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

American Express is a globally integrated payments company, providing customers with access to products, insights and experiences that enrich lives and build business success. We are a leader in providing credit and charge cards to consumers, small businesses, mid-sized companies and large corporations 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, fraud prevention, and point-of-sale marketing and information products and services for merchants
Network services
Travel and lifestyle services
Expense management products and services
Other fee services, such as the design and operation of customer loyalty programs

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 mechanisms, systems and products that leverage new technologies, business models and customer relationships to create payment, financing or banking solutions. The payments industry continues to undergo dynamic changes in response to evolving technologies, consumer habits and merchant needs, such as an increased shift to digital payments.

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. We are also subject to evolving and extensive government regulation and supervision in jurisdictions around the world.

We will become a Category III bank holding company in the third quarter of 2024 as a result of our total consolidated assets exceeding $250 billion, calculated based on a daily average of total consolidated assets for the four quarters ended June 30, 2024, and thus become subject to heightened capital, liquidity and prudential requirements. See “Certain Legislative, Regulatory and Other Developments” for further information.

Table 1: Summary of Financial Performance


	As of or for the Three Months Ended June 30,						Change 2024 vs. 2023						As of or for the Six Months Ended June 30,						Change 2024 vs. 2023
(Millions, except percentages, per share amounts and where indicated)	2024			2023					2024			2023
Selected Income Statement Data
Total revenues net of interest expense	$	16,333		$	15,054		$	1,279		8	%		$	32,134		$	29,335		$	2,799	10	%
Provisions for credit losses	1,268			1,198			70			6			2,537			2,253			284		13
Total expenses	11,275			11,122			153			1			22,662			22,181			481		2
Pretax income	3,790			2,734			1,056			39			6,935			4,901			2,034		42
Income tax provision	775			560			215			38			1,483			911			572		63
Net income	3,015			2,174			841			39			5,452			3,990			1,462		37
Earnings per common share — diluted (a)	$	4.15		$	2.89		$	1.26		44	%		$	7.48		$	5.29		$	2.19	41	%

Selected Balance Sheet Data
Cash and cash equivalents	$	52,895		$	42,958		$	9,937		23	%		$	52,895		$	42,958		$	9,937	23	%
Card Member receivables	59,656			58,221			1,435			2			59,656			58,221			1,435		2
Card Member loans	130,851			114,602			16,249			14			130,851			114,602			16,249		14
Customer deposits	133,746			122,756			10,990			9			133,746			122,756			10,990		9
Long-term debt	$	51,521		$	46,725		$	4,796		10	%		$	51,521		$	46,725		$	4,796	10	%

Common Share Statistics (b)
Cash dividends declared per common share	$	0.70		$	0.60		$	0.10		17	%		$	1.40		$	1.20		$	0.20	17	%
Average common shares outstanding:
Basic	716			740			(24)			(3)	%		718			741			(23)		(3)	%
Diluted	717			741			(24)			(3)	%		719			742			(23)		(3)	%

Selected Metrics and Ratios
Network volumes (Billions)	$	440.6		$	426.6		$	14		3	%		$	859.8		$	825.5		$	34	4	%
Billed business (Billions)	$	388.2		$	368.1		$	20		5	%		$	755.2		$	713.6		$	42	6	%
Card Member loans and receivables
Net write-off rate — principal, interest and fees (c)	2.4		%	2.0		%							2.4		%	1.9		%
Net write-off rate — principal only — consumer and small business (c)(d)	2.1		%	1.8		%							2.1		%	1.7		%
30+ days past due as a % of total — consumer and small business (e)	1.2		%	1.2		%							1.2		%	1.2		%
Effective tax rate	20.4		%	20.5		%							21.4		%	18.6		%
Return on average equity (f)	41.4		%	33.0		%							37.9		%	30.9		%
Common Equity Tier 1	10.8		%	10.6		%							10.8		%	10.6		%

(a)Represents net income, less (i) earnings allocated to participating share awards of $23 million and $17 million for the three months ended June 30, 2024 and 2023, respectively, and $41 million and $31 million for the six months ended June 30, 2024 and 2023, respectively, and (ii) dividends on preferred shares of $15 million for both the three months ended June 30, 2024 and 2023, and $29 million for both the six months ended June 30, 2024 and 2023.

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

(c)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.

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

(e)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.

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

Business Environment

Our results for the second quarter reflect the earnings power of our business model, driven by our premium, high credit-quality customer base, as well as the greater scale and operating leverage we have achieved over the last several years and the ongoing success of our strategic investments to enhance our Membership Model. We continued to see solid momentum across the business, with stable growth in billings, strong new card acquisitions and excellent credit performance. Our second quarter results also reflect the sale of Accertify Inc. (Accertify), which closed on May 1, 2024, and resulted in a gain of $531 million ($479 million after tax; $0.66 per share). Net income for the quarter was $3.0 billion, or $4.15 per share, compared with net income of $2.2 billion, or $2.89 per share, a year ago.

Billed business grew by 5 percent year-over-year (6 percent on an FX-adjusted basis), consistent with the past few quarters, and in line with a slower growth environment.1 G&S grew by 5 percent year-over-year (6 percent on an FX-adjusted basis) and T&E spending grew by 6 percent (7 percent on an FX-adjusted basis), with sequential softening in airline and lodging spend growth, while growth in restaurants, our largest T&E category, remained strong.1 U.S. Consumer Services billed business grew by 6 percent year-over-year, with continued strength in spending by Millennial and Gen-Z Card Members. Commercial Services billed business grew by 2 percent on a year-over-year basis, reflecting continued modest growth from U.S. small and mid-sized enterprise (SME) Card Members. International Card Services billed business grew by 10 percent year-over-year (13 percent on an FX-adjusted basis), driven by continued growth in spend across all regions and customer types outside the United States.1

Total revenues net of interest expense increased 8 percent year-over-year (9 percent on an FX-adjusted basis).1 The growth in billed business drove a 4 percent increase in Discount revenue, our largest revenue line. Net card fees increased 15 percent year-over-year, reflecting high levels of new card acquisition and Card Member retention, as well as our cycle of product refreshes. Net interest income increased 20 percent versus the prior year, primarily reflecting growth in our revolving loan balances, which has moderated over the last several quarters.

Total loans and Card Member receivables increased 11 percent year-over-year, with growth continuing to moderate sequentially. Provisions for credit losses increased, primarily driven by higher net write-offs, partially offset by a lower reserve build compared to last year. Net write-off and delinquency rates remained best-in-class, supported by our premium global customer base, our strong focus on risk management and disciplined growth strategy.

Card Member rewards, Card Member services and Business development expenses are generally correlated to volumes or are variable based on usage and collectively increased year-over-year primarily due to growth in billed business and premium card accounts, contributing to a higher usage of travel-related benefits. Marketing expense increased 5 percent year-over-year, as we continue to invest at an elevated level in acquiring high spending, high quality customers and other growth initiatives. During the quarter we acquired 3.3 million proprietary new cards. We continue to invest in and enhance our Membership Model of premium payment products, differentiated membership services and partnerships and partner-funded value, including with our announcement in the quarter to acquire Tock and Rooam to build on the success of our Resy restaurant platform.

Operating expenses decreased 13 percent, primarily reflecting the gain recognized on the sale of Accertify, partially offset by higher compensation costs to support business growth. Excluding the Accertify gain, operating expenses grew at a slower pace than revenue growth, reflecting continued operating expense discipline. These operating expense efficiencies demonstrate the earnings power of our core business that enables us to invest in growth initiatives at elevated levels. We remain focused on driving marketing and operating expense efficiencies over time.

During the second quarter, we maintained our capital ratios within our current target range of 10 to 11 percent and returned $2.3 billion of capital to our shareholders in the form of 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 balance sheet growth. Our robust capital, funding and liquidity positions provide us with significant flexibility to maintain a strong balance sheet.

