Q3 2023 American Express Co Earnings Call
Speaker 1: Ladies and gentlemen, thank you for standing by. Welcome to the American Express Q3 2023 earnings call. At this time, all participants are on a listen-only mode. Later, we will conduct a question.
Ladies and gentlemen, thank you for standing by welcome to the American Express Q3 2023 earnings call.
At this time all participants are in a listen only mode.
Later, we will conduct a question and answer session.
Speaker 1: If you wish to ask a question, please press star then 1 on your touch tone phone. You will hear a tone indicating you have...
If you wish to ask a question. Please press Star then one on your Touchtone phone.
We'll hear a tone, indicating you have been placed in Q.
Speaker 1: You may remove yourself from the queue at any time by pressing star then 2.
You may remove yourself from the queue at any time by pressing Star then two.
Speaker 1: If you are using a speakerphone, please pick up the handset before pressing the number.
If youre using a speakerphone, please pick up the handset before pressing the numbers.
Speaker 1: Should you require assistance during the call, please press star then zero.
Should you require assistance during the call. Please press Star then zero.
Speaker 1: As a reminder, today's call is being recorded. I would now like to turn the conference over to our host, Head of Investor Relations, Ms. Kerry Bernstein. Thank you. Please go ahead.
As a reminder, today's call is being recorded.
I'd now like to turn the conference over to our host head of Investor Relations Ms. Carrie Bernstein. Thank you. Please go ahead.
Speaker 2: Thank you, Donna, and thank you all for joining today's call. As a reminder, before we begin, today's discussion contains forward-looking statements about the company's future business and financial performance. These are based on management's current expectations and are subject to risks and uncertainty.
Thank you Donna and thank you all for joining today's call as a reminder, before we begin today's discussion contains forward looking statements about the company's future business and financial performance. These are based on management's current expectations and are subject to risks and uncertainties factors that could cause actual results to differ materially from these statements are included.
Speaker 2: Factors that could cause actual results to differ materially from these statements are included in today's presentation slides and in our reports on file with the SEC.
And today's presentation slides and in our reports on file with the SEC.
Speaker 2: The discussion today also contains non-GAAP financial measures. The comparable GAAP financial measures are included in this quarter's earnings materials, as well as the earnings materials for the prior periods we discussed. All of these are posted on our website at IR.americanexpress.com. We'll begin today with Steve Squarey, Chairman and CEO , who will start with some remarks about the company's progress and results. And then Chris Haslakayak, Chief Financial Officer, will provide a more detailed review of our financial performance.
Discussion today also contains non-GAAP financial measures the comparable GAAP financial measures are included in this quarter's earnings materials as well as the earnings materials for prior periods. We discussed all of these are posted on our website at IR that American Express Dot Com will begin today with Steve <unk>, Chairman and CEO , who will start with.
Some remarks about the company's progress and results and then Chris <unk> Chief Financial Officer will provide a more detailed review of our financial performance. After that we'll move to a Q&A session on the results with both Steve and Christophe with that let me turn it over to Steve. Thank.
Speaker 3: After that, we'll move to a Q&A session on the results with both Steve and Kristoff. With that, let me turn it over to Steve. Thank you, Keri. Good morning, and thanks for joining us today for our third quarter earnings call. Q3 was our seventh consecutive quarter of strong performance, continuing the momentum we've built over the last few years and aligned with the growth plan we announced in 2022.
Thank you Gary good morning, and thanks for joining us today for our third quarter earnings call Q.
Q3 was our seventh consecutive quarter of strong performance continuing the momentum we've built over the last few years and aligned with the growth plan, we announced in 2022.
Speaker 3: It was the sixth consecutive quarter of record revenues, which reached 15.4 billion up 13% year over year. Learning's per share of $3.30 was also a new quarterly record.
It was the sixth consecutive quarter of record revenues, which reached $15 4 billion up 13% year over year.
Earnings per share of $3 30 was also a new quarterly record.
Speaker 3: Based on our performance today, we remain confident in our ability to achieve full year revenue growth and EPS growth that is consistent with the annual guidance we provided at the beginning of the year.
Based on our performance to date, we remain confident in our ability to achieve full year revenue growth and EPS.
And EPS growth that is consistent with the annual guidance, we provided at the at the beginning of the year.
Speaker 3: And we are well positioned as we seek to achieve our growth plan aspirations of annual revenue growth in excess of 10% and mid-teens EPS growth in 2024 and beyond in a steady state macro environment.
And we are well positioned as we seek to achieve our growth plan aspirations of annual revenue growth in excess of 10% and mid teens EPS growth in 2024 and beyond in a steady state macro environment.
Speaker 3: My confidence is based on several factors, including the many attractive opportunities available to us because of the businesses and geographies we operate in. Our unique membership model, which powers a virtuous cycle of growth.
My confidence is based on several factors, including the many attractive opportunities available to us because of the businesses and geographies we operate in.
Our unique membership model, which powers a virtuous cycle of growth.
Speaker 3: The success of the strategic investments we've been making in key areas of our business and our ability to leverage our differentiated business model which includes our premium global customer base, integrated payments platform, strong partner relationships and trusted brands.
The success of the strategic investments, we've been making in key areas of our business and our ability to leverage our differentiated business model, which includes a premium global customer base integrated payments platform strong partner relationships and trusted brand together.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the American Express Q3 2023 earnings call. At this time, all participants are on a listen only mode.
Speaker 3: Together these factors have driven our strong performance over the past two years, including the continued momentum we saw in the third quarter.
Together these factors have driven our strong performance over the past two years, including the continued momentum we saw in the third quarter.
Speaker 3: In the quarter, card members spending remained strong, up 7% year over year on an FX-adjusted basis.
In the quarter card member spending remains strong up 7% year over year on an FX suggested basis spending was strongest in our U S. Consumer segment up 9% and international card services segment up 15% on an FX adjusted basis and use small business spending increased slightly from a year ago.
Operator: Later, we will conduct a question and answer session. If you wish to ask a question, please press star, then one on your touchtone phone. You will hear a tone indicating you have been placed in Q. You may remove yourself from the Q at any time by pressing star, then Q. If you are using a speaker phone, please pick up the handset before pressing the numbers. Should you require assistance during the call, please press star, then zero.
Speaker 3: Spending was strongest in our US consumer segment of 9%, and international card services segment of 15% on an FX adjusted basis. And US small business spending increased slightly from a year ago.
Speaker 3: Millennial and Gen Z consumers continue to be the fastest growing portion of our card member base, with spending from this demographic in the US up 18% year over year, and they accounted for more than 60% of all new consumer account acquisitions globally in the quarter. Demand for our products remain robust, particularly for fee-based products, which represented more than 70% of the new accounts acquired in the quarter.
Millennial and Gen Z consumers continue to be the fastest growing portion of our card member base with spending from this demographic in the U S up 18% year over year and they accounted for more than 60% of all new consumer account acquisitions globally in the quarter.
Operator: As a reminder, today's call is being recorded.
Kerri Bernstein: I would now like to turn the conference over to our host head of investor relations with Kerri Bernstein. Thank you. Please go ahead. Thank you, Donna, and thank you all for joining today's call. As a reminder, before we begin, today's discussion contains forward-looking statements about the company's future business and financial performance. These are based on management's current expectations and are subject to risk and uncertainties. Factors that could cause actual results differ materially from these statements are included in today's presentation slides and in our reports on file with the SEC.
Demand for our products remain robust, particularly for fee based products, which represented more than 70% of the new accounts acquired in the quarter.
Speaker 3: Customers continue to be highly satisfied without products and services, which drives high levels of engagement and retention. We were rated the number one US credit card company for customer satisfaction by JD Power for the fourth consecutive year and the 13th time in 17 years of the study.
Customers continue to be highly satisfied with our products and services, which drives high levels of engagement and retention. We were rated the number one U S credit card company for customer satisfaction by J D power for the fourth consecutive year and the 13th time in 17 years of the study.
Speaker 3: And our credit metrics remain best in class as we continue our focus on growing with discipline and a strong focus on risk management across the portfolio.
And our credit metrics remained best in class as we continue our focus on growing with discipline and a strong focus on risk management across the portfolio.
Kerri Bernstein: The discussion today also contains non-GAAP financial measures. The comparable gap financial measures are included in the supporters earnings materials, as well as the earnings materials for the prior periods we discussed. All of these are posted on our website at ir.americanexpress.com.
Speaker 3: A key reason for the momentum we're seeing is the investments we've been making in innovating our value propositions to deliver generational relevance across all age groups. Resi is a good example of some of the ways we're doing this.
