Financial Community Meeting Ken Chenault Chairman and Chief Executive Officer February 7, 2007 Agenda � 2006 Company Performance Ken Chenault � AXP Rewards Capabilities � Membership Rewards Ralph Andretta � Q&A Management 1 1
Performance vs. Long Term Targets Target 1 2005 2003 2004 2006 8% 12% 10% 13% Net Revenue 8% 2 2 12% 2 16% 2 EPS 12-15% 22% 18% ROE Pre-Spin 3 18-20% 21% 22% 25% 5 3 4 35% 31% Post-Spin 33-36% 1. Targets are on average, over time. 2. Income from continuing operations. EPS growth on a net income basis was 14% in 2003, 17% in 2004, 11% in 2005 and 1% in 2006. 3. Calculated on a trailing 12-month basis using reported net income over average total shareholders’ equity (including discontinued operations). For 2005, trailing 12-months net income was $3.7B and average total shareholders’ equity (including discontinued operations) was $14.7B. 4. Revised from 28-30%, effective 11/7/06. 5. Pro forma ROE, is determined on a trailing 12-month basis using income from continuing operations (which excludes discontinued operations) of $3.2B over average month-end shareholders’ equity for the 2 period from 9/30/05 through 12/31/05 of $10.2B. Source: 2003-2004 Revenue and EPS growth for AXP continuing operations based on data reported in Company’s 8-K reports dated 10/6/2005 and 4/5/06. Metric Trends FY 2004 FY 2005 FY 2003 FY 2006 13% 16% 16% 18% Billed Business* *Activities related to proprietary cards, including cash advances and certain insurance fees, and cards issued under network partnership agreements. 3 2
Worldwide Billed Business 16% 16% 13% 13% 12% 11% 10% 10% 7% 4% MasterCard*** AXP COF* JPM Citi Discover** 2006 vs. 2005 2005 vs. 2004 *U.S. Card portfolio only. Not reported prior to Q4’04. ** Transaction volume, which includes cash advances. 4 ***9/30/06 vs. 9/30/05. Credit and charge purchase volume, which excludes cash advances. Not reported prior to Q4’04. Source: Company reports. Metric Trends FY 2004 FY 2005 FY 2003 FY 2006 13% 16% 16% 18% Billed Business* 6% 9% 10% 8% Cards In Force Avg. Basic Cardmember 9% 10% 13% 7% Spending** Mgd. Cardmember 14% 15% 17% 8% Loans*** *Activities related to proprietary cards, including cash advances and certain insurance fees, and cards issued under network partnership agreements. **Computed from proprietary card activities only. 5 *** Managed basis includes owned and securitized loans. On a GAAP basis, owned loan growth was 14% in 2003, 10% in 2004, 23% in 2005 and 31% in 2006. 3
Worldwide Managed Loans 12/31/06 vs. 12/31/05 17% 17% 8% 8% 7% 7% 7% 7% 6% 6% 3% 3% AXP* COF** JPM Discover Citi BAC AXP* COF** JPM Discover Citi BAC (w/MBNA)*** (w/MBNA)*** *On a GAAP basis, owned loans increased 31%. **U.S. Card portfolio only. ***Credit Card segment, which represents U.S. and foreign consumer credit card only. Small business cards excluded. Source: Company reports. 6 Metric Trends FY 2004 FY 2005 FY 2003 FY 2006 13% 16% 16% 18% Billed Business* 6% 9% 10% 8% Cards In Force Avg. Basic Cardmember 9% 10% 13% 7% Spending** Mgd. Cardmember 14% 15% 17% 8% Loans*** Credit Performance *Activities related to proprietary cards, including cash advances and certain insurance fees, and cards issued under network partnership agreements. **Computed from proprietary card activities only. 7 *** Managed basis includes owned and securitized loans. On a GAAP basis, owned loan growth was 14% in 2003, 10% in 2004, 23% in 2005 and 31% in 2006. 4
Relative Credit Quality Write-off Rate 30+ Day Past Due Rate 7% 5% 6% 4% 5% 4% 3% 3% 2% 2% Q3'04 Q1'05 Q3'05 Q1'06 Q3'06 Q3'04 Q1'05 Q3'05 Q1'06 Q3'06 AXP USCS Reported Industry Note: Industry average calculations include COF (US), MS/Discover, BAC/MBNA, JPM and C (US). Both metrics are on a managed basis. On a GAAP basis, the AXP USCS write-off rate on owned loans was 3.7%, 3.7%, 3.9%, 3.9%, 3.6%, 4.1%, 2.6%, 2.9%, 3.1%, and 3.5% in Q3’04-Q4’06, respectively. On a GAAP basis, the AXP USCS 30+ day past due rate on owned loans was 2.4%, 2.4%, 2.6%, 2.3%, 2.4%, 2.3%, 2.4%, 2.5%, 2.7%, and 2.7% in Q3’04-Q4’06, respectively. 8 Source: Company reports. Metric Trends FY 2004 FY 2005 FY 2003 FY 2006 13% 16% 16% 18% Billed Business* 6% 9% 10% 8% Cards In Force Avg. Basic Cardmember 9% 10% 13% 7% Spending** Mgd. Cardmember 14% 15% 17% 8% Loans*** Credit Performance *Activities related to proprietary cards, including cash advances and certain insurance fees, and cards issued under network partnership agreements. **Computed from proprietary card activities only. 9 *** Managed basis includes owned and securitized loans. On a GAAP basis, owned loan growth was 14% in 2003, 10% in 2004, 23% in 2005 and 31% in 2006. 5