Our performance continues to give us confidence in our business model and while we recognize the uncertainty of the geopolitical and macroeconomic environment and the evolving regulatory and competitive landscape, 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.

1 The 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 six months ended June 30, 2024 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 June 30,				Change 2024 vs. 2023						Six Months Ended June 30,				Change 2024 vs. 2023
(Millions, except percentages)	2024		2023				2024			2023
Discount revenue	$	8,855	$	8,481	$	374		4	%		$	17,235	$	16,428	$	807	5	%
Net card fees	2,060		1,789		271			15			4,034		3,502		532		15
Service fees and other revenue	1,280		1,232		48			4			2,572		2,450		122		5
Processed revenue	408		447		(39)			(9)			794		867		(73)		(8)
Total non-interest revenues	12,603		11,949		654			5			24,635		23,247		1,388		6
Total interest income	5,794		4,775		1,019			21			11,569		9,191		2,378		26
Total interest expense	2,064		1,670		394			24			4,070		3,103		967		31
Net interest income	3,730		3,105		625			20			7,499		6,088		1,411		23
Total revenues net of interest expense	$	16,333	$	15,054	$	1,279		8	%		$	32,134	$	29,335	$	2,799	10	%

Total Revenues Net of Interest Expense

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

Net card fees increased for both the three and six month periods, primarily driven by growth in our premium card portfolios. See Table 5 for more details on proprietary cards-in-force and average fee per card.

Service fees and other revenue increased for both the three and six month periods, primarily driven by higher merchant service fees, higher foreign exchange related revenues associated with Card Member cross-currency spending and higher income from equity method investments. The increase in the three month period was partially offset by Accertify revenues included in the prior year. The increase in the six month period was also driven by increases in travel commissions and fees from our consumer travel business.

Processed revenue decreased for both the three and six month periods, primarily driven by decreases in volumes associated with the decommission of one of our alternative payment solutions in the prior year as well as lower network partner volumes. See Tables 5 and 6 for more details on processed volume performance.

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

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

Table 3: Provisions for Credit Losses Summary


	Three Months Ended June 30,				Change 2024 vs. 2023						Six Months Ended June 30,				Change 2024 vs. 2023
(Millions, except percentages)	2024		2023				2024			2023
Card Member loans
Net write-offs	$	913	$	597	$	316		53	%		$	1,768	$	1,083	$	685	63	%
Reserve build (release) (a)	57		326		(269)			(83)			216		626		(410)		(65)
Total	970		923		47			5			1,984		1,709		275		16
Card Member receivables
Net write-offs	205		243		(38)			(16)			422		473		(51)		(11)
Reserve (release) build (a)	21		(13)		34			#			—		(21)		21		#
Total	226		230		(4)			(2)			422		452		(30)		(7)
Other
Net write-offs - Other loans	45		28		17			61			88		44		44		#
Net write-offs - Other receivables	4		3		1			33			10		6		4		67
Reserve build (release) - Other loans (a)	4		15		(11)			(73)			14		39		(25)		(64)
Reserve build (release) - Other receivables (a)	19		(1)		20			#			19		3		16		#
Total	72		45		27			60			131		92		39		42
Total provisions for credit losses	$	1,268	$	1,198	$	70		6	%		$	2,537	$	2,253	$	284	13	%
# Denotes a variance of 100 percent or more

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

Provisions for Credit Losses

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

Card Member receivables provision for credit losses decreased for both the three and six month periods, primarily due to lower net write-offs, partially offset by reserve builds in the current periods versus reserve releases in the prior periods. The reserve build in the current three month period was primarily driven by an increase in receivables outstanding for U.S. consumer and U.S. small business customers. The reserve releases in the prior periods were primarily driven by lower delinquencies, partially offset by increases in receivables outstanding.

Other provision for credit losses increased for the three month period, primarily due to higher net write-offs and a higher reserve build in the current period. Other provision for credit losses increased for the six month period, primarily due to higher net write-offs, partially offset by a lower reserve build in the current period. The reserve builds in the current periods were primarily driven by a reserve related to amounts due from a merchant in bankruptcy, as well as increases in non-card loans outstanding. The reserve builds in the prior periods were primarily driven by increases in non-card loans outstanding.

Table 4: Expenses Summary


	Three Months Ended June 30,				Change 2024 vs. 2023						Six Months Ended June 30,				Change 2024 vs. 2023
(Millions, except percentages)	2024		2023				2024			2023
Card Member rewards	$	4,227	$	3,956	$	271		7	%		$	8,001	$	7,722	$	279	4	%
Business development	1,427		1,388		39			3			2,819		2,781		38		1
Card Member services	1,154		949		205			22			2,325		1,932		393		20
Marketing	1,480		1,408		72			5			2,956		2,749		207		8
Salaries and employee benefits	1,949		1,875		74			4			4,047		3,889		158		4
Other, net	1,038		1,546		(508)			(33)			2,514		3,108		(594)		(19)
Total expenses	$	11,275	$	11,122	$	153		1	%		$	22,662	$	22,181	$	481	2	%

Expenses

Card Member rewards expense increased for both the three and six month periods, driven by increases in Membership Rewards and cash back rewards expenses, collectively, of $148 million and $20 million, and cobrand rewards expense of $122 million and $259 million for the three and six month periods, respectively, all of which were primarily driven by higher billed business. The increase in Membership Rewards expense in the six month period was partially offset by a benefit from enhancements to the models that estimate future redemptions of Membership Reward points by U.S. Card Members as well as lower redemption costs.

The Membership Rewards Ultimate Redemption Rate (URR) for current program participants was 96 percent (rounded down) at both June 30, 2024 and 2023.

Business development expense increased for both the three and six month periods, primarily due to increased partner payments driven by higher network volumes, partially offset by lower client incentives. The increase in the six month period was also partially offset by a prior-year charge related to revenue allocated to a joint venture partner.

Card Member services expense increased for both the three and six month periods, primarily due to growth in premium card accounts, contributing to a higher usage of travel-related benefits.

Marketing expense increased for both the three and six month periods, reflecting higher levels of spending on customer acquisition and other growth initiatives.

Salaries and employee benefits expense increased for both the three and six month periods, primarily driven by higher incentive compensation expenses, reflecting the continued investment in our colleagues to support business growth. The increase in the three month period was partially offset by lower current and deferred compensation costs.

Other expenses decreased for both the three and six month periods, primarily driven by the gain recognized on the sale of Accertify and net gains on Amex Ventures investments, partially offset by increases in professional services expenses.

Income Taxes

The effective tax rate was 20.4 percent and 20.5 percent for the three months ended June 30, 2024 and 2023, respectively, which reflected discrete tax benefits primarily related to the sale of Accertify in the current period and a legal entity restructuring in the prior period. The effective tax rate was 21.4 percent and 18.6 percent for the six months ended June 30, 2024 and 2023, respectively. The increase for the six month period primarily reflected discrete tax benefits in the prior period related to the resolution of certain prior-year tax items.