A key reason for the momentum we're seeing is the investments we've been making in innovating our value propositions to deliver generational relevance across all age groups.
Kerri Bernstein: We'll begin today with Steve Squarie, Chairman and CEO, who will start with some remarks about the company's progress and results. And then Chris Haslachayak, Chief Financial Officer, will provide a more detailed review of our financial performance. After that, we'll move to a Q&A session on the results with both Steve and Chris Doth. With that, let me turn over to Steve. Thank you, Carrie.
<unk> is a good example of some of the ways we're doing this.
Speaker 3: We acquired Rezzy and continued to invest in building out the platform because we know that dining is something that all generations of card members care about.
We acquired <unk> and continued to invest in building out the platform because we know the dining is something that all generations of card members care about.
Speaker 3: We've seen that in our results, as restaurants continued to be the largest and one of the fastest growing T&E categories in the third quarter.
We've seen that in our results as restaurants continued to be the largest and one of the fastest growing categories in the third quarter.
Speaker 3: The number of resident users, restaurants on the platform, and reservations book, booked all continue to grow significantly.
The number of resin users restaurants on the platform and reservations book booked all continue to grow significantly in Q3 reservations on the platform set another quarterly record.
Stephen Squeri: Good morning, and thanks for joining us today for our third quarter earnings call. Q3 was our seventh consecutive quarter of strong performance, continuing in the momentum we've built over the last few years and aligned with the growth plan we announced in 2022. It was the sixth consecutive quarter of record revenues, which reached 15.4 billion up 13% year over year. Earnings per share of $3.30 was also a new quarterly record. Based on our performance today, we remain confident in our ability to achieve full-year revenue growth and EPS growth that is consistent with the annual guidance we provided at the beginning of the year.
Speaker 3: in Q3 reservations on the platform set another quarterly record.
Speaker 3: Over the last few years, we've also ramped up the number of exclusive lifestyle experiences, sponsorships, and access to events we offer that appeal to our card members across generations and geographies, and reinforce the unique value of membership.
Over the last few years, we've also ramped up the number of exclusive lifestyle experiences sponsorships and access to events, we offer that appeal to our card members across generations and geographies and reinforce the unique value of membership.
Speaker 3: are highly popular experiences cut across entertainment, sports, food, art, and fashion. They generate strong on-site engagement with our branded activities and offers, and they help drive interest among prospects.
Our highly popular experiences cut across entertainment sports food art and fashion, they generate strong onsite engagement with our branded activities and offers and it helped drive interest among prospects.
Speaker 3: They also continue to attract world-class partners who work with us to add new ways for our card members and prospects to experience the power of AMX membership. Earlier this week, we announced our latest sponsorship and exclusive multi-year agreement with Formula One to be the official payments partner of Formula One in the Americas. This sponsorship is our first new sports vertical in over 10 years, and it represents a great opportunity to build on the rapidly growing popularity of Formula One racing around the world.
They also continue to attract world class partners, who work with us to add new ways for our card members and prospects to experience the power of Amex membership.
Stephen Squeri: And we are well positioned as we seek to achieve our growth plan aspirations of annual revenue growth in excess of 10% and mid-teens EPS growth in 2024 and beyond in a steady state macro environment. My confidence is based on several factors, including the many attractive opportunities available to us because of the businesses and geographies we operate in. Our unique membership model, which powers a virtuous cycle of growth, the success of the strategic investments we've been making in key areas of our business and our ability to leverage our differentiated business model, which includes our premium global customer base, integrated payments platform, strong partner relationships and trusted brand.
Earlier this week, we announced our latest sponsorship and exclusive multi year agreement with Formula one to be the official payments partner of Formula One in the Americas. This sponsorship is our first new sports vertical in over 10 years and it represents a great opportunity to build on the rapidly growing popularity of formula one racing around the world.
Speaker 3: Another way we're delivering generational relevance is by regularly refreshing and adding value to our products on a global basis.
Another way, we are delivering generational relevance is by regularly refreshing and adding value to our products on a global basis. These product.
Speaker 3: These product enhancements are tailored to the interest and spending patterns of our customers of all age groups in each local market. So far this year we've made enhancements to over 20 premium products across the company. Some of the latest of which were refreshes of our platinum card products in Japan, our business gold card in the US, and just yesterday our Hilton co-branded consumer card.
Enhancements are tailored to the interest and spending patterns of our customers of all age groups in each local market. So far this year, we've made enhancements to over 20 premium products across the company. Some of the latest of which were refreshes of our platinum card products in Japan, our business gold card in the U S and just yesterday, our Hilton Cobranded consume.
Stephen Squeri: Together these factors have driven our strong performance over the past two years, including the continued momentum we saw in the third quarter. In the quarter, card members spending remained strong, up 7% year over year on an FX-adjusted basis. Spending was strongest in our US consumer segment, up 9%, an international card services segment, up 15% on an FX-adjusted basis. A US small business spending increased slightly from a year ago. Millennial and Gen Z consumers continue to be the fastest growing portion of our card member base, with spending from this demographic in the US up 18% year over year, and they accounted for more than 60% of all new consumer account acquisitions globally in the quarter.
Speaker 3: These examples and many others like them are further enriching our membership model, which helps us attract new premium customers, drive retention and deepening engagement with current customers, and add more merchants and partners who provide offers and experiences that deliver additional value.
Courts.
These examples and many others like them are further enriching our membership model, which helps us attract new premium customers drive retention and deepen engagement with current customers and add more merchants and partners, who provide offers and experiences that deliver additional value.
Speaker 3: Looking ahead, I feel very good about where we are and where we're going. We'll continue on strategy of investing for growth and adding more differentiated value to our membership model to deliver generational relevance while continuing to leverage the strengths of our business model, all of which gives us a competitive advance.
Looking ahead I feel very good about where we are and where we're going we will continue our strategy of investing for growth and adding more differentiated value to our membership model to deliver generational relevance, while continuing to leverage the strength of our business model all of which gives us a competitive advantage.
Stephen Squeri: Demand for our products remain robust particularly for fee-based products, which represented more than 70% of the new accounts acquired in the quarter. Customers continue to be highly satisfied with our products and services, which drives high levels of engagement and retention. We were rated the number one US credit card company for customer satisfaction by JD Power, for the fourth consecutive year, and the 13th time in 17 years of the study. And our credit metrics remain best in class as we continue our focus on growing with discipline, and a strong focus on risk management across the portfolio.
Speaker 3: I'll now hand the call over to Christophe Lacayak, traditional detail on our quarterly results.
I'll hand, the call over to Christophe the kayak for additional detail on our quarterly results.
Speaker 4: Thank you Steve and good morning everyone. I'm excited to have my first earning school, be one where we discuss our continued strong momentum, which is reflected in our record revenue and ETS in the third quarter.
Thank you, Steve and good morning, everyone I'm excited to have my first earnings call be one where we discussed our continued strong momentum which is reflected in our record revenue and EPS in the third quarter.
Speaker 4: I would like to take a minute at the outset to share my perspective on the company. As someone who has been here for a long time and through various business environments.
I would like to take a minute at the outset to share my perspective on the company or someone who has been here for a long time and through various business environments.
Speaker 4: The company is very focused on driving high levels of profitable revenue growth. The key enabler of that growth has been the discipline we use to deploy our resource.
The company is very focused on driving high levels of profitable revenue growth.
A key enabler of that growth has been the discipline, we use to deploy our resources as a result, the underlying quality of our business is very strong and I have confidence in the sustainability of the growth drivers that we're seeing.
Stephen Squeri: A key reason for the momentum we're seeing is the investments we've been making in innovating our value propositions to deliver generational relevance across all age groups. Rezi is a good example of some of the ways we're doing this. We acquired Rezi and continued to invest in building out the platform because we know that dining is something that all generations of card members care about. We've seen that in our results, as restaurants continued to be the largest and one of the fastest growing T&E categories in the third quarter.
Speaker 4: As a result, the underlying quality of our business is very strong. And I have confidence in the sustainability of the growth drivers that we are seeing.
Speaker 4: We have accelerated the pace of our revenue and EPS growth since before the pandemic. That acceleration is a direct result of the strategy that underpins our growth plan, which Steve described.
We have accelerated the pace of our revenue and EPS growth since before the pandemic that acceleration is a direct result of the strategy that underpins our growth plan, which Steve described.
Speaker 4: In the quarter, that strategy has driven 27 billion more in Billings versus Lost Quarter. The company is also generating almost two billion more in revenue and about six century million more in net income compared to a year ago. This demonstrates the earnings power of our business model. Now, let's take a look at the details of this quarter's performance.
