt issued in December 2014.

Tier 1 Leverage Ratio — Calculated by dividing Tier 1 capital by our average total consolidated assets for the most recent quarter.

We elected to delay the recognition of $0.7 billion of reduction in regulatory capital from the adoption of the CECL methodology for two years, followed by a three-year phase-in period at 25 percent once per year beginning January 1, 2022, pursuant to rules issued by federal banking regulators (the CECL final rules). As of January 1, 2023, we have phased in 50 percent of such amount.

We continue to include accumulated other comprehensive income (loss) in regulatory capital.

As a Category IV firm, we are not subject to the Federal Reserve’s supervisory stress tests in 2023. We submitted our annual capital plan to the Federal Reserve in April 2023. On July 27, 2023 the Federal Reserve confirmed our SCB of 2.5 percent, which resulted in a minimum CET1 ratio of 7 percent, effective October 1, 2023 to September 30, 2024.

Dividends and Share Repurchases

We return capital to common shareholders through dividends and share repurchases. The share repurchases reduce common shares outstanding and generally more than offset the issuance of new shares as part of employee compensation plans.

During the three and nine months ended September 30, 2023, we returned $1.7 billion and $3.9 billion, respectively, to our shareholders in the form of common stock dividends of $0.4 billion and $1.3 billion, respectively, and share repurchases of $1.3 billion and $2.6 billion, respectively. We repurchased 7.9 million common shares at an average price of $162.03 in the third quarter of 2023.

In addition, during the three and nine months ended September 30, 2023, we paid $14 million and $43 million, respectively, in dividends on non-cumulative perpetual preferred shares outstanding.

Funding Strategy

Our principal funding objective is to maintain broad and well-diversified funding sources to allow us to finance our global businesses and to maintain a strong liquidity profile.

We aim to satisfy our financing needs with a diverse set of funding sources. The diversity of funding sources by type of instrument, by tenor and by investor base, among other factors, mitigates the impact of disruptions in any one type of instrument, tenor or investor. We seek to achieve diversity and cost efficiency in our funding sources by maintaining scale and market relevance in deposits, unsecured debt and asset securitizations, and access to secured borrowing facilities and a committed bank credit facility.

Summary of Consolidated Debt

We had the following customer deposits and consolidated debt outstanding as of September 30, 2023 and December 31, 2022:

Table 18: Summary of Customer Deposits and Consolidated Debt


(Billions)	September 30, 2023		December 31, 2022
Customer deposits	$	124.4	$	110.2
Short-term borrowings	1.6		1.3
Long-term debt	46.4		42.6
Total customer deposits and debt	$	172.4	$	154.1

We may redeem from time to time certain debt securities prior to the original contractual maturity dates in accordance with the optional redemption provisions of those debt securities.

Our funding needs are driven by, among other factors, maturing obligations, our liquidity position and the pace of growth in our loans and receivables balances. Actual funding activities can vary from our plans due to various factors, such as future business growth, the impact of global economic, political and other events on market capacity and funding needs, demand for securities offered by us, regulatory changes, ability to securitize and sell loans and receivables, and the performance of loans and receivables previously sold in securitization transactions. Many of these factors are beyond our control.

We issued $11.0 billion of debt during the nine months ended September 30, 2023, consisting of $7.5 billion of unsecured debt and $3.5 billion of asset-backed securities. The following table presents our debt issuances for the three months ended September 30, 2023:

Table 19: Debt Issuances


(Billions)						Three Months Ended September 30, 2023
American Express Company:

Floating Rate Senior Notes (compounded SOFR(a) plus 97 basis points)						0.3
Fixed-to-Floating Rate Senior Notes (weighted-average coupon of 5.33% during the fixed rate periods and compounded SOFR(a) plus weighted-average spread of 114 basis points during the floating rate periods)						2.7
Fixed-to-Floating Rate Subordinated Notes (coupon of 5.63% during the fixed rate period and compounded SOFR(a) plus spread of 193 basis points during the floating rate period)						0.5
American Express Credit Account Master Trust:
Fixed Rate Class A Certificates (weighted-average coupon of 5.19%)						1.7
Total						5.2

(a)Secured overnight financing rate (SOFR).

Our equity capital and funding strategies are designed, among other things, to maintain appropriate and stable unsecured debt ratings from the major credit rating agencies: Moody’s Investor Services (Moody’s), Standard & Poor’s (S&P) and Fitch Ratings (Fitch). Such ratings help support our access to cost-effective unsecured funding as part of our overall funding strategy. Our asset securitization activities are rated separately.

Table 20: Unsecured Debt Ratings


American Express Entity		Moody’s	S&P	Fitch
American Express Company	Long Term	A2	BBB+	A
Short Term	N/R	A-2	F1
Outlook	Stable	Stable	Stable
American Express Travel Related Services Company, Inc.	Long Term	A2	A-	A
Short Term	P-1	A-2	F1
Outlook	Stable	Stable	Stable
American Express National Bank	Long Term	A3	A-	A
Short Term	P-1	A-2	F1
Outlook	Stable	Stable	Stable
American Express Credit Corporation	Long Term	A2	A-	A
Short Term	N/R	N/R	N/R
Outlook	Stable	Stable	Stable

These ratings are not a recommendation to buy or hold any of our securities and they may be revised or revoked at any time at the sole discretion of the rating organization.

Downgrades in the ratings of our unsecured debt or asset securitization program securities could result in higher funding costs, as well as higher fees related to borrowings under our unused credit facilities. Declines in credit ratings could also reduce our borrowing capacity in the unsecured debt and asset securitization capital markets. We believe our funding mix, including the proportion of U.S. retail deposits insured by the FDIC to total funding, should reduce the impact that credit rating downgrades would have on our funding capacity and costs.