Table 5: Selected Card-Related Statistical Information


	As of or for the Three Months Ended June 30,				Change 2024 vs. 2023			As of or for the Six Months Ended June 30,					Change 2024 vs. 2023
	2024		2023				2024			2023
Network volumes (billions)	$	440.6	$	426.6	3	%		$	859.8		$	825.5	4	%
Billed business	$	388.2	$	368.1	5			$	755.2		$	713.6	6
Processed volumes	$	52.4	$	58.5	(10)			$	104.6		$	111.9	(7)
Cards-in-force (millions)	144.3		137.9		5			144.3			137.9		5
Proprietary cards-in-force	82.1		79.3		4			82.1			79.3		4
Basic cards-in-force (millions)	121.4		116.0		5			121.4			116.0		5
Proprietary basic cards-in-force	63.1		61.0		3			63.1			61.0		3
Proprietary new cards acquired (millions)	3.3		3.0		10			6.7			6.4		5
Average proprietary basic Card Member spending (dollars)	$	6,192	$	6,075	2			$	12,112		$	11,869	2
Average fee per card (dollars) (a)	$	101	$	91	11	%		$	99		$	90	10	%
Discount revenue as a % of Billed business	2.28%		2.30%					2.28%			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 June 30, 2024				Six Months Ended June 30, 2024
	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	3	%	4	%	4	%	5	%
Total billed business	5		6		6		6
U.S. Consumer Services	6				7
Commercial Services	2		2		2		2
International Card Services	10		13		11		13
Processed volumes	(10)		(7)		(7)		(2)

Merchant industry billed business metrics
G&S spend (72% of billed business for both the three and six months ended June 30, 2024)	5		6		5		6
T&E spend (28% of billed business for both the three and six months ended June 30, 2024)	6		7		7		8
Airline spend (6% and 7% of billed business for the three and six months ended June 30, 2024, respectively)	4	%	5	%	6	%	7	%

(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 June 30,						Change 2024 vs. 2023			As of or for the Six Months Ended June 30,							Change 2024 vs. 2023
(Millions, except percentages)	2024			2023					2024				2023
Card Member loans and receivables:
Net write-off rate — principal, interest and fees (a)	2.4		%	2.0		%				2.4		%		1.9		%
Net write-off rate — principal only — consumer and small business (a)(b)	2.1		%	1.8		%				2.1		%		1.7		%
30+ days past due as a % of total — consumer and small business (c)	1.2		%	1.2		%				1.2		%		1.2		%

Card Member loans:
Card Member loans	$	130,851		$	114,602		14	%		$	130,851			$	114,602		14	%
Credit loss reserves:
Beginning balance	$	5,271		$	4,053		30			$	5,118			$	3,747		37
Provisions — principal, interest and fees	970			923			5			1,984				1,709			16
Net write-offs — principal less recoveries	(753)			(490)			54			(1,458)				(887)			64
Net write-offs — interest and fees less recoveries	(160)			(107)			50			(310)				(196)			58
Other (d)	(7)			11			#			(13)				17			#
Ending balance	$	5,321		$	4,390		21			$	5,321			$	4,390		21
% of loans	4.1		%	3.8		%				4.1		%		3.8		%
% of past due	312		%	336		%				312		%		336		%
Average loans	$	128,321		$	112,414		14			$	126,507			$	110,228		15
Net write-off rate — principal, interest and fees (a)	2.8		%	2.1		%				2.8		%		2.0		%
Net write-off rate — principal only (a)	2.3		%	1.7		%				2.3		%		1.6		%
30+ days past due as a % of total	1.3		%	1.1		%				1.3		%		1.1		%

Card Member receivables:
Card Member receivables	$	59,656		$	58,221		2			$	59,656			$	58,221		2
Credit loss reserves:
Beginning balance	$	151		$	223		(32)			$	174			$	229		(24)
Provisions — principal and fees	226			230			(2)			422				452			(7)
Net write-offs — principal and fees less recoveries	(205)			(243)			(16)			(422)				(473)			(11)
Other (d)	(1)			—			—			(3)				2			#
Ending balance	$	171		$	210		(19)	%		$	171			$	210		(19)	%
% of receivables	0.3		%	0.4		%				0.3		%		0.4		%
Net write-off rate — principal and fees (a)	1.4		%	1.7		%				1.5		%		1.6		%
Net write-off rate — principal only — consumer and small business (a)(b)	1.5		%	1.9		%				1.6		%		1.9		%
30+ days past due as a % of total — consumer and small business (c)	0.9		%	1.2		%				0.9		%		1.2		%
# 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 June 30,						Six Months Ended June 30,
(Millions, except percentages)	2024			2023			2024			2023
Net interest income	$	3,730		$	3,105		$	7,499		$	6,088
Exclude:
Interest expense not attributable to our Card Member loan portfolio (a)	912			728			1,794			1,352
Interest income not attributable to our Card Member loan portfolio (b)	(920)			(703)			(1,836)			(1,305)
Adjusted net interest income (c)	$	3,722		$	3,130		$	7,457		$	6,135
Average Card Member loans	$	128,321		$	112,414		$	126,507		$	110,228
Net interest income divided by average Card Member loans (c)	11.7		%	11.1		%	11.9		%	11.1		%
Net interest yield on average Card Member loans (c)	11.7		%	11.2		%	11.9		%	11.2		%

(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 June 30,				Change				Six Months Ended June 30,				Change
(Millions, except percentages)	2024		2023		2024 vs. 2023				2024		2023		2024 vs. 2023
Revenues
Non-interest revenues	$	5,029	$	4,643	$	386	8	%	$	9,795	$	9,002	$	793	9	%
Interest income	3,474		2,934		540		18		6,955		5,709		1,246		22
Interest expense	771		647		124		19		1,519		1,198		321		27
Net interest income	2,703		2,287		416		18		5,436		4,511		925		21
Total revenues net of interest expense	7,732		6,930		802		12		15,231		13,513		1,718		13
Provisions for credit losses	706		659		47		7		1,433		1,243		190		15
Total revenues net of interest expense after provisions for credit losses	7,026		6,271		755		12		13,798		12,270		1,528		12
Expenses
Card Member rewards, business development, Card Member services and marketing	4,351		3,965		386		10		8,426		7,778		648		8
Salaries and employee benefits and other operating expenses	1,115		1,056		59		6		2,199		2,112		87		4
Total expenses	5,466		5,021		445		9		10,625		9,890		735		7
Pretax segment income	$	1,560	$	1,250	$	310	25	%	$	3,173	$	2,380	$	793	33	%

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 across all revenue categories for both the three and six month periods, primarily driven by higher Discount revenue and Net card fees.

Discount revenue increased 5 percent and 6 percent for the three and six 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 17 percent and 16 percent for the three and six month periods, respectively, primarily driven by growth in our premium card portfolios.

Service fees and other revenue increased 16 percent and 12 percent for the three and six month periods, respectively. The increase in the three month period was primarily driven by the change in the allocation of TLS revenues in the prior year as described above. The increase in the six month period was primarily driven by higher travel commissions and fees from our consumer travel business and revenue from the sale of reward points.

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

Interest expense increased for both the three and six 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 six month periods, primarily due to higher net write-offs, partially offset by lower reserve builds in the current periods. The reserve builds in the current periods were primarily driven by increases in loans outstanding, partially offset by lower delinquencies. The reserve builds in the prior periods were primarily driven by increases in loans outstanding and, for the prior six month period, by higher delinquencies.

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

Expenses

Total expenses increased for both the three and six month periods, primarily driven by higher Card Member services, Business development and Card Member rewards expenses.

Card Member rewards expense increased for both the three and six month periods, driven by increases in Membership Rewards, cash back and cobrand rewards expenses, all of which were primarily driven by higher billed business. The increase in Membership Rewards expense for the six month period was partially offset by the above-mentioned benefit from enhancements to the U.S. URR models as well as lower redemption costs.

Business development expense increased for both the three and six month periods, primarily due to increased partner payments driven by higher billed business.

Card Member services expense increased for both the three and six month periods, primarily due to growth in premium card accounts, contributing to a higher usage of travel-related benefits.

Marketing expense increased for both the three and six month periods, reflecting higher levels of spending on customer acquisition and other growth initiatives.

Salaries and employee benefits and other expenses increased for both the three and six month periods. The increase in the three month period was primarily due to higher compensation expenses, partially offset by higher allocated service costs in the prior year, which includes an allocation of TLS servicing costs as described above. The increase in the six month period was primarily due to an increase in allocated service costs.