Stephen Squeri: The number of Rezi users, restaurants on the platform, and reservations book, both all continue to grow significantly. In Q3, reservations on the platform set another quarterly record. Over the last few years, we've also ramped up the number of exclusive lifestyle experiences, sponsorships, and access to events we offer that appeal to our card members across generations and geographies, and reinforce the unique value of membership. Our highly popular experiences cut across entertainment, sports, food, art, and fashion.
In the quarter that strategy has driven 27 billion more in billings versus last quarter. The company is also generating almost $2 billion more in revenue and about $600 million more in net income compared to a year ago.
This demonstrates the earnings power of our business model now, let's take a look at the details of this quarter's performance starting with our summary financials on slide two.
Speaker 4: Starting with our summary financials on slide two.
Speaker 4: Third quarter revenues were 15.4 billion. They reached a record high for the sixth straight quarter and we're up 13% year over year.
Third quarter revenues were $15 4 billion there reached a record high for the sixth straight quarter and were up 13% year over year.
Stephen Squeri: They generate strong on-site engagement with our branded activities and offers, and they help drive interest among prospects. They also continue to attract world-class partners who work with us to add new ways for our card members and prospects to experience the power of AMX membership. Earlier this week, we announced our latest sponsorship, an exclusive multi-year agreement with Formula One to be the official payments partner of Formula One in the Americas. This sponsorship is our first new sports vertical in over 10 years, and it represents a great opportunity to build an rapidly growing popularity of Formula One racing around the world.
Speaker 4: This revenue momentum drove reporting net income of 2.5 billion, an earnings per share of $3.30, which proved 34% year over year.
This revenue momentum drove reported net income of $2 5 billion and earnings per share of $3 30.
Which grew 34% year over year.
Speaker 4: Let's now go to a more detailed look at the drivers of these results. In our spent centric business model, that begins with a look at bill business starting on slide three.
Let's now go to a more detailed look at the drivers of these results in our spend centric business model that begins with a look at build business starting on slide three.
Speaker 4: Total Bill Business Group 27 billion this quarter versus last year. Up 7% on an FX adjusted basis, as we continue to see the more stable growth rates that we expect.
Total Bill business grew $27 billion this quarter versus last year up 7% on an FX adjusted basis as we continue to see the more stable growth rates that we expected.
Stephen Squeri: Another way we're delivering generational relevance is by regularly refreshing and adding value to our products on a global basis. These product enhancements are tailored to the interest and spending patterns of our customers of all age groups in each local market. So far this year, we've made enhancements to over 20 premium products across the company, some of the latest of which were refreshes of our platinum card products in Japan, our business gold card in the US, and just yesterday our Hilton co-branded consumer card.
Speaker 4: This growth was driven by 6% growth in goods and services spending. Consistence with last quarter's growth rate and sustained double digit growth in travel and entertainment spending.
This growth was driven by 6% growth in goods and services spending consistent with last quarter's growth rate and sustained double digit growth in travel and entertainment spending.
Stephen Squeri: These examples and many others like them are further enriching our membership model, which helps us attract new premium customers, drive retention, and deepen engagement with current customers and add more merchants and partners who provide offers and experiences that deliver additional value. Looking ahead, I feel very good about where we are and where we're going. We'll continue on strategy of investing for growth and adding more differentiated value to our membership model to deliver generational relevance. While continuing to leverage the strengths of our business model, all of which gives us a competitive advantage.
Speaker 4: This double digit T&E growth has been driven by continued demand for travel and dining experiences with a restaurant spending, our largest category, up 13% of this quarter.
This double digit <unk> growth has been driven by continued demand for travel and dining experiences with the restaurants spending our largest category up 13% this quarter.
Speaker 4: Total network volumes grew 6% year over year on an FX-adjusted basis. As you look at this results, I note that we exited a small product last quarter that was reported in our process volumes. This is reflected in the Q3 growth rate and expect to see the impact of the year over your growth rate continuing for the next few quarters until we lap this exit.
Total network volumes grew 6% year over year on an FX adjusted basis as you look at these results I'd note that we exited a small product last quarter that was reported in our process volumes. This is reflected in the Q3 growth rate I would expect to see the impact of the year over year growth rate continue for the next few quarters.
Until we lap this exists.
Speaker 4: As a reminder, process volume includes volumes from cards where we play more of a network role and from alternative payment solutions that we facilitate.
As a reminder, processed volume includes volumes from cards, where we see more of in network role and from alternative payment solutions that we facilitate.
Speaker 4: The revenue associated with these volumes makes up a small portion of our poll revenue, which you can see on slide 11.
The revenue associated with these volumes mix up a small portion of our total revenue, which you can see on slide 11.
Christophe Lacayak: I'll now hand the call over to Christophe Lacayak for additional detail on our quarterly results.
Speaker 4: As we then break down, I was spending trends across our businesses. There are a few other key points to take away.
We then breakdown our spending trends across our businesses. There were a few other key points to take away still.
Christophe Lacayak: Thank you Steve and good morning everyone. I'm excited to have my first earning school be one where we discuss our continued strong momentum, which is reflected in our record revenue and ETS in the third quarter. I would like to take a minute at the outset to share my perspective on the company as someone who has been here for a long time and through various business environments. The company is very focused on driving high levels of profitable revenue growth.
Speaker 4: Starting with our largest segment on slide four, US consumer group building strongly at 9% this quarter. Our focus on attracting, engaging, and retaining our premium con members is driving growth across all generations and age cohorts.
Starting with our largest segment on slide four.
U S consumer group billings strongly at 9% this quarter, our focus on attracting engaging and retaining our premium card members is driving growth across all generations and each cohorts.
Speaker 4: Millennial and Gen Z customers continue to drive our highest billed business growth within this segment with their spending up 18% this quarter.
Millennial and Gen Z customers continue to drive our highest billed business growth within this segment with their spending up 18% this quarter.
Christophe Lacayak: The key enabler of that growth has been the discipline we use to deploy our resources. As a result, the underlying quality of our business is very strong and I have confidence in the sustainability of the growth drivers that we are seeing. We have accelerated the pace of our revenue and ETS growth since before the pandemic. That acceleration is a direct result of the strategy that underpins our growth plan, which Steve described.
Speaker 4: Looking at commercial services on slide five, U.S. SME growth came in at 2% this quarter, consisting with last quarter's growth rate. As Steve discussed on our Q2 poll, organic growth in this segment has slowed given unique dynamics seen by small businesses over the past few years. Importantly, we do continue to see strong, high quality demand for new accounts within this segment. Looking forward, we focus on continuing to help SME clients run their business.
Looking at commercial services on slide five U S. SME growth came in at 2% this quarter consistent with last quarter's growth rate.
Steve discussed on our Q2 call organic growth in this segment have slowed given the unique dynamics seen by small businesses over the past few years importantly, we do continue to see strong high quality demand for new accounts within this segment.
Looking forward, we are focused on continuing to help SME clients run their businesses.
Christophe Lacayak: In the quarter, that strategy has driven 27 billion more in billing versus loss quarter. The company is also generating almost 2 billion more in revenue and about 600 million more in net income compared to a year ago. This demonstrates the earnings power of our business model. Now let's take a look at the details of this quarter's performance. Starting with our summary financials on slide two. Third quarter revenues were 15.4 billion. They reached a record high for the sixth straight quarter and were up 13% year over year.
Speaker 4: Billings from our US law and global corporate customers were flat year-to-year.
Billings from our U S large and global corporate customers were flat year over year.
Speaker 4: As we have said for many years, this customer is not a major growth driver for our business, but they remain an important foundation for the company's business model.
As we have said for many years. This customers are not a major growth driver for our business, but they remain an important foundation for the company's business model.
Speaker 4: And lastly, on slide six, you see our highest growth again, this quarter, in international card services. We saw strong growth across our geographies and customer times, spending from international consumers and from international SME and large corporate customers, each group 15%.
And lastly on slide six you'll see our highest growth again this quarter in international card services.
We saw strong growth across our geographies and customer types spending from international consumers and from international SME and large corporate customers each grew 15%.
Speaker 4: Overall strength and spending growth from our U.S. consumers and card members outside of the U.S. continues to us as soft as we can with commercial services that we've been talking about for the past few quarters.
Strength in spending growth from our U S consumers and card members outside of the U S continues to offset this softness with commercial services that we've been talking about for the past few quarters.
Christophe Lacayak: This revenue momentum drove reporting net income of 2.5 billion and earnings per share of $3.30 which proved 34% year over year. Let's now go to a more detailed look at the drivers of these results. In our spent centric business model, that begins with a look at bill business starting on slide three. Total bill business grew 27 billion this quarter versus last year. Up 7% on an FX adjusted basis as we continue to see the more stable growth rates that we expected.
