Global Network Services

Transcription

1 Global Network Services David House, Group President, Global Network and Establishment Services and Travelers Cheques and Prepaid Services Group February 4,

2 Global Network Services Benefits of Partnership! Leverage processing network! Drive high value business to merchants! Pave the way for competition! Deliver value to consumers! Extend the American Express brand! Open new revenue stream 2

3 GNS Global Business Partnerships - EMEA 3

4 GNS Global Business Partnerships - J/APA 4

5 GNS Global Business Partnerships - LAC 5

6 Global Network Services 5 Questions to be Answered Today! What is GNS?! How does GNS make money?! Who benefits from a GNS partnership and how?! How do GNS partnerships enhance the Amex brand?! What are our plans for GNS in the U.S.? 6

8 GNS Results to Date! 79 partners in 89 countries! 350 products launched! 6.4MM Cards issued! 2.5MM merchants added to network worldwide 8

9 GNS Results to Date Cards in Force CAGR 24% Billed Business CAGR 16%

10 GNS Results to Date In 2003, GNS delivered 1 in 5 new cards acquired worldwide 1 in 3 new cards acquired outside the U.S. 1 in 3 new merchants acquired 10

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12 Partnership Constructs Independent Operators 30 partners 44 markets! License to issue AXP cards and acquire AXP merchants in markets where AXP does not have local currency proprietary card business 12

13 IO Partnerships Capturing AXP-branded Share of Cards Ecuador Card Share* 17% Building Parity Coverage Pakistan AXP Spend Coverage** 98% 6% 25% * Share of General Purpose Charge and Credit cards in the marketplace represented by AXP- branded cards ** Estimated. Based on Internal Data 13

14 Partnership Constructs Joint Ventures 5 partners 21 markets! Form equity partnership to issue cards and/or acquire merchants 14

15 Partnership Constructs Non Proprietary Licenses (NPL) 44 partners 24 markets! License to issue AXP branded cards on the AXP network (non AXP format) 15

16 NPL Partnerships Banco Popular, Puerto Rico AXP Branded Cards CAGR % 35% CIF Billed Business 16

18 Revenue Streams IO! Fees driven by number of cards issued in local markets! Spending on cards issued in local markets JV! Discount Revenue! Net Spread Income! Annual Card and Other Fees! Expanded merchant network that can accommodate inbound spending 18

19 NPL Partnerships Revenue Breakdown AXP Global Cards Typical NPL Transaction Spread Card Other 19

20 Principle Cost Components for GNS Operating expenses Other Costs are Minimized:! Card marketing and acquisition! Credit risk and fraud! Servicing and rewards 20

21 Cost Comparison GNS vs. Proprietary* Higher Lower Revenues Expenses ROE * Non US 21

22 Costs GNS Fixed Variable International 10% Increase in Transaction volume 1.5% Increase in Network Costs 90% US (Potential) 10% Increase in Transaction volume 1% Increase in Network Costs 10% 22

24 Benefits to Bank Partners Premium Economics! Card issuing revenues! Billed business revenues! Merchant acquiring fees 24

25 Benefits to Banks Marketing Examples Loyalty Programs 25

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27 Benefits to Bank Partners Premium Economics! Card issuing revenues! Billed business revenues! Merchant acquiring fees Premium Capabilities! Targeted marketing! Global reach via AXP Travel Service Offices 27

28 Benefits to Bank Partners Premium Economics! Card issuing revenues! Billed business revenues! Merchant acquiring fees Premium Capabilities! Targeted marketing! Global reach via AXP Travel Service Offices Superior Brand! AXP brand image! Valued, high spending cardmembers 28

29 Benefits to Bank Partners Strong Brand Image Pakistan Union Bank 29

30 Benefits to Consumers! Greater customer choice! Enhanced value! Innovation 30

31 Benefits to Consumers Card Features and Benefits! Emergency Assistance! Concierge Service! Travel Accident Insurance! Car Rental Insurance! Trip Inconvenience Service! Emergency Roadside Assistance! Emergency Card / Travelers Cheque Replacement & Emergency Funds Access at Amex Travel Service Offices! Loyalty Programs! Purchase Protection! Extended Warranty! Best Value Guarantee! Fee Insurance! Credit Protection! Credit Card Registry 31