On August 29, 2023, the Federal Reserve, the OCC and the FDIC issued a notice of proposed rulemaking that proposed long-term debt requirements that, if adopted as proposed, would require covered bank holding companies such as American Express Company to issue and maintain minimum amounts of eligible external long-term debt with specific terms for purposes of absorbing losses or recapitalizing the covered bank holding company and its operating subsidiaries. The notice of proposed rulemaking also proposed requiring minimum amounts of eligible internal long-term debt to be maintained by certain insured depository institutions that have at least $100 billion in consolidated assets, such as AENB, for purposes of absorbing losses or recapitalizing the insured depository institution.

Deposit Programs

We offer deposits within our U.S. bank subsidiary, AENB. These funds are currently insured up to an amount that is at least $250,000 per account holder through the FDIC; as of September 30, 2023, approximately 92 percent of these deposits were insured. Our ability to obtain deposit funding and offer competitive interest rates is dependent on, among other factors, the capital level of AENB. Direct retail deposits offered by AENB is our primary deposit product channel, which makes FDIC-insured high-yield savings account, certificates of deposit (CDs), business checking and consumer rewards checking account products available directly to customers. As of September 30, 2023, our direct retail deposit program had approximately 2.2 million accounts. AENB also sources deposits through third-party distribution channels as needed to meet our overall funding objectives.

As of September 30, 2023 and December 31, 2022, we had $124.4 billion and $110.2 billion, respectively, in deposits. Refer to Note 6 to the “Consolidated Financial Statements” for a further description of these deposits and scheduled maturities of certificates of deposits.

Liquidity Management

Our liquidity objective is to maintain access to a diverse set of on- and off-balance sheet liquidity sources. We seek to maintain liquidity sources in amounts sufficient to meet our expected future financial obligations and business requirements for liquidity for a period of at least twelve months in the event we are unable to raise new funds under our regular funding programs during a substantial weakening in economic conditions.

Our liquidity management strategy includes a number of elements, including, but not limited to:

Maintaining diversified funding sources (refer to the “Funding Strategy” section for more details);
Maintaining unencumbered liquid assets and off-balance sheet liquidity sources;
Projecting cash inflows and outflows under a variety of economic and market scenarios; and
Establishing clear objectives for liquidity risk management, including compliance with regulatory requirements.

The amount and type of liquidity resources we maintain can vary over time, based upon the results of stress scenarios required under the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as additional stress scenarios required under our liquidity risk policy.

We believe that we currently maintain sufficient liquidity to meet all internal and regulatory liquidity requirements.

As of September 30, 2023 and December 31, 2022, we had $43.9 billion and $33.9 billion in Cash and cash equivalents, respectively. Refer to the “Cash Flows” section below for a discussion of the major drivers impacting cash flows for the nine months ended September 30, 2023. The investment income we receive on liquidity resources has historically been less than the interest expense on the sources of funding for these balances. From time to time, including in this quarter, interest income may exceed the interest expense associated with the liquidity portfolio. Depending on the interest rate environment, our funding composition and the amount of liquidity resources we maintain, the level of future net interest income or expense associated with our liquidity resources will vary.

Securitized Borrowing Capacity

As of September 30, 2023, we maintained committed, revolving, secured borrowing facilities that give us the right to sell up to $3.0 billion face amount of eligible AAA notes from American Express Issuance Trust II (the Charge Trust) and up to $3.0 billion face amount of eligible AAA certificates from American Express Credit Account Master Trust (the Lending Trust). On July 26, 2023, we extended the Charge Trust’s facility by two years to mature on July 15, 2026 and on September 15, 2023, we extended the Lending Trust’s facility by two years to mature on September 15, 2026, and increased the maximum face amount of eligible AAA certificates that can be sold using this facility from $2.0 billion to $3.0 billion. These facilities enhance our contingent funding resources and are also used in the ordinary course of business to fund working capital needs. As of September 30, 2023, no amounts were drawn on the Charge Trust facility or Lending Trust facility.

Committed Bank Credit Facility

As of September 30, 2023, we maintained a committed syndicated bank credit facility of $3.5 billion, with a maturity date of October 15, 2024. This facility enhances our contingent funding resources and is also used in the ordinary course of business to fund working capital needs. As of September 30, 2023, no amount was drawn on this facility.

Other Sources of Liquidity

In addition to cash and other liquid assets and the secured borrowing facilities and committed bank credit facility described above, as an insured depository institution, AENB may borrow from the Federal Reserve Bank of San Francisco through the discount window against its credit card loans and charge card receivables. Further, in March 2023, the Federal Reserve established an additional facility, the Bank Term Funding Program (BTFP). The BTFP offers loans of up to one year in length to banks and other eligible depository institutions against U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. Any qualifying assets pledged to the BTFP are valued at par by the Federal Reserve for the purpose of determining the amount of collateral we can borrow against. The amount of borrowing capacity available to AENB at either the discount window or the BTFP is subject to the amount of qualifying collateral that it may pledge.

As of September 30, 2023, AENB had available borrowing capacity of $67.3 billion as a result of U.S. credit card loans and charge card receivables that were pledged to the Federal Reserve through the discount window. It also had approximately $1.0 billion in U.S. Treasuries, agency debt and mortgage-backed securities that could be pledged through the BTFP. Whether specific assets will be considered qualifying collateral and the amount that may be borrowed against the collateral remain at the discretion of the Federal Reserve. Due to regulatory restrictions, liquidity generated by AENB can generally be used only to fund obligations within AENB, and transfers to the parent company or non-bank affiliates may be subject to prior regulatory approval. During the three months ended September 30, 2023, we did not borrow from either the discount window or the BTFP and no amounts were outstanding on either facility at the end of the period.