Speaker 4: Taking everything into account, our spending volumes are tracking to support our revenue guidance for the full year and our long term aspirations for sustainable growth rates greater than what we were generating pre pandemic.
Taking everything into account our spending volumes are tracking to support our revenue guidance for the full year and our long term aspirations for sustainable growth rates greater than what we were generating pre pandemic.
Speaker 4: Now, moving on to loans and conmembrosiva bolts on slide seven. We saw year-over-year growth of 15% as well as good continued sequential growth. As our customers continue to rebuild balances, the interest bearing portion of our loans and receivables balances continues to grow faster than the overall growth you see. Importantly, over 70% of our revolving loan growth in the US continues to come from our ten-year customers.
Now moving on to loans and card member receivables on slide seven we saw year over year growth of 15% as well as good continued sequential growth.
Christophe Lacayak: This growth was driven by 6% growth in business services spending. Consistence with last quarter's growth rate and sustained double digit growth and travel and entertainment spending. This double digit T&E growth has been driven by continued demand for travel and dining experiences with a restaurant spending our largest category up 13% this quarter. Total network volumes grew 6% year over year on an FX adjusted basis. As you look at this results, I know that we exited a small product last quarter that was reported in our process volumes.
As our customers continue to rebuild balances the interest bearing portion of our loans and receivables balances continues to grow faster than the overall growth Youll see importantly over 70% of our revolving loan growth in the U S continues to come from our tenured customers.
Speaker 4: As you then turn to credit and provision on slide 8 through 10, the high credit quality of our customer base continues to show in our best in class credit performance.
As you then turn to credit and provision on slide eight through 10, the high credit quality of our customer base continues to show in our best in class credit performance.
Speaker 4: As you can see on slide eight, our carnivores and receiver bolts, right offs and delinquency rates both remain fairly flat to last quarter and below prepandemic levels.
You can see on slide eight our card member loans and receivables write offs and delinquency rates, both remained fairly flat to last quarter and below pre pandemic levels going forward as we've talked about for many quarters. Now we continue to expect this delinquency and brighter rates to increase over time and they are likely.
Christophe Lacayak: This is reflected in the Q3 growth rate and expect to see the impact of the year over year growth rate continue for the next few quarters until we lap this exit. As a reminder, process volume includes volumes from cards where we play more of a network role and from alternative payment solutions that we facilitate. The revenue associated with these volumes makes up a small portion of our poll revenue, which you can see on slide 11.
Speaker 4: going forward. As we've talked about for many quarters now, we continue to expect this delinquency and right of rates to increase over time, and they're likely to remain below pre-pandemic levels in the fourth quarter.
To remain below pre pandemic levels in the fourth quarter.
Speaker 4: Turning now to the accounting of this credit performance on slide nine. The quarter of a quarter of a roll in our loan balances combined with a modest increase in our commonable loans and receivables, the linkancy rate resulted in a 321 million reserve bill. This reserve bill combined with net write offs to a 1.2 billion of provision expense in the third quarter.
Turning now to the accounting of this credit performance on slide nine the quarter over quarter growth in our loan balances combined with a modest increase in our card member loans and receivables delinquency rate resulted in a $321 million reserve build this reserve build combined with net write offs drove $1 $2 billion of provision.
Christophe Lacayak: As we then break down our spending trends across our businesses, there are a few other key points to take away. Starting with our largest segment on slide 4. US consumer group billing strongly at 9% this quarter. Our focus on attracting, engaging, and retaining our premium conmembers is driving growth across all generations and age cohorts. Millennial and Gen Z customers continue to drive our highest billed business growth within this segment, with their spending up 18% this quarter.
Expense in the third quarter.
Speaker 4: As you see on slide 10, we ended the third quarter with 5 billion of reserves representing 2.7% of our total loans and car member receivables.
As you see on slide 10, we ended the third quarter with $5 billion of reserves, representing two 7% of our total loans and card member receivables. This reserve rate remaining about 20 basis points below the level, we had pre pandemic or day one seasonal.
Speaker 4: This reserve rate remained about 20 basis points below the level we had pre-pandemic or day one sees.
Speaker 4: We continue to expect this reserve rate to increase a bit in the balance of year, similar to the modest increases we've seen over the past few quarters.
Christophe Lacayak: Looking at commercial services on slide 5, US SME growth came in at 2% this quarter. Consistent with last quarter's growth rate. As Steve discussed on our Q2 poll, organic growth in this segment has slowed given unique dynamics seen by small businesses over the past few years. Importantly, we do continue to see strong, high quality demand for new accounts within this segment. Looking forward, we focus on continuing to help SME clients run their businesses.
We continue to expect this reserve rate to increase a bit in the balance of year similar to the modest increases we've seen over the past few quarters.
Speaker 4: Moving next to revenue on slide 11, total revenues were up 1.8 billion or 13% year over year in the third quarter. Our largest revenue line, discount revenue grew 7% year over year in Q3. As you can see on slide 12, driven by spending trends we discussed earlier. Netcard fee revenues were up 19% year over year on an FX adjusted basis. As you can see on slide 13.
Moving next to revenue on Slide 11, total revenues were up $1 8 billion or 13% year over year in the third quarter.
Our largest revenue line discount revenue grew 7% year over year in Q3 as you can see on slide 12, driven by spending trends we discussed earlier.
Net card fee revenues were up 19% year over year on an FX adjusted basis as you can see on slide 13.
Christophe Lacayak: Billings from our US large and global corporate customers were flat year over year. As we have said for many years, this customers are not a major growth driver for our business, but they remain an important foundation for the company's business model. And lastly on slide 6, you see our highest growth again this quarter in international card services. We saw strong growth across our geographies and customer times, spending from international consumers and from international SME and large corporate customers, each group 15%.
Speaker 4: This growth remains very strong and is powered by the continued attractiveness to both new and existing customers of our fee-paying products due to the investment with maybe an our premium value proposition.
This growth remains very strong and is powered by the continued attractiveness to both new and existing customers of our fee paying products due to the investment we've made in our premium value propositions as.
Speaker 4: As we expected, growth moderated a bit this quarter from the high levels we saw earlier this year, reflecting our cycle of product refresh.
As we expected growth moderated a bit this quarter from the high levels. We saw earlier this year, reflecting our cycle of product refreshes.
Speaker 4: This quarter, we require 2.9 million new cars. Importantly, the acquisition levels you see on slide 13 remain consistent with our long-term growth aspirations.
This quarter, we acquired $2 9 million new cards importantly, the acquisition level as you see on slide 13 remained consistent with our long term growth aspirations. This spend revenue and credit profile of our new card members continued to look strong relative to what we saw pre pandemic.
Christophe Lacayak: Overall, strength and spending growth from our US consumers and card members outside of the US continues to see us as a softness with commercial services that we've been talking about for the past few quarters. Taking everything into account, our spending volumes are tracking to support our revenue guidance for the full year and our long term aspirations for sustainable growth rates greater than what we were generating pre pandemic. Now moving on to loans and comment or receivables on slide 7, we saw year over year growth of 15% as well as good continued sequential growth.
Speaker 4: The spend, revenue and credit profiles of our new conmembers continue to look strong relative to what we so prepanded.
Speaker 4: Moving on to slide 14. You can see that net interest income was up 33% year over year on an FX-attested basis, driven mostly by the growth in our revolving loan balance.
Moving on to Slide 14, you can see that net interest income was up 33% year over year on an FX adjusted basis, driven mostly by the growth in our revolving loan balances.
Speaker 4: We've got some up revenues on slide 15. We're seeing broad-based revenue momentum across our diversified revenue lines. For 2023, we expect revenue growth to be within the range we communicated in January at around 15% growth for the full year.
To sum up revenues on slide 15, we're seeing broad base revenue momentum across our diversified revenue lines for 2023, we expect revenue growth to be within the range. We communicated in January at around 15% growth for the full year.
Christophe Lacayak: As our customers continue to reveal balances, the interest bearing portion of our loans and receivables balances continues to grow faster than the overall growth you see. Importantly, over 70% of our revolving loan growth in the US continues to come from our 10 year customers. As you then turn to credit and provision on slide 8 through 10, the high credit quality of our customer base continues to show in our best in class credit performance.
Speaker 4: Moving to expenses on slide 16, variable customer engagement expenses came in at 40% of total revenues in the third quarter. Therefore, I now expect the these costs to run at around 42% of total revenues in the foodier base on the foodier basis. Looking forward, we view this cost as a key driver of our momentum as we continue to innovate our value propositions, to deepen engagement with our premium car members and to attract new ones, as Steve discussed earlier.