32 Benefits to Merchants! High spending Cardmembers! Incentives to drive spend! Unique marketing programs 32

33 Benefits to Merchants Unique Marketing Capabilities Membership Privileges Asia 33

34 Benefits to Merchants! High spending Cardmembers! Incentives to drive spend! Increased value of marketing programs! Continued merchant acquisition 34

36 GNS Partner Standards Brand Product Service! Brand standards and policies! Marketing standards! Advertising and communications policy! Product standards to support brand! Features and benefits for each product! Minimum lines of credit! Issuer servicing standards! Network quality policy 36

37 Security / Firewalls 37

38 Selecting Partners! Commitment to quality! Marketing expertise and broad, local customer base! Brand affinity! Skill and will 38

39 Key Customer Groups! High spending! Affluent and aspirational! Loyalty / reward driven! Frequent business travelers! Affinity / co-brand cardmembers! Transactors 39

40 Incentives to Banks Argentina Accelerators Cards in Force Billed Business* +22% +55% * At local FX rates 40

41 Incentives to Banks Asia Premiumization Partner Platinum Card Launch 2003 Average Spend / Card 2, Classic Gold Platinum * Classic Indexed to

43 Conclusion of DOJ Case U.S. District Court Ruling 2 nd Circuit Rules for DOJ Estimated Timeline V/MC petitions for rehearing en banc 2 nd Circuit denies motion for rehearing en banc V/MC files petition for certiorari with U.S. Supreme Court First MBNA/AXP card issued Supreme Court decision on certiorari expected Oct 01 Sept 03 Jan 04 May 04 Q

44 American Express Readiness! Technology infrastructure! Valuable experience! Third party card processors! Policies, procedures and standards 44

45 2004 Plan ACTIONS! Ensure MBNA partnership launch is strong and successful! Form additional partnerships RESULTS! Expanded merchant network! Incremental value to merchants and Amex! Enhanced brand presence 45

46 Opportunities 46

47 Summary GNS has already had a positive impact on American Express outside the U.S. The unique U.S. opportunity will accelerate that contribution.! Leveraged American Express global merchant network investment and capabilities! Increased value to merchants! Delivered substantial revenues to both American Express and to our partners 47

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49 NOTE RELATING TO NON-GAAP FINANCIAL DISCLOSURES This presentation contains certain non-gaap financial disclosures, which are disclosed on a "managed" basis. Managed basis (a) assumes no securitization transactions in the TRS business segment, i.e., all securitized loans and related income effects are reflected as if they were in the Company's balance sheet and income statement, respectively, and (b) presents aggregate revenues in the AEFA business segment on a basis that is net of provisions for losses and benefits. Information relating to comparable GAAP financial measures may be found on the relevant slides and on American Express Company's investor relations website at ir.americanexpress.com. INFORMATION RELATED TO FORWARD LOOKING STATEMENTS This presentation includes forward-looking statements, which are subject to risks and uncertainties. The words "believe," "expect," "anticipate," "optimistic," "intend," "plan," "aim," "will," "should," "could," "likely," and similar expressions are intended to identify forward-looking statements. 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. The company undertakes 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 ability of the Company in 2004 to moderate the growth of its marketing, promotion and rewards expenses, realize $1 billion in re-engineering benefits, and control other expenses to achieve margin improvement; the continuation of favorable trends, such as increasing T&E spending, strong equity markets, lower interest rates and improving credit provisions; the success of the Company in continuing to grow primarily through organic expansion of its businesses; the ability of AEFA to improve its investment performance and reduce outflows of invested funds; the ultimate outcome in the Department of Justice suit against Visa and MasterCard challenging their restrictions on member banks issuing cards on the American Express Network in the U.S.; any continuing effects of the conduct that was the subject of the Department of Justice suit against Visa and MasterCard; the success of the Company s GNS business in the U.S., which will depend in part on the extent to which such business: further enhances the Company s brand, allows the Company to leverage its significant processing scale, expands merchant coverage of the network, provides U.S. GNS bank partners the benefits of greater cardmember loyalty and higher spend per customer, and merchants benefits such as greater transaction volume and additional higher spending customers; and the Company s ability to grow and manage its proprietary business in the U.S. at the same time there is expansion in the U.S. GNS business.