Metric Trends FY 2003 FY 2004 FY 2005 FY 2006 13% 16% 18% 16% Billed Business* 6% 9% 10% 8% Cards In Force Avg. Basic Cardmember 9% 13% 10% 7% Spending** Mgd. Cardmember 14% 15% 17% 8% Loans*** Credit Performance Travel Sales 3% 4% 25% 6% Travelers Cheque (13%) (1%) - 4% and Prepaid Sales 16% Pvt. Bank Holdings 15% 10% 11% *Activities related to proprietary cards, including cash advances and certain insurance fees, and cards issued under network partnership agreements. **Computed from proprietary card activities only. 10 *** Managed basis includes owned and securitized loans. On a GAAP basis, owned loan growth was 14% in 2003, 10% in 2004, 23% in 2005 and 31% in 2006. Expenses as a Percentage of Revenue 30% M&P, Rewards & 25% CM Svces Other Opex 20% Human Resources 15% Provision 10% 5% Interest 0% 1999 2000 2001 2002 2003 2004 2005 2006 Note: Data for the periods from 1999-2001 derived from (i) total reported marketing & promotion expense for AXP less reported marketing & promotion expense for AEFA and (ii) reported rewards and cardmember services expense for AXP less rewards and cardmember services reported for AEFA. On a consolidated basis, reported marketing & promotion expense, was $1.4B, $1.5B and $1.3B, and rewards and cardmember services expense was 11 $1.1B, $1.3B and $1.4B, for each year in 1999-2001. 2002-06 data derived from reported company data and internal company data. 6
Expenses as a Percentage of Revenue 30% $6.5B M&P, Rewards & 25% CM Svces $3.0B Other Opex 20% Human Resources 15% Provision 10% 5% Interest 0% 1999 2000 2001 2002 2003 2004 2005 2006 Note: Data for the periods from 1999-2001 derived from (i) total reported marketing & promotion expense for AXP less reported marketing & promotion expense for AEFA and (ii) reported rewards and cardmember services expense for AXP less rewards and cardmember services reported for AEFA. On a consolidated basis, reported marketing & promotion expense, was $1.4B, $1.5B and $1.3B, and rewards and cardmember services expense was 12 $1.1B, $1.3B and $1.4B, for each year in 1999-2001. 2002-06 data derived from reported company data and internal company data. AXP Spend Velocity 6.1x 6.0x 5.6x 5.2x 5.0x 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 Note: Spend velocity is defined as annual billed business divided by average managed receivables. AXP spend velocity determined using average GAAP, owned, receivables was 6.8x, 7.1x, 7.6x, 8.0x, and 7.8x for 2002-2006, respectively. Source: Company data 13 7
2006 Spend Velocity 6.1x 6.1x AXP JPM Citi Discover** COF* AXP JPM Citi Discover** COF* Note: Spend velocity is defined as annual billed business divided by average managed receivables. AXP spend velocity determined using average GAAP, owned, receivables was 7.8x for 2006. *U.S. Cards portfolio only. ** Based on net sales volume. Source: Company data and public filings. 14 15 8
Agenda � 2006 Company Performance Ken Chenault � AXP Rewards Capabilities � Membership Rewards Ralph Andretta � Q&A Management 16 Spend-Centric Model Investments in Premium Value Premium Attractive Economics Customer Base High Average Spending 17 9
The Spend-Centric View Forecasted U.S. Consumer Spend Growth 2005: $6.8T Market: +5% 2010F: $8.8T 5 Year CAGR 10% 15% 40% 56% Plastic: +12% 29% 50% Electronic Plastic Cash & Checks 18 Source: The Nilson Report. The Spend-Centric View Forecasted U.S. Consumer Spend Growth 2005: $6.8T Market: +5% 2010F: $8.8T 5 Year CAGR 10% 15% 40% 56% Plastic: +12% 29% 50% Electronic Plastic Cash & Checks 19 Source: The Nilson Report. 10
The Spend-Centric View Plastic Opportunity by Segment % of Plastic Penetration U.S. Consumer < 45% < 25% Non-U.S. Consumer U.S. Small Business < 15% Global Middle Market < 15% 20 Source: 2005/2006 internal data and The Nilson Report. Defining Rewards ISSUER REWARDS � Proprietary to card issuer � Product or program-specific � Tied to spending � Leverage AXP’s closed loop 21 11
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