Moving to expenses on slide 16 variable customer engagement expenses came in at 40% of total revenues in the third quarter. Therefore, I'd now expect these costs to run at around 42% of total revenues in the full year based on a full year basis looking forward we view this cause.
As a key driver of our momentum as we continue to innovate our value propositions to deepen engagement with our premium card members and to attract new ones as Steve discussed earlier.
Christophe Lacayak: As you can see on slide 8, our card member loans and receivables write offs and delinquency rates both remain fairly flat to last quarter and below pre pandemic levels. Going forward, as we've talked about for many quarters now, we continue to expect this delinquency and right of rates to increase over time and they're likely to remain below pre pandemic levels in the fourth quarter. Turning now to the accounting of this credit performance on slide 9.
Speaker 4: On the marketing line, we invested 1.2 billion in the quarter. I still expect to have marketing spend over around 5.5 billion for the full year. Fairly flat to our 2020 Twitch.
On the marketing line, we invested $1 2 billion in the quarter.
Still expect to have marketing spend of around $5 5 billion for the full year fairly flat to our 2022 expense.
Speaker 4: We feel really good about the quality of our new car acquisitions, which I talked about earlier, and I continue to see great demand for our products across the wide range of attractive investment opportunities.
We feel really good about the quality of our new card acquisitions, which I talked about earlier and I continue to see great demand for our products across a wide range of attractive investment opportunities given the strong set of opportunities I would expect I would expect to increase our marketing spend in the balance of this year and we are confident.
Christophe Lacayak: The quarter of a quarter of a roll in our loan balances, combined with a modest increase in our con-member loans and receivables, the Lincolency rate, resulted in a 321 million reserve bill. This reserve bill, combined with net write offs to of 1.2 billion of provision expense in the third quarter. As you see on slide 10, we ended the third quarter with 5 billion of reserves, representing 2 billion 7.7% of our total loans and con-member receivables.
Speaker 4: Given this strong set of opportunities, I would expect to increase our marketing spend in the balance of this year. And we're confident that our sophisticated acquisition engine will continue to do so in an efficient way.
Our sophisticated acquisition engine will continue to do so in an efficient way.
Speaker 4: Moving to the bottom of slide 16 brings us to operating spaces, which were 3.7 billion in the third quarter, as we invest in critical areas, such as our talented colleagues and technology.
Moving to the bottom of slide 16 brings us to operating expenses, which were $3 7 billion in the third quarter as we invest in critical areas such as our talented colleague base and technology.
Christophe Lacayak: This reserve rate remained about 20 basis points below the level we had pre-pandemic or day one Cecil. We continue to expect this reserve rate to increase a bit in the balance of year, similar to the modest increases we've seen over the past few quarters. Moving next to revenue on slide 11, total revenues were up 1.8 billion or 13% year over year in the third quarter. Our largest revenue line, discount revenue, grew 7% year over year in Q3.
Speaker 4: Taking this into account, we now expect our failure operating expenses to be around 14.5 billion.
Taking this into account, we now expect our full year operating expenses to be around $14 5 billion.
Speaker 4: Looking forward, we continue to view marketing and op-ex as a key source of leverage.
Looking forward, we continue to view marketing and Opex as a key source of leverage.
Speaker 4: Turning next to capital on slide 17, we return 1.7 billion of capital to our shareholders in the third quarter. This included common start repurchase of 1.3 billion and 438 million in common start dividends, all in the back of strong earnings generation.
Turning next to capital on Slide 17.
We returned $1 7 billion of capital to our shareholders in the third quarter.
This included common stock repurchase of $1 3 billion and $438 million in common stock dividends all on the back of strong earnings generation.
Christophe Lacayak: As you can see on slide 12, driven by spending trends we discussed earlier. Netcard fee revenues were up 19% year over year on an FX-adjusted basis, as you can see on slide 13. This growth remains very strong and is powered by the continued attractiveness to both new and existing customers of our fee-paying products due to the investment we've made in our premium value propositions. As we expected, growth moderated a bit this quarter from the high levels we saw earlier this year, reflecting our cycle of product refreshes.
Speaker 4: As you can see on slide 17, we target a C-T-1 ratio between 10 to 11%. We ended the quarter with a C-T-1 ratio of 10.7%, which is well above our current regulatory minimum of 7%.
As you can see on slide 17, we target a CET one ratio between 10% to 11%. We ended the quarter with a CET one ratio of 10, 7%, which is well above our current regulatory minimum of 7%.
Speaker 4: As we think about the Basel 3 proposal, the RWA increase could consume the buffer above regulatory capital requirements if the proposal is adopted as written. Notably, we believe there are clear opportunities for improvements between the proposal and the final rule. In fact, the regulators themselves have posed questions about potential issues in applying these rules broadly, and we are actively engaged in that dialogue.
As we think about the Basel III proposal, the RW increase could consume the buffer above regulatory capital requirements. If the proposal is adopted as written.
Notably we believe there are clearly opportunities for improvements between the proposal and the final rule in fact, the regulators themselves a post questions about potential issues and applying these rules broadly and we are actively engaged in that dialogue.
Christophe Lacayak: This quarter, we required 2.9 million new cards. Importantly, the acquisition levels you see on slide 13 remain consistent with our long-term growth aspirations. The spend, revenue and credit profiles of our new card members continue to look strong relative to what we so pre-pandemic. Moving on to slide 14, you can see that net interest income was up 33% year over year on an FX-adjusted basis, driven mostly by the growth in our revolving loan balances.
Speaker 4: We plan to continue to return to shareholders the excess capital regenerate while supporting our balance team growth.
We plan to continue to return to shareholders the excess capital, we generated while supporting our balance sheet growth.
Speaker 4: We do not expect any material near-term changes to our capital management approach.
We do not expect any material near term changes to our capital management approach.
Speaker 4: That brings me to our growth plan and 2023 guidance on slide 18. As Steven I discussed in our third quarter results, our third quarter results are we reflect a continuation of the strong momentum we've built over the last few years. Evidence by our performance across diversified revenue stream.
That brings me to our growth plan in 2023 guidance on slide 18, as Steve and I discussed in our third quarter results.
Christophe Lacayak: To sum up revenues on slide 15, we're seeing broad-based revenue momentum across our diversified revenue lines. For 2023, we expect revenue growth to be within the range we communicated in January at around 15% growth for the foodier. Moving to expenses on slide 16, variable customer engagement expenses came in at 40% of total revenues in the third quarter. Therefore, I now expect this cost to run at around 42% of total revenues in the foodier base on the foodier basis.
Our third quarter results already reflect a continuation of the strong momentum we've built over the last few years evidenced by our performance across diversified revenue streams for.
Speaker 4: For the foodier, we expect revenue growth of around 15% consistent with the revenue guidance range we provided at the beginning of the year. As I discussed before, we now expect variable conmembron engagement expenses to be around 42% of total revenues on a foodier basis, modestly below our original expectation.
For the full year, we expect revenue growth of around 15% consistent with our revenue guidance range. We provided at the beginning of the year.
As I discussed before we now expect variable card member engagement expenses to be around 42% of total revenues on a full year basis modestly below our original expectation on.
Speaker 4: On marketing, we still expect to spend around 5.5 billion for the full year. And lastly, we now expect our operating expenses to be around 14.5 billion this year, modestly above our original expectation, as we invest in areas critical to our success.
On marketing, we still expect to spend around $5 5 billion for the full year and lastly, we now expect our operating expenses to be around $14 5 billion. This year.
Christophe Lacayak: Looking forward, we view this cost as a key driver of our momentum as we continue to innovate our value propositions to deepen engagement with our premium card members and to attract new ones as Steve discussed earlier. On the marketing line, we invested 1.2 billion in the quarter. I still expect to have marketing spend over around 5.5 billion for the foodier fairly flat to our 2020 expense. We feel really good about the quality of our new card acquisitions, which I talked about earlier, and I continue to see great demand for our products across the wide range of attractive investment opportunities, news.
<unk> modestly above our original expectation as we invest in areas critical to our success.
Speaker 4: Taking everything together on our earnings per share guidance remains between $11 and $1.40.
Taking everything together on our earnings per share guidance remains between $11 and dive a $1 40.
Speaker 4: Looking forward, we remain committed to focusing on achieving our aspirations of sustainably delivering revenue growth in excess of 10 and meet team EPS growth in a steady state macro-environment.