Unused Credit Outstanding

As of September 30, 2023, we had approximately $377 billion of unused credit outstanding, primarily available to customers as part of established lending product agreements. Total unused credit outstanding does not represent potential future cash requirements, as a significant portion of this unused credit will likely not be drawn. Our charge card products generally have no pre-set spending limit and therefore are not reflected in unused credit outstanding.

Cash Flows

The following table summarizes our cash flow activity, followed by a discussion of the major drivers impacting operating, investing and financing cash flows for the nine months ended September 30:

Table 21: Cash Flows


(Billions)	2023		2022
Total cash provided by (used in):
Operating activities	$	11.8	$	12.6
Investing activities	(16.3)		(22.9)
Financing activities	14.3		18.9
Effect of foreign currency exchange rates on cash and cash equivalents	0.2		0.5
Net increase in cash and cash equivalents	$	10.0	$	9.1

Cash Flows from Operating Activities

Our cash flows from operating activities primarily include net income adjusted for (i) non-cash items included in net income, such as provisions for credit losses, depreciation and amortization, stock-based compensation, deferred taxes and other non-cash items and (ii) changes in the balances of operating assets and liabilities, which can vary significantly in the normal course of business due to the amount and timing of payments.

In 2023, the net cash provided by operating activities was primarily driven by cash generated from net income for the period and higher net operating liabilities, primarily resulting from higher accounts payable to merchants and an increase in Membership Rewards liability, partially offset by payments related to annual incentive compensation.

In 2022, the net cash provided by operating activities was primarily driven by cash generated from net income for the period and higher net operating liabilities, primarily resulting from higher accounts payable to merchants and an increase in Membership Rewards liability driven by higher Card Member spending.

Cash Flows from Investing Activities

Our cash flows from investing activities primarily include changes in Card Member loans and receivables, as well as changes in our available-for-sale investment securities portfolio.

In 2023, the net cash used in investing activities was primarily driven by higher Card Member loans and receivables outstanding, resulting from higher Card Member spending.

In 2022, the net cash used in investing activities was primarily driven by higher Card Member loans and receivables outstanding and net purchases of investment securities.

Cash Flows from Financing Activities

Our cash flows from financing activities primarily include changes in customer deposits, long-term debt and short-term borrowings, as well as dividend payments and share repurchases.

In both the periods presented, the net cash provided by financing activities was primarily driven by growth in customer deposits and net proceeds from debt, partially offset by share repurchases and dividend payments.

OTHER MATTERS

Certain Legislative, Regulatory and Other Developments

Supervision & Regulation

We are subject to extensive government regulation and supervision in jurisdictions around the world, and the costs of compliance are substantial. The financial services industry is subject to rigorous scrutiny, high regulatory expectations, a range of regulations and a stringent and unpredictable enforcement environment.

Governmental authorities have focused, and we believe will continue to focus, considerable attention on reviewing compliance by financial services firms and payment systems with laws and regulations, and as a result, we continually work to evolve and improve our risk management framework, governance structures, practices and procedures. Reviews by us and governmental authorities to assess compliance with laws and regulations, as well as our own internal reviews to assess compliance with internal policies, including errors or misconduct by colleagues or third parties or control failures, have resulted in, and are likely to continue to result in, changes to our products, practices and procedures, restitution to our customers and increased costs related to regulatory oversight, supervision and examination. We have also been subject to regulatory actions and may continue to be the subject of such actions, including governmental inquiries, investigations, enforcement proceedings and the imposition of fines or civil money penalties, in the event of noncompliance or alleged noncompliance with laws or regulations. For example, as previously disclosed, we are cooperating with governmental investigations related to our historical sales practices, which are described in more detail in Note 7 to the “Consolidated Financial Statements.” External publicity concerning investigations can increase the scope and scale of investigations and lead to further regulatory inquiries.

Please see the “Supervision and Regulation” and “Risk Factors” sections of the 2022 Form 10-K for further information.

Basel III Proposal

On July 27, 2023, the Federal Reserve, the OCC and the FDIC issued a notice of proposed rulemaking that would significantly revise U.S. regulatory capital requirements for large banking organizations, including American Express Company and AENB. The proposed rules would apply a new expanded risk-based approach to calculating risk-based capital ratios, and large banking organizations would be required to calculate their risk-based capital ratios under both (i) the standardized approach and (ii) the expanded risk-based approach and use the lower of the two ratio calculations to determine binding capital constraints under each risk-based capital ratio. The expanded risk-based approach to calculating risk-weighted assets would apply more granular risk-weighting methodologies for, among others, credit, operational, market and equity risks, including differential treatment of fee and other non-interest revenues as compared to interest income for purposes of determining operational risk-weighted assets. The proposed rules would also include additional capital requirements for certain “unconditionally cancellable commitments” such as unused portions of committed lines of credit (e.g., credit cards), and would create a proxy methodology to assign capital requirements to credit exposure on products that carry no pre-set spending limits such as charge cards.