Table 10: USCS Selected Statistical Information


	As of or for the Three Months Ended June 30,						Change 2024 vs. 2023			As of or for the Six Months Ended June 30,							Change 2024 vs. 2023
(Millions, except percentages and where indicated)	2024			2023					2024				2023
Billed business (billions)	$	165.1		$	155.4		6	%		$	318.5			$	297.6		7	%
Proprietary cards-in-force	45.2			43.2			5			45.2				43.2			5
Proprietary basic cards-in-force	31.7			30.2			5			31.7				30.2			5
Average proprietary basic Card Member spending (dollars)	$	5,258		$	5,181		1			$	10,220			$	10,005		2
Total segment assets	$	108,224		$	94,944		14			$	108,224			$	94,944		14
Card Member loans:
Total loans	$	84,958		$	75,613		12			$	84,958			$	75,613		12
Average loans	$	83,452		$	74,212		12			$	82,648			$	73,068		13
Net write-off rate — principal, interest and fees (a)	2.9		%	2.1		%				2.9		%		2.0		%
Net write-off rate — principal only (a)	2.4		%	1.7		%				2.3		%		1.6		%
30+ days past due as a % of total	1.3		%	1.1		%				1.3		%		1.1		%
Calculation of Net Interest Yield on Average Card Member Loans:
Net interest income	$	2,703		$	2,287					$	5,436			$	4,511
Exclude:
Interest expense not attributable to our Card Member loan portfolio (b)	44			44						80				80
Interest income not attributable to our Card Member loan portfolio (c)	(132)			(91)						(254)				(173)
Adjusted net interest income (d)	$	2,615		$	2,240					$	5,262			$	4,418
Average Card Member loans	$	83,452		$	74,212					$	82,648			$	73,068
Net interest income divided by average Card Member loans (d)	13.0		%	12.4		%				13.2		%		12.4		%
Net interest yield on average Card Member loans (d)	12.6		%	12.1		%				12.8		%		12.2		%
Card Member receivables:
Total receivables	$	13,796		$	13,734		—	%		$	13,796			$	13,734		—	%
Net write-off rate — principal and fees (a)	1.2		%	1.3		%				1.3		%		1.3		%
Net write-off rate — principal only (a)	1.1		%	1.2		%				1.2		%		1.2		%
30+ days past due as a % of total	0.7		%	0.8		%				0.7		%		0.8		%

(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 June 30,				Change 2024 vs. 2023						Six Months Ended June 30,				Change 2024 vs. 2023
(Millions, except percentages)	2024		2023				2024			2023
Revenues
Non-interest revenues	$	3,333	$	3,301	$	32		1	%		$	6,527	$	6,408	$	119	2	%
Interest income	1,051		792		259			33			2,056		1,498		558		37
Interest expense	430		364		66			18			844		685		159		23
Net interest income	621		428		193			45			1,212		813		399		49
Total revenues net of interest expense	3,954		3,729		225			6			7,739		7,221		518		7
Provisions for credit losses	349		339		10			3			704		622		82		13
Total revenues net of interest expense after provisions for credit losses	3,605		3,390		215			6			7,035		6,599		436		7
Expenses
Card Member rewards, business development, Card Member services and marketing	1,958		1,895		63			3			3,777		3,749		28		1
Salaries and employee benefits and other operating expenses	742		782		(40)			(5)			1,475		1,507		(32)		(2)
Total expenses	2,700		2,677		23			1			5,252		5,256		(4)		—
Pretax segment income	$	905	$	713	$	192		27	%		$	1,783	$	1,343	$	440	33	%

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 six month periods, primarily driven by higher Discount revenue and Net card fees.

Discount revenue increased 2 percent and 1 percent for the three and six 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 11 percent and 12 percent for the three and six month periods, respectively, primarily driven by growth in our premium card portfolios.

Service fees and other revenue decreased 20 percent for the three month period and was relatively flat for the six month period. The decrease in the three month period was largely driven by the change in the allocation of TLS revenues in the prior year as described above.

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

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

Provisions for Credit Losses

Card Member loans provision for credit losses for the three month period remained largely in line with the prior period, as the lower reserve build in the current period was offset by higher net write-offs. Card Member loans provision for credit losses increased for the six month period, primarily due to higher net write-offs, partially offset by a lower reserve build in the current period. The reserve builds in both current periods were primarily driven by increases in loans outstanding, partially offset for the current three month period by lower delinquencies. The reserve builds in the prior periods were primarily driven by increases in loans outstanding and, for the prior six month period, higher delinquencies.

Card Member receivables provision for credit losses increased for the three month period, primarily due to a reserve build in the current period, versus a reserve release in the prior period, partially offset by lower net write-offs. Card Member receivables provision for credit losses decreased for the six month period, primarily due to lower net write-offs, partially offset by a reserve build in the current period, versus a reserve release in the prior period. The reserve build in the current three month period was primarily driven by an increase in receivables outstanding for U.S. small business customers. The reserve releases in the prior periods were primarily driven by lower delinquencies, partially offset by increases in receivables outstanding.

Expenses

Total expenses increased for the three month period and were flat for the six month period. The increase in the three month period was primarily driven by higher Marketing expense, partially offset by a decrease in Operating expenses.

Card Member rewards expense increased for the three month period and decreased for the six month period. The increase in the three month period was driven by higher cobrand rewards and Membership Rewards expenses, both of which were primarily driven by higher billed business. The decrease in the six month period was primarily driven by lower Membership Rewards expense, primarily due to the above-mentioned benefit from enhancements to the U.S. URR models as well as lower redemption costs, partially offset by higher billed business.

Business development expense decreased for both the three and six month periods, primarily due to lower client incentives, partially offset by increased partner payments, primarily driven by an increase in billed business.

Card Member services expense increased for both the three and six month periods, primarily due to growth in premium card accounts, contributing to a higher usage of travel-related benefits.

Marketing expense increased for both the three and six month periods, primarily reflecting higher levels of spending on customer acquisition and other growth initiatives.

Salaries and employee benefits and other expenses decreased for both the three and six month periods, primarily due to higher allocated service costs in the prior year, which includes an allocation of TLS servicing costs as described above.

Table 12: CS Selected Statistical Information


	As of or for the Three Months Ended June 30,						Change 2024 vs 2023			As of or for the Six Months Ended June 30,							Change 2024 vs 2023
(Millions, except percentages and where indicated)	2024			2023					2024				2023
Billed business (billions)	$	132.3		$	130.2		2	%		$	259.5			$	255.2		2	%
Proprietary cards-in-force	15.4			15.4			—			15.4				15.4			—
Average Card Member spending (dollars)	$	8,588		$	8,490		1			$	16,845			$	16,775		—
Total segment assets	$	58,993		$	54,290		9			$	58,993			$	54,290		9
Card Member loans:
Total loans	$	28,621		$	23,830		20			$	28,621			$	23,830		20
Average loans	$	28,031		$	23,505		19			$	27,243			$	22,756		20
Net write-off rate — principal, interest and fees (a)	2.7		%	1.9		%				2.7		%		1.7		%
Net write-off rate — principal only (a)	2.3		%	1.6		%				2.3		%		1.4		%
30+ days past due as a % of total	1.4		%	1.2		%				1.4		%		1.2		%
Calculation of Net Interest Yield on Average Card Member Loans:
Net interest income	$	621		$	428					$	1,212			$	813
Exclude:
Interest expense not attributable to our Card Member loan portfolio (b)	190			178						374				340
Interest income not attributable to our Card Member loan portfolio (c)	(81)			(46)						(155)				(84)
Adjusted net interest income (d)	$	730		$	560					$	1,431			$	1,069
Average Card Member loans	$	28,031		$	23,505					$	27,243			$	22,756
Net interest income divided by average Card Member loans (d)	8.9		%	7.3		%				8.9		%		7.2		%
Net interest yield on average Card Member loans (d)	10.5		%	9.6		%				10.6		%		9.5		%
Card Member receivables:
Total receivables	$	26,737		$	27,227		(2)	%		$	26,737			$	27,227		(2)	%
Net write-off rate — principal and fees (e)	1.4		%	1.5		%				1.4		%		1.5		%
Net write-off rate — principal only (a) — small business	2.0		%	2.1		%				2.0		%		2.1		%
30+ days past due as a % of total — small business	1.2		%	1.7		%				1.2		%		1.7		%
90+ days past billing as a % of total (e) — corporate	0.4		%	0.5		%				0.4		%		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).