Looking forward, we remain committing committed to focusing on achieving our aspirations of sustainably delivering revenue growth in excess of 10 and mid teen EPS growth in a steady state macro environments with that we'll open up the call for your questions in a moment a final point, which relates to our Investor relations teams here at American.
Speaker 4: With that, we'll open up the call for your questions in a moment. A final point which relates to our investor relations teams here at American Express. Steve and I have decided to move Kerry Bernstein to the critical role of corporate treacher. I'd like to thank Kerry for the leading the IR function during a period of strong performance for the company.
Christophe Lacayak: Given this strong set of opportunities, I would expect to increase our marketing spend in the balance of this year. And we're confident that our sophisticated acquisition engine will continue to do so in an efficient way. Moving to the bottom of slide 16 brings us to operating expenses, which were 3.7 billion in the third quarter, as we invest in critical areas such as our talented colleague base and technology. Taking this into account, we now expect our junior operating expenses to be around 14.5 billion.
Express, Steve and I have decided to move carry Bernstein to the critical role of corporate Treasurer I'd like to thank Gary for the lead for leading the IR function during a period of strong performance for the company.
Speaker 4: I'd then like to welcome Karthik Ramashantran, our new head of investor relations. Karthik was most recently your key finance leading our US consumer business and has had a number of finance positions over 11 years with the company. Now, let me turn it back over to Kerry to open up the poll for your questions.
And then like to welcome Kartik Roma, Sean from our new head of Investor Relations.
<unk> was most recently a key finance, leading our U S consumer business and has had a number of finance positions over his 11 years with the company now.
Christophe Lacayak: Looking forward, we continue to view marketing and op-ex as a key source of leverage. Turning next to capital on slide 17, we return 1.7 billion of capital to our shareholders in the third quarter. This included common start repurchase of 1.3 billion and 438 million in common stock dividends, all on the back of straw. As you can see on slide 17, we target a C-T-1 ratio between 10 to 11%. We ended the quarter with a C-T-1 ratio of 10.7%, which is well above our current regulatory minimum of 7%.
Now, let me turn it back over to Carrie to open up the call for your questions.
Speaker 2: Thank you, Trisha. Before we open up the lines for Q&A, I will ask those in the queue to please limit yourself to just one question.
Thank you first off before we open up the lines for Q&A.
It is in the queue to please limit yourself to just one.
Speaker 2: Thank you for your cooperation and with that the operator will now open up the line for
Question. Thank you for your cooperation and with that the operator will now open up the line for questions operator.
Speaker 1: Ladies and gentlemen, if you wish to ask a question, please press star then one on your touch tone phone. You'll hear a tone indicating that you've been placed in queue. You may remove yourself from the queue at any time by pressing star then two. If you're using a speaker phone, please pick up the handset before pressing the numbers. One moment please.
Ladies and gentlemen, if you wish to ask a question. Please press Star then one on your Touchtone phone.
You'll hear a tone, indicating that you've been placed in Q you may remove yourself from the queue at any time by pressing Star then two.
Youre using a speakerphone, please pick up the handset before pressing the numbers.
One moment please for the first question.
Speaker 1: Our first question is coming from Sunday, so crown the of KBW, please go ahead.
Christophe Lacayak: As we think about the Basel 3 proposal, the RWA increase could consume the buffer above regulatory capital requirements if the proposal is adopted as written. Notably, we believe there are clear opportunities for improvements between the proposal and the final rule. In fact, the regulators themselves have posed questions about potential issues in applying these rules broadly, and we are actively engaged in that dialogue. We plan to continue to return to shareholders the excess capital we generate while supporting our balanced growth.
Our first question is coming from Sanjay <unk> of <unk>. Please go ahead.
Speaker 5: Thanks, good morning and congrats, Christophe, Kerry, Kartik.
Thanks, Good morning, and congrats Chris Toth Kerry.
Speaker 5: We hear a lot about the choppy macro backdrop and its impact on spending. I'm just curious if you've seen any changes, behavioral over the past quarter, that might make you more sanguine or on the outlook, or do you feel like your customers are unfazed? And just on a related point, you know, I know the Delta stuff. There's been a lot of headlines on the changes that Delta's made to the medallion and qualification process. I'm just curious if you've seen any impacts.
Steve just a question we hear a lot about the choppy macro backdrop and its impact on the spending I'm just curious if you've seen any changes being April over the past quarter that might make you more sanguine on the outlook or do you feel like your customers are unfazed.
On a related point I know the Delta Scott there's been a lot of headlines on the change of that.
Christophe Lacayak: We do not expect any material near term changes to our capital management approach. That brings me to our growth plan in 2023 guidance on slide 18. As Steven, I discussed in our third quarter results, our third quarter results are we reflect a continuation of the strong momentum we've built over the last few years. Evidence by our performance across diversified revenue streams. For the full year, we expect revenue growth of around 15% consistent with the revenue guidance range we provided at the beginning of the year.
It has made to the medallion and qualification process I'm just curious if you've seen any impact.
Speaker 3: Yeah, so thanks, Andre. Let me start with the Delta first. I think, you know, as...
Yes, so thanks, Sanjay let me, let me start with the with Delta first I think.
No.
Speaker 3: Delta makes changes. We're in lockstep with them all the way. And one of the great things about how to delta as a partner is there are very customer focused organization. And they made some changes. The team got some reaction. And I think they made some other changes, which I think will be, and have been received in a very good fashion.
Delta makes changes we're in lockstep with them all the way and.
One of the great things about.
Having delta as a partner as they are a very customer focused organization and they made some changes.
The team got some reaction and I think they made they made some other changes, which I think will be.
Christophe Lacayak: As I discussed before, we now expect variable conmemory engagement expenses to be around 42% of total revenues on a full year basis, modestly below our original expectation. On marketing, we still expect to spend around 5.5 billion for the full year. And lastly, we now expect our operating expenses to be around 14.5 billion this year, modestly above our original expectation, as we invest in areas critical to our success. Taking everything together on our earnings per share guidance remains between $11 and $1.40. Looking forward, we remain committed to focusing on achieving our aspirations of sustainably delivering revenue growth in excess of 10 and 18 EPS growth in a steady state macro environment.
And have been received.
In a very good fashion.
Speaker 3: But as far as spending or card acquisition, it has had zero impact. So we haven't seen anything from a card spending on Delta or from a card acquisition. In fact, Delta card spending Euro be it was up almost 20%. So we feel pretty good about that. As far as the US consumer, let's just talk about the US consumer and international consumer.
But as far as spending or card acquisition. It has had zero impact.
So we haven't seen anything from a card spending on delta or.
From a card acquisition impact.
Delta card spending year over year was up almost 20% so so.
So we feel we feel pretty good about that as far as the U S consumer and let's just talk about the U S consumer and international consumer.
Speaker 3: It's still strong. We had 9% US consumer spending, 6% growth on goods and services, 13% growth on P&E, and that continues to be very strong off a high base.
It's still strong and we had 9% U S consumer spending, 6% or 6% growth in goods and services 13, 13% growth on <unk> and that continues to be very strong off a high base.
Kerri Bernstein: With that, we'll open up the call for your questions in a moment. A final point which relates to our investor relations teams here at American Express.
Speaker 3: And, you know, from an international perspective, we've seen 15% spending from an international part services perspective and strong both from a goods and services and a T&E perspective. And I think it's important that I'll remind everybody.
And from an international perspective, we've seen 15%.
Spending.
From an international.
Stephen Squeri: Steven, I have decided to move Kerry Bernstein to the critical goal of corporate treasure. I'd like to thank Kerry for the leading the IR function during a period of strong performance for the company.
Services perspective, and strong both from a goods and services and a <unk> perspective, and I think it is important that I'll remind everybody.
Speaker 3: You know, our card base is, you know, is a mic is is is a really small piece of the overall US economy and You know, one of the reasons we have such
Our card base is.
Kerri Bernstein: I then like to welcome Kartik Ramachandran, our new head of investor relations, Kartik was most recently your key finance leading our US consumer business and has had a number of finance positions over 11 years for the company.
Mike.
A really small piece of the overall U S economy and.
One of the reasons, we have such such great credit metrics as we had a really high quality card member and so.
Speaker 3: Great credit metrics is we have a really high quality card member. And so at this point in time, they have not been impacted by anything. But the other thing that I would say is
At this point in time, they have not been impacted by anything but the other thing that I would say is.
Kerri Bernstein: Now, let me turn it back over to Kerry to open up the poll for your questions. Thank you, Christophe. Before we open up the lines for Q&A, I will ask those in the queue to please limit yourself to just one question. Thank you for your cooperation and with that the operator will now open up the line for questions.