Under the proposal, the revisions would become effective on July 1, 2025, subject to a three-year transition period for certain provisions, including phasing in the use of risk-weighted assets under the expanded risk-based approach. We are currently evaluating the impact of the proposal, but based on a preliminary analysis, we estimate that the increase in our risk-weighted assets under the expanded risk-based approach as currently proposed could consume the capital buffer between our minimum regulatory requirements and our current CET1 risk-based capital ratio. This estimated impact reflects our current understanding of the proposal, the application to our businesses as currently conducted and the current composition of our balance sheet, and therefore does not reflect the impact of any changes we may make in the future as a result of the expanded risk-based approach or otherwise. The ultimate impact will depend on the final rulemaking, future minimum regulatory requirements as well as management decisions regarding our product constructs, capital distributions and target capital levels, and there can be no assurance that the impact will not be more or less than currently estimated.

Consumer Financial Products Regulation

Our consumer-oriented activities are subject to regulation and supervision in the United States and internationally. In the United States, our marketing, sale and servicing of consumer financial products and our compliance with certain federal consumer financial laws are supervised and examined by the Consumer Financial Protection Bureau (CFPB), which has broad rulemaking and enforcement authority over providers of credit, savings and payment services and products and authority to prevent “unfair, deceptive or abusive” acts or practices. In addition, a number of U.S. states have significant consumer credit protection, disclosure and other laws (in certain cases more stringent than U.S. federal laws). U.S. federal law also regulates abusive debt collection practices, which along with bankruptcy and debtor relief laws, can affect our ability to collect amounts owed to us or subject us to regulatory scrutiny.

On February 1, 2023, the CFPB issued a proposed rule to lower the safe harbor amount that would be considered, by regulation, to be “reasonable and proportional” to the costs incurred by credit card issuers for late payments. The proposed rule would also eliminate the annual inflation adjustment for such safe harbor amount and prohibit late fee amounts above 25 percent of the consumer’s required minimum payment.

On March 30, 2023, the CFPB adopted a final rule requiring covered financial institutions, such as us, to collect and report data to the CFPB regarding certain small business credit applications. Based on our small business credit transaction volume, we will be required to comply with this rule by October 1, 2024, subject to the outcome of litigation over the final rule facing the CFPB.

For more information on consumer financial products regulation, as well as the potential impacts on our results of operations and business, please see the “Supervision and Regulation” and “Risk Factors” sections of the 2022 Form 10-K.

Payments Regulation

Legislators and regulators in various countries in which we operate have focused on the operation of card networks, including through enforcement actions, legislation and regulations to change certain practices or pricing of card issuers, merchant acquirers and payment networks, and, in some cases, to establish broad and ongoing regulatory oversight regimes for payment systems.

The European Union (EU), Australia, Canada and other jurisdictions have focused on interchange fees (that is, the fee paid by the bankcard merchant acquirer to the card issuer in payment networks like Visa and Mastercard), as well as the rules, contract terms and practices governing merchant card acceptance. Regulation and other governmental actions relating to pricing or practices could affect all networks directly or indirectly, as well as adversely impact consumers and merchants. Among other things, regulation of bankcard fees has negatively impacted, and may continue to negatively impact, the discount revenue we earn, including as a result of downward pressure on our merchant discount rates from decreases in competitor pricing in connection with caps on interchange fees. In some cases, regulations also extend to certain aspects of our business, such as network and cobrand arrangements or the terms of card acceptance for merchants. For example, we exited our network business in the EU and Australia as a result of regulation in those jurisdictions. In addition, there is uncertainty as to when or how interchange fee caps and other provisions of the EU payments legislation might apply when we work with cobrand partners and agents in the EU. On August 29, 2023, the Dutch Trade and Industry Appeals Tribunal referred questions to the EU Court of Justice on the interpretation of the application of the interchange fee caps in connection with an administrative proceeding by the Netherlands Authority for Consumers and Markets regarding our cobrand relationship with KLM Royal Dutch Airlines. Given differing interpretations by regulators and participants in cobrand arrangements, we are subject to regulatory action, penalties and the possibility we will not be able to maintain our existing cobrand and agent relationships in the EU.

Broad regulatory oversight over payment systems can also include, in some cases, requirements for international card networks to localize aspects of their operations, such as processing infrastructure and data storage, which increases our costs and could diminish the value of our closed loop. The development and enforcement of payment system regulatory regimes generally continue to grow and may adversely affect our ability to compete effectively and maintain and extend our global network.

For more information on payments regulation, as well as the potential impacts on our results of operations and business, please see the “Supervision and Regulation” and “Risk Factors” sections of the 2022 Form 10-K.

Surcharging

In various countries, such as certain Member States in the EU, Australia and Canada (other than in Quebec), merchants are permitted to surcharge card purchases. In addition, the laws of a number of states in the United States that prohibit surcharging have been overturned and certain states have passed or are considering laws to permit surcharging by merchants. Surcharging is an adverse customer experience and could have a material adverse effect on us, particularly where it only or disproportionately impacts credit card usage or card usage generally, our Card Members or our business. In addition, other steering or differential acceptance practices that are permitted by regulation in some jurisdictions could also have a material adverse effect on us.

For more information on the potential impacts of surcharging and other actions that could impair the Card Member experience, please see the “Risk Factors” section of the 2022 Form 10-K.

Merchant Litigation

We continue to vigorously defend antitrust and other claims initiated by merchants. See Note 7 to the “Consolidated Financial Statements” for descriptions of the cases. It is possible that actions impairing the Card Member experience, or the resolution of one or any combination of these merchant claims, could have a material adverse effect on our business. For more information on the potential impacts of an adverse decision in the merchant litigations on our business, please see the “Risk Factors” section of the 2022 Form 10-K.