(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 June 30,				Change				Six Months Ended June 30,				Change
(Millions, except percentages)	2024		2023		2024 vs. 2023				2024		2023		2024 vs. 2023
Revenues
Non-interest revenues	$	2,548	$	2,349	$	199	8	%	$	4,985	$	4,616	$	369	8	%
Interest income	577		497		80		16		1,160		964		196		20
Interest expense	303		261		42		16		610		485		125		26
Net interest income	274		236		38		16		550		479		71		15
Total revenues net of interest expense	2,822		2,585		237		9		5,535		5,095		440		9
Provisions for credit losses	192		198		(6)		(3)		374		379		(5)		(1)
Total revenues net of interest expense after provisions for credit losses	2,630		2,387		243		10		5,161		4,716		445		9
Expenses
Card Member rewards, business development, Card Member services and marketing	1,592		1,386		206		15		3,147		2,805		342		12
Salaries and employee benefits and other operating expenses	748		748		—		—		1,472		1,469		3		—
Total expenses	2,340		2,134		206		10		4,619		4,274		345		8
Pretax segment income	$	290	$	253	$	37	15	%	$	542	$	442	$	100	23	%

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 six month periods, primarily driven by higher Discount revenue and Net card fees.

Discount revenue increased 9 percent and 10 percent for the three and six month periods, respectively (13 percent and 12 percent, respectively, 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 15 percent for both the three and six month periods, (19 percent on an FX-adjusted basis for both periods), primarily driven by growth in our premium card portfolios.2

Service fees and other revenue was relatively flat for both the three and six month periods. Both the three and six month periods reflect increases in foreign exchange related revenues associated with Card Member cross-currency spending, offset for the three month period by a decrease in delinquency fees and for the six month period by a benefit in the prior year related to a portion of the revenue allocated to a joint venture partner as described in Business development expense below.

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

Interest expense increased for both the three and six 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 increased for both the three and six month periods. The increase in the three 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 increase in the six month period was primarily due to higher net write-offs, partially offset by a lower reserve build in the current period. The reserve builds in both current periods were primarily driven by increases in loans outstanding, partially offset by lower delinquencies. The reserve release in the prior three month period was primarily driven by lower delinquencies, partially offset by an increase in loans outstanding. The reserve build in the prior six month period was primarily driven by an increase in loans outstanding and higher delinquencies.

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

Expenses

Total expenses increased for both the three and six month periods, primarily driven by higher Card Member rewards and Card Member services expenses.

Card Member rewards expense increased for both the three and six month periods, primarily driven by higher billed business.

Business development expense increased for the three month period and decreased for the six month period. The increase in both periods was primarily due to increased partner payments driven by higher billed business, which was more than offset in the six 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 six month periods, primarily due to growth in premium card accounts, contributing to a higher usage of travel-related benefits.

Marketing expense increased for both the three and six month periods, reflecting higher levels of spending on customer acquisition and other growth initiatives.

Salaries and employee benefits and other expenses were flat for both the three and six month periods. The three month period was primarily driven by a decrease in allocated service costs, offset by higher compensation costs. The six month period was primarily driven by an increase in allocated service costs and technology expense, offset by a decrease in compensation costs.

Table 14: ICS Selected Statistical Information


	As of or for the Three Months Ended June 30,						Change 2024 vs. 2023			As of or for the Six Months Ended June 30,							Change 2024 vs. 2023
(Millions, except percentages and where indicated)	2024			2023					2024				2023
Billed business (billions)	$	90.2		$	81.8		10	%		$	175.6			$	158.7		11	%
Proprietary cards-in-force	21.5			20.7			4			21.5				20.7			4
Proprietary basic cards-in-force	16.0			15.4			4			16.0				15.4			4
Average proprietary basic Card Member spending (dollars)	$	5,681		$	5,360		6			$	11,122			$	10,473		6
Total segment assets	$	41,982		$	38,183		10			$	41,982			$	38,183		10
Card Member loans — consumer and small business:
Total loans	$	17,272		$	15,159		14			$	17,272			$	15,159		14
Average loans	$	16,838		$	14,697		15			$	16,616			$	14,404		15
Net write-off rate — principal, interest and fees (a)	2.5		%	2.8		%				2.6		%		2.5		%
Net write-off rate — principal only (a)	2.1		%	2.4		%				2.1		%		2.1		%
30+ days past due as a % of total	1.2		%	1.3		%				1.2		%		1.3		%
Calculation of Net Interest Yield on Average Card Member Loans:
Net interest income	$	274		$	236					$	550			$	479
Exclude:
Interest expense not attributable to our Card Member loan portfolio (b)	118			110						244				198
Interest income not attributable to our Card Member loan portfolio (c)	(15)			(16)						(30)				(29)
Adjusted net interest income (d)	$	377		$	330					$	764			$	648
Average Card Member loans	$	16,838		$	14,697					$	16,616			$	14,404
Net interest income divided by average Card Member loans (d)	6.5		%	6.4		%				6.7		%		6.7		%
Net interest yield on average Card Member loans (d)	9.0		%	9.0		%				9.3		%		9.1		%
Card Member receivables:
Total receivables	$	19,123		$	17,260		11	%		$	19,123			$	17,260		11	%
Net write-off rate — principal and fees (e)	1.5		%	2.3		%				1.6		%		2.2		%
Net write-off rate — principal only (a) — consumer and small business	1.6		%	2.5		%				1.6		%		2.4		%
30+ days past due as a % of total — consumer and small business	0.9		%	1.2		%				0.9		%		1.2		%
90+ days past billing as a % of total (e) — corporate	0.4		%	0.5		%				0.4		%		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 June 30,				Change 2024 vs. 2023						Six Months Ended June 30,				Change 2024 vs. 2023
(Millions, except percentages and where indicated)	2024		2023				2024			2023
Revenues
Non-interest revenues	$	1,684	$	1,675	$	9		1	%		$	3,339	$	3,271	$	68	2	%
Interest income	13		14		(1)			(7)			30		28		2		7
Interest expense	(176)		(174)		(2)			(1)			(374)		(305)		(69)		(23)
Net interest income	189		188		1			1			404		333		71		21
Total revenues net of interest expense	1,873		1,863		10			1			3,743		3,604		139		4
Provisions for credit losses	20		1		19			#			26		7		19		#
Total revenues net of interest expense after provisions for credit losses	1,853		1,862		(9)			—			3,717		3,597		120		3
Expenses
Business development, Card Member services and marketing	374		420		(46)			(11)			726		808		(82)		(10)
Salaries and employee benefits and other operating expenses	(58)		479		(537)			#			437		941		(504)		(54)
Total expenses	316		899		(583)			(65)			1,163		1,749		(586)		(34)
Pretax segment income	1,537		963		574			60			2,554		1,848		706		38
Network volumes (billions)	440.6		426.6		$	14		3			859.8		825.5		$	34	4
Total segment assets	$	24,446	$	17,024				44	%		$	24,446	$	17,024			44	%
# 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 for both the three and six month periods, primarily driven by higher Discount revenue and Service fees and other revenue, partially offset by lower Processed revenue.

Discount revenue increased 2 percent and 3 percent for the three and six 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 3 percent and 8 percent for the three and six month periods, respectively, primarily driven by higher merchant service fees and foreign exchange related revenues associated with Card Member cross-currency spending, partially offset by Accertify revenues included in the prior year.