Speaker 3: You know, you probably had the same question at this time last year. And, you know, I probably gave you the same answer. And right now, we can only, you know, manage the business for what we're seeing in our business, which is still strong growth.
You probably had the same question at this time last year.
I probably gave you the same answer.
Right now we look we can we can only manage the business for what we're seeing in our business, which is still strong growth.
Operator: Operator? Ladies and gentlemen, if you wish to ask a question, please press star then one on your touchtone phone. You'll hear a tone indicating that you've been placed in queue. You may remove yourself from the queue at any time by pressing star then two. If you're using a speaker phone, please pick up the handset before pressing the numbers. One moment please for the first question.
Speaker 3: And we use the Blue Chip Economic Forecast and that calls for pretty much more of the same. So in a steady state macro environment, I feel really good about delivering on our plan as Christophe said. We are well positioned. And as I said, my remarks were well positioned to continue delivering on our growth.
And we use the blue chip economic forecast and that calls for pretty much more of the same. So we are in a steady state macro environment I feel really good about.
Delivering on delivering on our plan as Christoph said.
We are well positioned and.
And as I said in my remarks, we're well positioned.
Continuing to deliver on our growth plan.
Sanjay Sakhrani: Our first question is coming from Sunday Socrombie of KBW. Please go ahead. Thanks.
Speaker 1: Thank you. The next question is coming from Ryan Nash of Goldman Sachs. Please go ahead.
Thank you. The next question is coming from Ryan Nash of Goldman Sachs. Please go ahead.
Stephen Squeri: Good morning and congrats, Christophe, Kerry, Kartik. The question we hear a lot about the choppy macro backdrop and its impact on spending. I'm just curious if you've seen any changes, behavioral over the past quarter that might make you more sanguine or on the outlook. Or do you feel like your customers are unfazed and just on a related point, you know, I know the Delta stuff. There's been a lot of headlines on the changes that Delta has made to the medallion qualification process. I'm just curious if you've seen any impact. Thanks. Yeah, so thanks, Ajay.
Speaker 3: good morning Steve, good morning Christophe. Good morning. Um, you know, look, you know, as a follow up to Sanjay's question, obviously it was good to see, you know, the solid revenue growth.
Hey, good morning, Steve Good morning Christoph.
Good morning.
Look there's a follow up on Jay's question, obviously it was good to see the solid revenue growth.
Speaker 3: you know, given the challenging economic backdrop and, you know, you're still talking about double digit revenue growth next year, but
Given the challenging economic backdrop, and Youre still talking about double digit revenue growth next year, but can you maybe just talk about some of the pieces are the drivers you expect to see.
Speaker 3: maybe just talk about you know some of the pieces or the drivers you expect to see uh... you know given what's going on in in billings growth and and are you leaning more into lending in order to drive this growth and and just like like or do we need to see billings to improve in order to be able to drive double did you read the growth thank you well those are a lot of questions right uh... i know try to put it in the you actually only asked one you just put it in multiple parts uh...
Given what's going on in billings growth I know you are leaning more into lending in order to drive this growth and then just lastly like.
Do we need to see billings to improve in order to be able to drive double digit revenue growth will also have a lot of questions Ryan.
Stephen Squeri: Let me let me start with the Delta first. I think, you know, as Delta makes changes, we're in lockstep with them all the way. And, you know, one of the great things about how to delta as a partner is there are very customer focused organization and they made some changes. The team got some reaction and I think they made they made some other changes, which I think will be, you know, and have been received in a in a very fashion.
China, you actually only asked one you just put it in multiple parts.
Speaker 3: I'm glad to see you. Yeah, right. I will leave that one alone. But when you look at our model, there are many ways for us to grow rabbit.
All right.
Right exactly.
Okay, I will leave that we'll leave that one alone.
But when you when you look at our model.
There are many ways for us to grow revenue.
Speaker 3: you know we grow revenue from a billings perspective we grow revenue from a a card fee perspective and we do grow revenue from a lending perspective.
We grow revenue from a billings perspective, we grow revenue from a card fee perspective, and we do grow revenue.
Stephen Squeri: But as far as spending or card acquisition, it has had zero impact. So we haven't seen anything from a card spending on Delta or from a card acquisition. In fact, you know, Delta card spending euro bill was up almost 20%. So, so we feel we feel pretty good about that.
From a lending perspective.
Speaker 3: The current revenue growth that we have, the current Billings growth that we have is in line with what our long-term growth aspirations are. So where we are from a Billings growth perspective, we feel really good about it.
The current revenue growth that we had the current billings growth that we have is is in line with what our long term growth aspirations are so where we are from a billings growth perspective, we feel really good about that.
Speaker 3: From a fee perspective, and I like to point this out, is that the major driver of our fee revenue is actually a new card acquisition. It's not raising fees. It's really new card acquisition. And we've invested approximately $5.5 billion this year. We'll probably step that up next year. So we're very confident in our card acquisition. As Christophe said, there were a lot of great opportunities out there for us.
From a fee perspective, and I'd like to point. This out is that the major driver of our fee revenue is actually new card acquisition, it's not raising fees its really new card acquisition and we look we've we've invested.
Ryan Nash: As far as the US consumer and let's just talk about the US consumer and international consumer. It's still strong. You know, we had 9% US consumer spending, 6% of the 6% growth on goods and services, you know, 13 13% growth on P and 80 and that continues to be very strong off a high base. And, you know, from an international perspective, we've seen 15% spending from an international card services perspective and strong both from a goods and services and a T and E perspective.
Five point, we're going to invest approximately $5 5 billion. This year will probably stepped it up next year. So we're very confident in our card acquisition as Christoph said there were a lot of great opportunities out there for us and from a lending perspective, and we've mentioned this multiple times. Our book today, We believe is better than our book was in <unk>.
Speaker 3: And from a lending perspective, and we've mentioned this multiple times, our book today we believe is better than our book was in 2019.
Speaker 3: And, you know, if our card members will continue to lend responsibly, and, you know, our card members have various needs at various points in time. And I think it's that model, it's our three-legged stool of revenue, which will continue to provide confidence that we're gonna be able to deliver double-digit revenue growth next year.
<unk> thousand 19.
And.
If our card members, we will continue to lend responsibly.
Ryan Nash: And I think it's important that I'll remind everybody, you know, our card base is, you know, is a mic is, is a really small piece of the overall US economy. And, you know, one of the reasons we have such such great credit metrics is we have a really high quality card member. And so, at this point in time, they have not been impacted by anything.
Card members have various needs at various points in time.
I think it's that it's that model, it's our three legged stool of revenue, which will continue to provide confidence that we're going to be able to deliver double digit revenue growth next year.
Speaker 4: And maybe Ryan I can add one point on the landing side as Steve said we have
And maybe Brian I can add one point on the lending side as Steve said, we have.
Stephen Squeri: But the other thing that I would say is, you know, you probably had the same question at this time last year. And, you know, I probably gave you the same answer. And right now, we look, we can, we can only, you know, manage the business for what we're seeing in our business, which is still strong growth. And, you know, we use the blue chip economic forecast and, you know, that calls for pretty much more of the same.
Speaker 4: a premium customer base. And we're growing lending of that premium customer base, 70% of...
Our premium customer base, and we growing lending of that premium customer base, 70% of the balances are coming from established card members that we know well so.
Speaker 4: The balances are coming from established card members.
Speaker 4: that we know well. So, you know, those conmembers we know revolve with, you know, competitors products. And historically we under index on that. We capture a big share of their spend, a smaller share of that lending. And what we're doing here is just, you know, deepening the relationship with them and capturing a bigger share of their revolving needs.
<unk> card members, we knew revolve with compete.
Competitors products and historically, we under index on tax we capture a bigger share of their spend a smaller share of that lending and what we're doing here is just deepening the relationship with them and capturing a bigger share of their revolving needs.
Stephen Squeri: So in a steady state macro environment, I feel really good about, you know, delivering on delivering on our plan as Christophe said, you know, we are, we are well positioned. And as I said, my remarks were well positioned, you know, to continue delivering on our growth.
Speaker 1: Thank you. The next question is coming from Bob Napoli of William Blair. Please go ahead.
Thank you. The next question is coming from Bob Napoli of William Blair. Please go ahead.
Ryan Nash: Thank you, the next question is coming from Ryan Nash of Goldman Sachs. Please go ahead. Good morning, Steve. Good morning, Christophe. Good morning. As a follow-up to Sanjay's question, obviously it was good to see the solid revenue growth given the challenging economic backdrop. And you're still talking about double-digit revenue growth next year, but maybe just talk about some of the pieces or the drivers you expect to see given what's going on in Billings' growth.