Privacy, Data Protection, Data Governance, Information and Cyber Security

Regulatory and legislative activity in the areas of privacy, data protection, data governance, resiliency and information and cyber security continues to increase worldwide. We have established, and continue to maintain and enhance, policies and a governance framework to comply with applicable laws, meet evolving customer and industry expectations and support and enable business innovation and growth. Global financial institutions like us, as well as our customers, colleagues, regulators, service providers and other third parties, have experienced a significant increase in information and cyber security risk in recent years and will likely continue to be the target of increasingly sophisticated cyberattacks, including computer viruses, malicious or destructive code, ransomware, social engineering attacks (including phishing, impersonation and identity takeover attempts), corporate espionage, hacking, website defacement, denial-of-service attacks, exploitation of vulnerabilities and other attacks and similar disruptions from the misconfiguration or unauthorized use of or access to computer systems. For more information on privacy, data protection and information and cyber security regulation and the potential impacts of a major information or cyber security incident on our results of operations and business, please see the “Supervision and Regulation” and “Risk Factors” sections of the 2022 Form 10-K.

Anti-Money Laundering and Countering the Financing of Terrorism

We are subject to significant supervision and regulation, and an increasingly stringent enforcement environment, with respect to compliance with anti-money laundering (AML) and countering the financing of terrorism (CFT) laws and regulations. In the United States, the majority of AML/CFT requirements are derived from the Currency and Foreign Transactions Reporting Act and the accompanying regulations issued by the U.S. Department of the Treasury (collectively referred to as the Bank Secrecy Act), as amended by the USA PATRIOT Act of 2001. The Anti-Money Laundering Act of 2020 (the AMLA), enacted in January 2021, amended the Bank Secrecy Act and is intended to comprehensively reform and modernize U.S. AML/CFT laws. Many of the statutory provisions in the AMLA will require additional rulemakings, reports and other measures, the effects of which are not known at this time. In Europe, AML/CFT requirements are largely the result of countries transposing the 5th and 6th EU Anti-Money Laundering Directives (and preceding EU Anti-Money Laundering Directives) into local laws and regulations. Numerous other countries have also enacted or proposed new or enhanced AML/CFT legislation and regulations applicable to American Express.

Among other things, these laws and regulations require us to establish AML/CFT programs that meet certain standards, including, in some instances, expanded reporting, particularly in the area of suspicious transactions, and enhanced information gathering and recordkeeping requirements. Our AML/CFT programs have become the subject of heightened scrutiny in some countries, including certain Member States in the EU. Any errors, failures or delays in complying with AML/CFT laws, perceived deficiencies in our AML/CFT programs or association of our business with money laundering, terrorist financing, tax fraud or other illicit activity can give rise to significant supervisory, criminal and civil proceedings and lawsuits, which could result in significant penalties and forfeiture of assets, loss of licenses or restrictions on business activities, or other enforcement actions. For more information on AML/CFT regulation, as well as the potential impacts on our results of operations and business, please see the “Supervision and Regulation” and “Risk Factors” sections of the 2022 Form 10-K.

Recently Adopted and Issued Accounting Standards

Refer to the Recently Adopted and Issued Accounting Standards section of Note 1 to the “Consolidated Financial Statements.”

Glossary of Selected Terminology

Adjusted net interest income — A non-GAAP measure that represents net interest income attributable to our Card Member loans (which includes, on a GAAP basis, interest that is deemed uncollectible), excluding the impact of interest expense and interest income not attributable to our Card Member loans.

Airline spend — Represents spend at airlines as a merchant, which is included within T&E spend.

Allocated service costs — Represents salaries and benefits associated with our technology and customer servicing groups, allocated based on activities directly attributable to our reportable operating segments, as well as overhead expenses, which are allocated to our reportable operating segments based on their relative levels of assets.

Asset securitizations — Asset securitization involves the transfer and sale of loans or receivables to a special-purpose entity created for the securitization activity, typically a trust. The trust, in turn, issues securities, commonly referred to as asset-backed securities that are secured by the transferred loans and receivables. The trust uses the proceeds from the sale of such securities to pay the purchase price for the transferred loans or receivables. The securitized loans and receivables of our Lending Trust and Charge Trust (collectively, the Trusts) are reported as assets and the securities issued by the Trusts are reported as liabilities on our Consolidated Balance Sheets.

Billed business (Card Member spending) — Represents transaction volumes (including cash advances) on payment products issued by American Express.

Capital ratios — Represents the minimum standards established by regulatory agencies as a measure to determine whether the regulated entity has sufficient capital to absorb on- and off-balance sheet losses beyond current loss accrual estimates. Refer to the Capital Strategy section under “Consolidated Capital Resources and Liquidity” for further related definitions under Basel III.

Card Member — The individual holder of an issued American Express-branded card.

Card Member loans — Represents revolve-eligible transactions on our card products, as well as any interest charges and associated card-related fees.

Card Member receivables — Represents transactions on our card products and card related fees that need to be paid in full on or before the Card Member’s payment due date.

Cards-in-force — Represents the number of cards that are issued and outstanding by American Express (proprietary cards-in-force) and cards issued and outstanding under network partnership agreements with banks and other institutions, except for retail cobrand cards issued by network partners that had no out-of-store spending activity during the prior twelve months. Basic cards-in-force excludes supplemental cards issued on consumer accounts. Cards-in-force is useful in understanding the size of our Card Member base.