Processed revenue decreased 6 percent and 5 percent for the three and six month periods, respectively, and was flat for both periods on an FX-adjusted basis.3

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 six month periods, primarily due to higher interest expense credits, primarily driven by increases in average merchant payables and higher interest rates.

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

Provisions for Credit Losses

Other provision for credit losses increased for both the three and six month periods, primarily due to higher reserve builds in the current periods driven by a reserve related to amounts due from a merchant in bankruptcy.

Expenses

Total expenses decreased for both the three and six month periods, primarily driven by lower Operating expenses.

Business development expense decreased for both the three and six month periods, primarily due to decreased partner payments driven by lower contractual rates.

Marketing expense decreased for both the three and six month periods, reflecting lower levels of spending on merchant engagement initiatives.

Salaries and employee benefits and other expenses decreased for both the three and six month periods, primarily driven by the gain recognized on the sale of Accertify included in the Other, net component of operating expenses, partially offset by increases in allocated service costs.

Corporate & Other

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

Corporate & Other pretax loss was $502 million and $445 million for the three months ended June 30, 2024 and 2023, respectively, and $1.1 billion for both the six months ended June 30, 2024 and 2023. The increase in the pretax loss for the three month period was primarily driven by higher incentive compensation, partially offset by net gains on Amex Ventures investments. Higher incentive compensation in the six month period was wholly offset by net gains 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 under a variety of adverse circumstances.

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 issuance of subordinated debt and preferred shares, as well 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 American Express Company 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 U.S. federal bank regulatory agencies 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 the “Supervision and Regulation ― Capital and Liquidity Regulation” section of our Annual Report on Form 10-K for the year ended December 31, 2023 (the 2023 Form 10-K) for more information.

The following table presents our regulatory risk-based capital and leverage ratios and those of AENB, as of June 30, 2024:

Table 16: Regulatory Risk-Based Capital and Leverage Ratios


	Effective Minimum (a)		Ratios as of June 30, 2024
Risk-Based Capital
Common Equity Tier 1	7.0	%
American Express Company			10.8	%
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			13.5
American Express National Bank			13.0
Tier 1 Leverage	4.0	%
American Express Company			9.9
American Express National Bank			9.1	%

(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 June 30, 2024:

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


American Express Company ($ in Billions)	June 30, 2024
Risk-Based Capital
Common Equity Tier 1	$	24.6
Tier 1 Capital	26.1
Tier 2 Capital	4.6
Total Capital	30.7

Risk-Weighted Assets	227.8
Average Total Assets to calculate the Tier 1 Leverage Ratio	$	263.3

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 the allowance for credit losses adjusted for the CECL final rules (limited to 1.25 percent of risk-weighted assets) and $1,750 million of eligible subordinated notes, adjusted for capital held by insurance subsidiaries. The $1,750 million of eligible subordinated notes includes the $500 million subordinated debt issued in April 2024, the $500 million subordinated debt issued in July 2023 and the $750 million subordinated debt issued in May 2022.

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, 2024, we have phased in 75 percent of such amount.

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

We participated in the Federal Reserve’s supervisory stress tests in 2024. We submitted our annual capital plan to the Federal Reserve in April 2024. On June 26, 2024, the Federal Reserve communicated, on a preliminary basis, that our SCB will remain at 2.5 percent, effective from October 1, 2024 to September 30, 2025, subject to final confirmation by the Federal Reserve.

As discussed above, we will become a Category III firm in the third quarter of 2024 and thus will become subject to a CET1 countercyclical capital buffer requirement (if enacted by the Federal Reserve) and a minimum supplementary leverage ratio, among other requirements. See the “Supervision and Regulation — Capital and Liquidity Regulation” section of the 2023 Form 10-K for more information.

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 six months ended June 30, 2024, we returned $2.3 billion and $3.9 billion, respectively, to our shareholders in the form of share repurchases of $1.8 billion and $2.9 billion, respectively, and common stock dividends of $0.5 billion and $1.0 billion, respectively. We repurchased 7.4 million common shares at an average price of $236.37 in the second quarter of 2024.

In addition, during the three and six months ended June 30, 2024, we paid $15 million and $29 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. Our funding strategy and activities are integrated into our asset-liability management activities. We have in place a funding policy covering American Express Company and all of our subsidiaries.

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. In particular, we are focused on continuing to grow our direct deposit program as a funding source.

Summary of Consolidated Debt

We had the following customer deposits and consolidated debt outstanding as of June 30, 2024 and December 31, 2023:

Table 18: Summary of Customer Deposits and Consolidated Debt


(Billions)	June 30, 2024		December 31, 2023
Customer deposits	$	133.7	$	129.1
Short-term borrowings	1.6		1.3
Long-term debt	51.5		47.9
Total customer deposits and debt	$	186.8	$	178.3

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. Our current funding plan for the full year 2024 includes, among other sources, approximately $7.0 billion to $11.0 billion of unsecured term debt issuance and approximately $2.0 billion to $6.0 billion of secured term debt issuance. 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 $7.5 billion of debt during the six months ended June 30, 2024, consisting of $5.5 billion of unsecured debt and $2.0 billion of asset-backed securities. The following table presents our debt issuances for the three months ended June 30, 2024:

Table 19: Debt Issuances


(Billions)	Three Months Ended June 30, 2024
American Express Company:

Floating Rate Senior Notes (compounded SOFR(a) plus 75 basis points)	$	0.3
Fixed-to-Floating Rate Senior Notes (weighted-average coupon of 5.59% during the fixed rate period and compounded SOFR(a) plus weighted-average spread of 93 basis points during the floating rate period)	2.7
Fixed-to-Floating Rate Subordinated Notes (coupon of 5.92% during the fixed rate period and compounded SOFR(a) plus spread of 163 basis points during the floating rate period)	0.5
American Express Credit Account Master Trust:
Fixed Rate Class A Certificates (weighted-average coupon of 5.24%)	$	2.0
Total	$	5.5

(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	Positive	Stable
American Express Travel Related Services Company, Inc.	Long Term	A2	A-	A
Short Term	P-1	A-2	F1
Outlook	Stable	Positive	Stable
American Express National Bank	Long Term	A3	A-	A
Short Term	P-1	A-2	F1
Outlook	Stable	Positive	Stable
American Express Credit Corporation	Long Term	A2	A-	A
Short Term	N/R	N/R	N/R
Outlook	Stable	Positive	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. direct deposits insured by the Federal Deposit Insurance Corporation (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 U.S. federal bank regulatory agencies issued a notice of proposed rulemaking 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 and certain insured depository institutions such as AENB to issue and maintain minimum amounts of eligible internal long-term debt. See the “Supervision and Regulation ― Capital and Liquidity Regulation” section of the 2023 Form 10-K for more information.

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 June 30, 2024, 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. The direct deposit program 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 June 30, 2024, our direct deposit program had approximately 2.9 million accounts. AENB also sources deposits through third-party distribution channels as needed to meet our overall funding objectives. CDs carry stated maturities while high-yield savings account, checking account and third-party sweep deposit products do not. We manage the duration of our maturing obligations, including CDs, to reduce concentration and refinancing risk.

As of June 30, 2024 and December 31, 2023, we had $133.7 billion and $129.1 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.

The following tables set forth the average interest rates we paid on different types of deposits during the three and six months ended June 30, 2024 and 2023. Changes in the average interest rates we paid on our deposits for both periods compared to the prior year were primarily due to the impact of higher market interest rates offered for deposits.