Charge cards — Represents cards that generally carry no pre-set spending limits and are primarily designed as a method of payment and not as a means of financing purchases. Each charge card transaction is authorized based on its likely economics reflecting a Card Member’s most recent credit information and spend patterns. Charge Card Members must pay the full amount of balances billed each month, with the exception of balances that can be revolved under lending features offered on certain charge cards, such as Pay Over Time and Plan It, that allow Card Members to pay for eligible purchases with interest over time.

Cobrand cards — Represents cards issued under cobrand agreements with selected commercial partners. Pursuant to the cobrand agreements, we make payments to our cobrand partners, which can be significant, based primarily on the amount of Card Member spending and corresponding rewards earned on such spending and, under certain arrangements, on the number of accounts acquired and retained. The partner is then liable for providing rewards to the Card Member under the cobrand partner’s own loyalty program.

Credit cards — Represents cards that have a range of revolving payment terms, structured payment features (e.g. Plan It), grace periods, and rate and fee structures.

Discount revenue — Represents the amount we earn and retain from the merchant payable for facilitating transactions between Card Members and merchants on payment products issued by American Express.

Goods & Services (G&S) spend — Includes spend in merchant categories other than T&E-related merchant categories, which includes B2B spending by small and mid-sized enterprise customers in our CS and ICS segments.

Interest expense — Includes interest incurred primarily to fund Card Member loans and receivables, general corporate purposes and liquidity needs. Interest expense is divided principally into two categories: (i) deposits, which primarily relates to interest expense on deposits taken from customers and institutions, and (ii) debt, which primarily relates to interest expense on our long-term financing and short-term borrowings, (e.g., commercial paper, federal funds purchased, bank overdrafts and other short-term borrowings), as well as the realized impact of derivatives hedging interest rate risk on our long-term debt.

Interest income — Includes (i) interest on loans, (ii) interest and dividends on investment securities and (iii) interest income on deposits with banks and other.

Interest on loans — Assessed using the average daily balance method for Card Member loans. Unless the loan is classified as non-accrual, interest is recognized based upon the principal amount outstanding in accordance with the terms of the applicable account agreement until the outstanding balance is paid or written off.

Interest and dividends on investment securities — Primarily relates to our performing fixed-income securities. Interest income is recognized using the effective interest method, which adjusts the yield for security premiums and discounts, fees and other payments, so a constant rate of return is recognized on the outstanding balance of the related investment security throughout its term. Amounts are recognized until securities are in default or when it is likely that future interest payments will not be made as scheduled.

Interest income on deposits with banks and other — Primarily relates to the placement of cash in excess of near-term funding requirements in interest-bearing time deposits, overnight sweep accounts, and other interest-bearing demand and call accounts.

Loyalty coalitions — Programs that enable consumers to earn rewards points and use them to save on purchases from a variety of participating merchants through multi-category rewards platforms. Merchants in these programs generally fund the consumer offers and are responsible to us for the cost of rewards points; we earn revenue from operating the loyalty platform and by providing marketing support.

Net card fees — Represents the card membership fees earned during the period recognized as revenue over the covered card membership period (typically one year), net of the provision for projected refunds for Card Membership cancellation and deferred acquisition costs.

Net interest yield on average Card Member loans — A non-GAAP measure that is computed by dividing adjusted net interest income by average Card Member loans, computed on an annualized basis. Reserves and net write-offs related to uncollectible interest are recorded through provision for credit losses and are thus not included in the net interest yield calculation.

Net write-off rate — principal only — Represents the amount of proprietary consumer or small business Card Member loans or receivables written off, consisting of principal (resulting from authorized transactions), less recoveries, as a percentage of the average loan or receivable balance during the period.

Net write-off rate — principal, interest and fees — Includes, in the calculation of the net write-off rate, amounts for interest and fees in addition to principal for Card Member loans, and fees in addition to principal for Card Member receivables.

Network volumes — Represents the total of billed business and processed volumes.

Operating expenses — Represents salaries and employee benefits, professional services, data processing and equipment, and other expenses.

Processed revenue — Represents revenues related to network partnership agreements, comprising royalties, fees and amounts earned for facilitating transactions on cards issued by network partners. Processed revenue also includes fees earned on alternative payment solutions facilitated by American Express.

Processed volumes — Represents transaction volumes (including cash advances) on cards issued under network partnership agreements with banks and other institutions, including joint ventures, as well as alternative payment solutions facilitated by American Express.

Reserve build (release) — Represents the portion of the provisions for credit losses for the period related to increasing or decreasing reserves for credit losses as a result of, among other things, changes in volumes, macroeconomic outlook, portfolio composition and credit quality of portfolios. Reserve build represents the amount by which the provision for credit losses exceeds net write-offs, while reserve release represents the amount by which net write-offs exceed the provision for credit losses.

T&E spend — Represents spend on travel and entertainment, which primarily includes airline, cruise, lodging and dining merchant categories.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. The forward-looking statements, which address our current expectations regarding business and financial performance, among other matters, contain words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” “estimate,” “potential,” “continue” and similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements, include, but are not limited to, the following:

our ability to grow earnings per share in the future, which will depend in part on revenue growth, credit performance and the effective tax rate remaining consistent with current expectations and our ability to continue investing at high levels in areas that can drive sustainable growth (including our brand, value propositions, customers, colleagues, technology and coverage), controlling operating expenses, effectively managing risk and executing our share repurchase program, any of which could be impacted by, among other things, the factors identified in the subsequent paragraphs as well as the following: fiscal and monetary policies (including government shutdowns) and macroeconomic conditions, such as recession risks, effects of inflation, changes in interest rates, labor shortages and strikes or higher rates of unemployment, energy costs and the continued effects of the pandemic; geopolitical instability, including the ongoing Ukraine and Israel wars; the impact of any future contingencies, including, but not limited to, restructurings, investment gains or losses, impairments, changes in reserves, legal costs and settlements, the imposition of fines or monetary penalties and increases in Card Member remediation; issues impacting brand perceptions and our reputation; impacts related to new or renegotiated cobrand and other partner agreements; and the impact of regulation and litigation, which could affect the profitability of our business activities, limit our ability to pursue business opportunities, require changes to business practices or alter our relationships with Card Members, partners and merchants;
our ability to grow revenues net of interest expense and the sustainability of our future growth, which could be impacted by, among other things, the factors identified above and in the subsequent paragraphs, as well as the following: spending volumes not being consistent with expectations, including T&E spend growing slower than expected, further slowing in spend by U.S. small and mid-sized enterprise or U.S. large and global corporate customers, or a general slowdown or increase in volatility in consumer and business spending volumes; the strengthening of the U.S. dollar beyond expectations; an inability to address competitive pressures, innovate and expand our products and services, leverage the advantages of our differentiated business model and implement strategies and business initiatives, including within the premium consumer space, commercial payments and the global merchant network; the effects of the end of the moratorium on student loan repayments; the impact of the decommissioning of one of our alternative payment solutions; and merchant discount rates changing by a greater or lesser amount than expected;
net card fees not performing consistently with expectations, which could be impacted by, among other things, a deterioration in macroeconomic conditions impacting the ability and desire of Card Members to pay card fees; higher Card Member attrition rates; the pace of Card Member acquisition activity, particularly with respect to fee-based products; and our inability to address competitive pressures, develop attractive value propositions and implement our strategy of refreshing card products and enhancing benefits and services;
net interest income, the effects of interest rates and the growth rate of loans and Card Member receivables outstanding, and the portion of which that is interest bearing, being higher or lower than expectations, which could be impacted by, among other things, the behavior and financial strength of Card Members and their actual spending, borrowing and paydown patterns; our ability to effectively manage risk and enhance Card Member value propositions; changes in benchmark interest rates, including where such changes affect our assets or liabilities differently than expected; changes in capital and credit market conditions and the availability and cost of capital; credit actions, including line size and other adjustments to credit availability; the yield on Card Member loans not remaining consistent with current expectations; our deposit levels or the interest rates we offer on deposits changing from current expectations; and the effectiveness of our strategies to capture a greater share of existing Card Members’ spending and borrowings, and attract new, and retain existing, customers;
future credit performance, the level of future delinquency, reserve and write-off rates and the amount and timing of future reserve builds and releases, which will depend in part on macroeconomic factors such as unemployment rates, GDP and the volume of bankruptcies; the ability and willingness of Card Members to pay amounts owed to us; changes in consumer behavior that affect loan and receivable balances (such as paydown and revolve rates); the credit profiles of new customers acquired; the enrollment in, and effectiveness of, financial relief programs and the performance of accounts as they exit from such programs; collections capabilities and recoveries of previously written-

off loans and receivables; and governmental actions providing forms of relief with respect to certain loans and fees, and the termination of such action;

the actual amount to be spent on Card Member rewards and services and business development, and the relationship of these variable customer engagement costs to revenues, which could be impacted by continued changes in macroeconomic conditions and Card Member behavior as it relates to their spending patterns (including the level of spend in bonus categories), the redemption of rewards and offers (including travel redemptions) and usage of travel-related benefits; the costs related to reward point redemptions; further enhancements to product benefits to make them attractive to Card Members and prospective customers, potentially in a manner that is not cost-effective; new and renegotiated contractual obligations with business partners; and the pace and cost of the expansion of our global lounge collection;
the actual amount we spend on marketing in the future, which will be based in part on continued changes in the macroeconomic and competitive environment and business performance; management’s decisions regarding the timing of spending on marketing and the effectiveness of management’s investment optimization process, management’s identification and assessment of attractive investment opportunities and the receptivity of Card Members and prospective customers to advertising and customer acquisition initiatives; our ability to realize marketing efficiencies, optimize investment spending and drive increases in revenue; and our ability to balance expense control and investments in the business;
our ability to control operating expenses, including relative to future revenue growth, and the actual amount we spend on operating expenses in the future, which could be impacted by, among other things, salary and benefit expenses to attract and retain talent; a persistent inflationary environment; our ability to realize operational efficiencies, including through automation; management’s decision to increase or decrease spending in such areas as technology, business and product development, sales force, premium servicing and digital capabilities depending on overall business performance; our ability to innovate efficient channels of customer interactions and the willingness of Card Members to self-service and address issues through digital channels; restructuring activity; supply chain issues; fraud costs; compliance expenses or consulting, legal and other professional services fees, including as a result of litigation or internal and regulatory reviews; regulatory assessments; the level of M&A activity and related expenses; information or cyber security incidents; the payment of fines, penalties, disgorgement, restitution, non-income tax assessments and litigation-related settlements; the performance of Amex Ventures and other of our investments; impairments of goodwill or other assets; and the impact of changes in foreign currency exchange rates on costs;
our tax rate not remaining consistent with expectations, which could be impacted by, among other things, further changes in tax laws and regulation, our geographic mix of income, unfavorable tax audits and other unanticipated tax items;
changes affecting our plans regarding the return of capital to shareholders, which will depend on factors such as our capital levels and regulatory capital ratios; changes in the stress testing and capital planning process and new rulemakings and guidance from the Federal Reserve and other banking regulators, including changes to regulatory capital requirements, such as final rules resulting from the Basel III rule proposal; our results of operations and financial condition; our credit ratings and rating agency considerations; and the economic environment and market conditions in any given period;
changes in the substantial and increasing worldwide competition in the payments industry, including competitive pressure that may materially impact the prices charged to merchants that accept American Express cards, the desirability of our premium card products, competition for new and existing cobrand relationships, competition from new and non-traditional competitors and the success of marketing, promotion and rewards programs;
our ability to expand our leadership in the premium consumer space, which will be impacted in part by competition, brand perceptions (including perceptions related to merchant coverage) and reputation, and our ability to develop and market new benefits and value propositions that appeal to Card Members and new customers, offer attractive services and rewards programs and build greater customer loyalty, which will depend in part on identifying and funding investment opportunities, addressing changing customer behaviors, new product innovation and development, Card Member acquisition efforts and enrollment processes, including through digital channels, continuing to realize the benefits from strategic partnerships and evolving our infrastructure to support new products, services and benefits;
our ability to build on our leadership in commercial payments, which will depend in part on competition, the willingness and ability of companies to use credit and charge cards for procurement and other business expenditures as well as use our other products and services for financing needs, perceived or actual difficulties and costs related to setting up card-based B2B payment platforms, our ability to offer attractive value propositions and new products to potential customers, our ability to enhance and expand our payment and lending solutions, and build out a multi-product digital ecosystem to integrate our broad product set, which is dependent on our continued investment in capabilities, features, functionalities, platforms and technologies;
our ability to expand merchant coverage globally and our success, as well as the success of OptBlue merchant acquirers and network partners, in signing merchants to accept American Express, which will depend on, among other factors, the value propositions offered to merchants and merchant acquirers for card acceptance, the awareness and