Table 21: Average Interest Rates Paid on Deposits


	Three Months Ended June 30,
	2024							2023
(Millions, except percentages)	Average Balance		Interest Expense		Average Interest Rate (a)		Average Balance			Interest Expense			Average Interest Rate (a)
Savings accounts	$	100,510	$	1,047	4.2	%		$	83,521		$	799		3.8	%
Checking accounts	1,558		6		1.5			1,190			4			1.5
Certificates of deposit:
Direct	5,024		53		4.2			4,385			38			3.4
Third-party (brokered)	10,338		104		4.0			15,554			143			3.7
Sweep accounts — Third-party (brokered)	15,279		214		5.6			15,986			210			5.3
Total U.S. interest-bearing deposits	$	132,709	$	1,424	4.3	%		$	120,636		$	1,194		4.0	%

	Six Months Ended June 30,
	2024							2023
(Millions, except percentages)	Average Balance		Interest Expense		Average Interest Rate (a)		Average Balance			Interest Expense			Average Interest Rate (a)
Savings accounts	$	97,989	$	2,065	4.2	%		$	81,264		$	1,465		3.6	%
Checking accounts	1,495		10		1.4			1,083			8			1.5
Certificates of deposit:
Direct	5,241		110		4.2			3,867			62			3.2
Third-party (brokered)	11,455		229		4.0			14,600			256			3.5
Sweep accounts — Third-party (brokered)	15,442		436		5.7			16,006			396			5.0
Total U.S. interest-bearing deposits	$	131,622	$	2,850	4.4	%		$	116,820		$	2,187		3.8	%

(a)Average interest rate reflects interest expense divided by average deposits, computed on an annualized basis.

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 under a variety of adverse circumstances. These include, but are not limited to, an event where 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 “Funding Strategy” above 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.

We seek to maintain access to a diverse set of on-balance sheet and off-balance sheet liquidity sources, including cash and other liquid assets, secured borrowing facilities and a committed bank credit facility. Through our U.S. bank subsidiary, AENB, we have also pledged collateral eligible for use at the Federal Reserve’s discount window.

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. Additionally, as discussed above, we will become a Category III firm in the third quarter of 2024 and thus be subject to the regulatory requirements under the liquidity coverage ratio and net stable funding ratio rules, subject to applicable transition periods. See the “Supervision and Regulation — Capital and Liquidity Regulation” section of the 2023 Form 10-K for more information. We believe that we currently maintain sufficient liquidity to meet all internal and regulatory liquidity requirements.

As of June 30, 2024 and December 31, 2023, we had $52.9 billion and $46.6 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 six months ended June 30, 2024. 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 June 30, 2024, we maintained our committed, revolving, secured borrowing facility, with a maturity date of July 15, 2026, which gives us the right to sell up to $3.0 billion face amount of eligible AAA notes from the American Express Issuance Trust II (the Charge Trust). We also maintained our committed, revolving, secured borrowing facility, with a maturity date of September 15, 2026, which gives us the right to sell up to $3.0 billion face amount of eligible AAA certificates from American Express Credit Account Master Trust (the Lending Trust). These facilities enhance our contingent funding resources and are also used in the ordinary course of business to fund working capital needs. As of June 30, 2024, no amounts were drawn on the Charge Trust facility or Lending Trust facility.

Committed Bank Credit Facility

As of June 30, 2024, we maintained a committed syndicated bank credit facility of $4.0 billion with a maturity date of October 30, 2026. This facility enhances our contingent funding resources and is also used in the ordinary course of business to fund working capital needs. As of June 30, 2024, no amounts were 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 the U.S. credit card loans and charge card receivables that it pledged. As of June 30, 2024, AENB had available borrowing capacity of $62.2 billion based on the amount and collateral valuation of receivables that were pledged to the Federal Reserve Bank of San Francisco. 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.

Unused Credit Outstanding

As of June 30, 2024, we had approximately $433 billion of unused credit available to customers. Total unused credit does not represent potential future cash requirements, as a significant portion of this unused credit will likely not be drawn. Charge card products with no pre-set spending limits are not reflected in unused credit.

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 six months ended June 30:

Table 22: Cash Flows


(Billions)	2024		2023
Total cash provided by (used in):
Operating activities	$	10.1	$	3.5
Investing activities	(8.6)		(9.3)
Financing activities	4.8		14.6
Effect of foreign currency exchange rates on cash and cash equivalents	—		0.2
Net increase in cash and cash equivalents	$	6.3	$	9.0

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 2024, the net cash provided by operating activities was driven by cash generated from net income for the period and higher net operating liabilities primarily driven by higher book overdrafts due to timing differences arising in the ordinary course of business.

In 2023, the net cash provided by operating activities was primarily driven by cash generated from net income for the period, partially offset by lower net operating liabilities primarily driven by lower book overdrafts due to timing differences arising in the ordinary course of business and payments related to annual incentive compensation.

Cash Flows from Investing Activities

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

In 2024, the net cash used in investing activities was primarily driven by higher loans outstanding, partially offset by net maturities of investment securities and net proceeds received from the sale of Accertify.

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.

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.

Governments and regulators are increasingly requiring financial services firms and payment systems to be locally licensed and/or to localize aspects of their operations, compliance programs and governance frameworks. The development and enforcement of these and other similar laws, regulations and policies may increase our operational complexity and compliance costs, result in enforcement actions and penalties and adversely affect our ability to compete effectively and maintain and extend our global network.

Governmental authorities have also 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.” In addition, various bank regulators have announced they are reviewing credit card rewards programs for compliance with certain consumer protection laws and regulations. As previously disclosed, we identified during an internal review that certain U.S. Card Members were not credited certain Membership Rewards points they had earned and we have taken actions to remediate it and enhance our related procedures. We are cooperating with regulators in their ongoing regulatory examination of rewards and benefits programs. 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 2023 Form 10-K for further information.

Enhanced Prudential Standards

We are subject to the U.S. federal bank regulatory agencies’ rules that tailor the application of enhanced prudential standards to bank holding companies and depository institutions with $100 billion or more in total consolidated assets. Under these rules, American Express Company (and its depository institution subsidiary, AENB) is currently subject to Category IV standards; however, as discussed above, we will become a Category III firm in the third quarter of 2024. Category III firms are subject to heightened capital, liquidity and prudential requirements, single-counterparty credit limits and additional stress tests, which in some cases are subject to a transition period following a financial institution becoming a Category III firm. Please see the “Supervision and Regulation” and “Risk Factors” sections of the 2023 Form 10-K for further information.

Resolution Planning

On June 20, 2024, the FDIC issued a final rule amending its resolution plan requirements for insured depository institutions. The final rule requires insured depository institutions with $100 billion or more in assets that are not affiliated with U.S. global systematically important banking organizations, including AENB, to submit full resolution plans every three years with interim supplements in non-submission years. Under the final rule, resolution plans are subject to more stringent standards with respect to their assumptions and content, as well as enhanced credibility standards for the FDIC’s evaluation of resolution plans and expanded expectations regarding engagement and capabilities testing. The final rule is effective on October 1, 2024, and provides that the due date for the first resolution plan or interim supplement for insured depository institutions such as AENB will be no earlier than June 30, 2025.

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 March 5, 2024, the CFPB issued a final rule that lowers the safe harbor amount for credit card late fees that would be considered to be “reasonable and proportional” to the costs incurred by credit card issuers for late payments to $8, eliminates a higher late fee safe harbor amount for subsequent late payments and eliminates the annual inflation adjustment for the safe harbor amount. On May 10, 2024, a preliminary injunction was granted staying the effectiveness of the final rule; however, whether the final rule will ultimately be implemented will depend on the outcome of the ongoing litigation. If the rule were to go into effect, in the absence of providing a cost justification to support a late fee higher than the safe harbor amount, which would be permissible under the final rule, we would be required to reduce our late fees, resulting in a decrease to our delinquency fee revenue. In addition, a reduction in the late fee amount could alter Card Member behavior and impact repayment rates.