willingness of Card Members to use American Express cards at merchants, scaling marketing and expanding programs to increase card usage, identifying new-to-plastic industries and businesses as they form, working with commercial buyers and suppliers to establish B2B acceptance, increasing coverage in priority international cities and countries and key industry verticals, and executing on our plans in China and for continued technological developments, including capabilities that allow for greater digital integration and modernization of our authorization platform;

our ability to stay on the leading edge of technology and digital payment and travel solutions, which will depend in part on our success in evolving our products and processes for the digital environment, developing new features in the Amex app and enhancing our digital channels, building partnerships and executing programs with other companies, effectively utilizing artificial intelligence and increasing automation to address servicing and other customer needs, and supporting the use of our products as a means of payment through online and mobile channels, all of which will be impacted by investment levels, new product innovation and development and infrastructure to support new products, services, benefits and partner integrations;
our ability to grow internationally, which could be impacted by regulation and business practices, such as those capping interchange or other fees, mandating network access or data localization, favoring local competitors or prohibiting or limiting foreign ownership of certain businesses; our inability to tailor products and services to make them attractive to local customers; competitors with more scale, local experience and established relationships with relevant customers, regulators and industry participants; the success of our network partners in acquiring Card Members and/or merchants; political or economic instability or regional hostilities, including as a result of the Ukraine and Israel wars;
a failure in or breach of our operational or security systems, processes or infrastructure, or those of third parties, including as a result of cyberattacks, which could compromise the confidentiality, integrity, privacy and/or security of data, disrupt our operations, reduce the use and acceptance of American Express cards and lead to regulatory scrutiny, litigation, remediation and response costs, and reputational harm;
changes in capital and credit market conditions, which may significantly affect our ability to meet our liquidity needs and expectations regarding capital ratios; our access to capital and funding costs; the valuation of our assets; and our credit ratings or those of our subsidiaries;
our funding plan being implemented in a manner inconsistent with current expectations, which will depend on various factors such as future business growth, the impact of global economic, political and other events on market capacity, demand for securities we offer, regulatory changes, our ability to securitize and sell loans and receivables and the performance of loans and receivables previously sold in securitization transactions;
our ability to implement our ESG strategies and initiatives, which depend in part on the amount and efficacy of our investments in product innovations, marketing campaigns, our supply chain and operations, and philanthropic, colleague and community programs; customer preferences and behaviors; and the cost and availability of solutions for a low carbon economy;
legal and regulatory developments, which could affect the profitability of our business activities; limit our ability to pursue business opportunities or conduct business in certain jurisdictions; require changes to business practices or alter our relationships with Card Members, partners, merchants and other third parties, including our ability to continue certain cobrand relationships in the EU; exert further pressure on merchant discount rates and our network business; result in increased costs related to regulatory oversight, litigation-related settlements, judgments or expenses, restitution to Card Members or the imposition of fines or monetary penalties; materially affect capital or liquidity requirements, results of operations or ability to pay dividends; or result in harm to the American Express brand;
changes in the financial condition and creditworthiness of our business partners, such as bankruptcies, restructurings or consolidations, including of cobrand partners, merchants that represent a significant portion of our business, network partners or financial institutions that we rely on for routine funding and liquidity, which could materially affect our financial condition or results of operations; and
factors beyond our control such as a further escalations of the Ukraine and Israel wars and other military conflicts, adverse developments affecting third parties, including other financial institutions, the severity and contagiousness of new COVID-19 variants, severe weather conditions, natural disasters, power loss, disruptions in telecommunications, terrorism and other catastrophic events, any of which could significantly affect demand for and spending on American Express cards, delinquency rates, loan and receivable balances, deposit levels and other aspects of our business and results of operations or disrupt our global network systems and ability to process transactions.

A further description of these uncertainties and other risks can be found in the 2022 Form 10-K, the Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 2023 and other reports filed with the Securities and Exchange Commission.

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