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 2023 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 regulatory 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. In the United States, certain states have passed or are considering laws to regulate various aspects of network operations and contract terms and practices governing merchant card acceptance, including information associated with electronic transactions (such as the use of specific merchant categories codes) and pricing of electronic transactions (such as interchange fees on sales tax or gratuities). In addition, changes in federal law and regulation have been proposed from time to time that could impact various aspects of network operations or contract terms and practices governing merchant card acceptance.

Regulation and other governmental actions relating to operations, pricing or practices could affect all networks and/or acquirers 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. In a ruling issued on February 7, 2018, the EU Court of Justice confirmed the validity of fee capping and other provisions in circumstances where three-party networks issue cards with a cobrand partner or through an agent, although the ruling provided only limited guidance as to when or how the provisions might apply in such circumstances and remains subject to differing interpretations by regulators and participants in cobrand arrangements. 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.

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 2023 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 2023 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 2023 Form 10-K.

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

Regulatory and legislative activity in the areas of privacy, data protection, data governance and information security and cybersecurity 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; however our policies and governance framework may be insufficient given the size and complexity of our business and heightened regulatory scrutiny. Laws and regulations related to automated decision making, artificial intelligence and machine learning are still evolving and there is uncertainty as to new laws and regulations that will be adopted and the application of existing laws and regulations, which may restrict us or impose burdensome and costly requirements, including on our ability to use artificial intelligence and machine learning. 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 security and cybersecurity 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), artificial intelligence-assisted deepfake attacks and disinformation campaigns, 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 security and cybersecurity regulation and the potential impacts of a major information security or cybersecurity incident on our results of operations and business, please see the “Supervision and Regulation” and “Risk Factors” sections of the 2023 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 and the impact of the AMLA will depend on, among other things, rulemaking and implementation guidance.

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 generally require us to establish AML/CFT programs that meet certain standards, including, policies and procedures to collect information from and verify the identities of our customers, and to monitor for and report suspicious transactions, in addition to other 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 2023 Form 10-K.

Recently Issued Accounting Standards

Refer to the Recently 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 revenue and Card Member loans and receivables.

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 transaction on a charge card with no pre-set spending limit 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.

Proprietary new cards acquired — Represents the number of new cards issued by American Express during the referenced period, net of replacement cards. Proprietary new cards acquired is useful as a measure of the effectiveness of our customer acquisition strategy.

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, marketing, 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: macroeconomic conditions, such as recession risks, higher rates of unemployment, changes in interest rates, effects of inflation, supply chain issues, energy costs and fiscal and monetary policies; geopolitical instability, including the ongoing Ukraine and Israel wars, broader regional hostilities and tensions involving China and the United States; the impact of any future contingencies, including, but not limited to, legal costs and settlements, the imposition of fines or monetary penalties, increases in Card Member remediation, investment gains or losses, restructurings, impairments and changes in reserves; issues impacting brand perceptions and our reputation; impacts related to sales and acquisitions, including management’s decisions regarding the use of the gain from the sale of Accertify, and new or renegotiated cobrand and other partner agreements and joint ventures; 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 and the spending environment not being consistent with expectations, including T&E spend categories growing slower than expected, further moderation in spending by U.S. small and mid-sized enterprise Card Members, or a slowdown in U.S. consumer or International spending volumes; an inability to address competitive pressures, attract and retain customers, invest in and enhance our Membership Model of premium products, differentiated services and partnerships, grow spending and lending with customers across generations and age cohorts, including Millennial and Gen Z customers and implement strategies and business initiatives, including within the premium consumer space, commercial payments and the global network; the effects of regulatory initiatives, including pricing regulation; merchant coverage growing less than expected or the reduction of merchant acceptance; increased surcharging, steering or suppression of our products; merchant discount rates changing by a greater or lesser amount than expected; and changes in foreign currency exchange rates;
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, and demand for our fee-based products; and our inability to address competitive pressures, develop attractive premium value propositions and implement our strategy of refreshing card products and realize our anticipated growth from those refreshes, enhancing and delivering benefits and services and continuing to innovate with respect to our products;
net interest income, the effects of changes in interest rates and the growth of loans and Card Member receivables outstanding, 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 underwriting risk and enhance Card Member value propositions to continue to attract premium Card Members; 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; the impact of the usage of debt settlement companies; 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;
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, which may be affected by business partners with greater scale and leverage; our ability to identify and negotiate partner-funded value for Card Members; and the pace and cost of the expansion of our global lounge collection;
the actual amount we spend on marketing in the future and the effectiveness and efficiency of our marketing spend, which will be based in part on continued changes in the macroeconomic and competitive environment and business performance, including the levels of demand for our products; 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; management’s ability to develop premium value propositions and drive customer demand, including continued customer spend growth and retention; the receptivity of Card Members and prospective customers to advertising and customer acquisition initiatives; and our ability to realize marketing efficiencies and balance expense control and investments in the business;
our ability to control operating expenses, including relative to 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 increased scale and 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; 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; expenses related to control and compliance and 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, including related to the completion of our acquisitions of Tock and Rooam; information or cybersecurity 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, such as due to the devaluation of foreign currencies;
our tax rate not remaining consistent with expectations, which could be impacted by, among other things, further changes in tax laws and regulation (or the expiration of provisions of tax laws or regulations), the timing and manner of the implementation of tax guidelines by jurisdictions, 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 U.S. federal bank regulatory agencies’ capital 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;

the parties’ ability to satisfy the closing conditions for the acquisitions of Tock and Rooam, including receipt of regulatory approvals, and to consummate the transactions; the underlying assumptions related to the transactions proving to be inaccurate or unrealized; and our ability to integrate Tock and Rooam and benefit from and expand the platforms, tools and capabilities, which will depend in part on management’s decisions regarding future operations, strategies and business initiatives;
changes in the substantial and increasing worldwide competition in the payments industry, including competitive pressure and competitor settlements and mergers that may materially impact the prices charged to merchants that accept American Express cards, surcharging by merchants and merchant acceptance, the desirability of our premium card products, competition for new and existing cobrand relationships, competition with respect to new products, services and technologies, 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, grow spending with new and younger age cohort Card Members, 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 B2B payment platforms, our ability to offer attractive value propositions and new products to current and potential customers, our ability to enhance and expand our payment and lending solutions, increase customer engagement, 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 third-party merchant acquirers, aggregators and processors, 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 and growing acceptance in low- and new-to-plastic industries and businesses as they form, working with commercial buyers and suppliers to establish B2B acceptance, executing on our plans to increase coverage in priority international cities, destinations, countries and industry verticals, and continued network investments, including in capabilities that allow for greater digital integration and modernization of our authorization platform;
our ability to successfully invest in, benefit from and expand the use of technological developments, digital payments, servicing and travel solutions and other technological capabilities, 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, effectively utilizing data and data platforms, building partnerships and executing programs with other companies, effectively utilizing artificial intelligence and machine learning and increasing automation to address servicing and other business and 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, customer and colleague receptiveness and ability to adopt new technologies, new product innovation and development and the platforms 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 successfully replicate aspects of our business model internationally and 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 us and our network partners in acquiring Card Members and/or merchants; and political or economic instability or regional hostilities;

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 governance, or alter our relationships with Card Members, partners, merchants and other third parties, including affecting our network operations and practices governing merchant acceptance, as well as our ability to continue certain cobrand relationships in the EU; impact card fees and rewards programs; exert further pressure on merchant discount rates and our network business, as well as result in an increase in surcharging or steering; alter the competitive landscape; subject us to heightened regulatory scrutiny and result in increased costs related to regulatory oversight and compliance, 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 global economic and business conditions, consumer and business spending generally, unemployment rates, geopolitical conditions, including further escalations or widening of ongoing military conflicts and regional hostilities, the effects of U.S. and international elections, adverse developments affecting third parties, including other financial institutions, merchants or vendors, as well as severe weather conditions, natural disasters, power loss, disruptions in telecommunications, health pandemics, 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 2023 Form 10-K, the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 and other reports filed with the Securities and Exchange Commission.

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