Speaker 6: Now, thank you and congratulations to everyone. Kerry's been great. Working with you. Good luck. So, question Steve on the SMB business. That's a really important business for you. It's only growing 2%. I think there are large opportunities there. But what is, can you maybe give a little color on what's going on in SMB and your thoughts about SMB as we move into what's at 20%.
Thank you and congratulations to everyone Gary been great working with you.
Good luck so question, Steve on the SMB business, that's really important.
Business for you, it's only growing 2%.
I think there's large opportunities there, but what is can you maybe give a little color on what's going on in F&B and your thoughts about SMB.
As we move into 2024.
Speaker 3: Yeah, I think, you know, this is probably the second quarter in a row. It's, you know, it's been low growth. I think a lot of it, a lot of our high growth was, was really driven by organic growth. And we haven't seen as much organic growth.
Yes, I think this is probably the second quarter in a row.
Ryan Nash: And are you leaning more into lending in order to drive this growth? And then just let me feel like, do we need to see Billings to improve in order to be able to drive double-digit revenue growth? Thank you. Well, those are a lot of questions, Ryan. I know. You actually only asked one. You just put it in multiple parts. Yeah, right. I will leave that one alone.
It's been low growth I think a lot of it a lot of our high growth was was really driven by organic.
Growth in we haven't seen as much organic growth.
Speaker 3: From a small business perspective, I think from an acquisition perspective, we're still very happy about the opportunities that are out there.
From a small business perspective, I think from an acquisition perspective, we're still very happy about the opportunities that are out there.
Speaker 3: We're still happy about the lending opportunities that are out there. And I think small businesses went through a very interesting cycle over the last few years in terms of not having a lot of inventory and stocking up on inventory. And so we're still very positive on small business albeit the last two quarters were relatively slow, but we share.
We're still happy about the.
The lending opportunities that are out there and I think small businesses went through a very interesting cycle over the last few years in terms of not having a lot of inventory and stocking up on inventory and so we're still very positive on small business, albeit the last two quarters were relatively slow, but we share.
Stephen Squeri: But when you look at our model, there are many ways for us to grow revenue. You know, we grow revenue from a Billings perspective, we grow revenue from a card fee perspective, and we do grow revenue from a lending perspective. The current revenue growth that we have, the current Billings growth that we have, is in line with what our long-term growth aspirations are. So where we are from a Billings growth perspective, we feel really good about that.
Speaker 3: We share your perspective that it's still a huge opportunity for us and it is a big part of our business from a billing perspective. And to remind people, our small business footprint is across a variety of small businesses, whether it's restaurant and retail or professional services and construction and so forth. So we still feel good about it. We have a three day business framework which I? on. It's not easy.
We share your perspective that it's still a huge opportunity for us and it is a it is a.
It's a big part of our business from a billings perspective and to remind people.
Our small business.
Our footprint is across a variety of small businesses, whether its restaurants.
Stephen Squeri: From a fee perspective, and I like to point this out, is that the major driver of our fee revenue is actually a new card acquisition. It's not raising fees. It's really a new card acquisition. And look, we've invested approximately $5.5 billion this year. We'll probably step that up next year. So we're very confident in our card acquisition. As Christophe said, there were a lot of great opportunities out there for us. And from a lending perspective, and we've mentioned this multiple times, our book today we believe is better than our book was in 2019.
In retail or professional services and construction and so forth. So we still feel good about it.
And.
Speaker 3: I think that we'll see just, you know, when organic does come back, but we're still very positive on small business.
I think that we'll see just.
When organic does come back but.
We're still very positive on small business.
Speaker 1: Thank you. The next question is coming from Rick Shane of J.P. Morgan. Please go ahead.
Thank you. The next question is coming from Rick Shane of Jpmorgan. Please go ahead.
Speaker 7: Thanks everybody for taking my question and congratulations, Kerry really enjoyed working with you on Christoph. We are looking forward to...
Thanks, everybody for taking my question and congratulations Carrie.
Really enjoyed working with you and Christophe we are looking forward to.
Stephen Squeri: And you know, if our card members will continue to lend responsibly, and you know, our card members have various needs at various points in time. And I think it's that it's that model, it's our three-legged stool of revenue, which will continue to provide confidence that we're going to be able to deliver double digit revenue growth next year.
Speaker 7: more dialogue. I just have one question. There was a comment about raising the reserve rate modestly as we move forward. Obviously that's not a function of changing economic outlook because you don't know what that will be. I'm assuming it's a mixed shift issue. Can you talk about that a little bit in terms of what components are shifting in the mix and the different reserve rates for those products? Yeah, yeah, yeah.
More dialogue.
I just have one question there was a comment about raising the reserve rate modestly as we move forward.
Forward, obviously, thats a function of changing economic outlet because you don't know what that will be.
Im assuming its a mix shift issue can you talk about that a little bit in terms of what components are shifting in the mix and the different reserve rates for.
Christophe Lacayak: And maybe Ryan, I can add one point on the lending side. Steve said we have, you know, a premium customer base. And we're growing lending of that premium customer base, 70% of the balances are coming from established card members that we know well. So, you know, those card members we know revolve with, you know, competitors products. And historically, we under index on that. We capture a big share of their spend, a smaller share of that lending. And what we're doing here is just, you know, deepening the relationship with them and capturing a bigger share of their revolving needs.
Those products.
Yes, yes, yes so.
Speaker 4: So they're trend, you know, there is like still a bit of normalization going on. So if you look at our note, I would tell you can see rates there.
So the trend there is still a bit of normalization going on so should dilute at if you look at our.
Quincy rates there.
Fairly flat, if you squint, a little bit you're going to see a couple of basis points increase and thats effectively what I meant when I said that you should expect that reserve.
Speaker 4: If you squint a little bit, you're gonna see a couple of basis points increase. And that's effectively what I meant when I said that you should expect that reserve rate to increase a little bit. There's still a little bit of normalization happening here, but as you know well, those delinquency rates and right of rates are...
To increase a little bit where theyre still a little bit of normalization happening here, but as you know well those delinquency rates in write off rates are very strong relative to our historical performance and of course relative to peers. So.
Bob Nathalie: Thank you. The next question is coming from Bob Nathalie of William Blair. Please go ahead.
Speaker 4: Very strong relative to our historical performance and of course
Stephen Squeri: Thank you and congratulations to everyone who has been great, working with you. Good luck. So, question Steve on the SMB business. That's a really important business for you. It's only growing 2%. I think there are large opportunities there. But can you maybe give a little color on what's going on in SMB and your thoughts about SMB as we move into what's at 2024? Yeah, I think you know this is probably the second quarter in a row.
Speaker 4: relative to peers. So there's nothing that gives me concern in that comment is just just to preempt a little bit what we are seeing.
There is nothing that gives me concern in that comment is just just to preempt a little bit, but what we are seeing.
Speaker 1: Thank you. The next question is coming from Don Fandandetti of Wells Fargo. Please go ahead.
Thank you. The next question is coming from Don Vendetti of Wells Fargo. Please go ahead.
Speaker 8: Hi, good morning. Christophe on the Baffle pre-end game. Has the message still unchanged? I mean, it seems like that's a pretty big increase in our WAs and that maybe you might have to ultimately dial back the buybacks at some point.
Hi, Good morning, Christoph on the Basel III end game has the message.
Still.
Unchanged I mean, it seems like that's a pretty big increase in our WMA as maybe you might have to ultimately dialed back the buybacks at some point just wanted to get thoughts on that.
Stephen Squeri: It's been low growth. I think a lot of it, a lot of our high growth was really driven by organic growth and we haven't seen as much organic growth. From a small business perspective, I think from an acquisition perspective, we're still very happy about the opportunities that are out there. We're still happy about the lending opportunities that are out there. And I think small businesses went through a very interesting cycle over the last few years in terms of not having a lot of inventory and stocking up on inventory.
Stephen Squeri: And so we're still very positive on small business, albeit the last two quarters were relatively slow, but we share your perspective that it's still a huge opportunity for us. And it is a big part of our business from a Billings perspective. And to remind people our small business footprint is across a variety of small businesses, you know, whether it's restaurant and retail or professional services and construction and so forth. So we still feel good about it. And I think that we'll see just, you know, when organic does come back, but we're still very positive on small business.
Speaker 4: Yeah, so this is, as you know, a complicated set of rules, like over a thousand pages. So let me try to summarize it for you and the way we are thinking about puzzle three.
Yeah. So.
unknown: Thank you.
This is as you know a complicated set of rules like over 1000 pages. So let me try to summarize it for you in the way we are thinking about Basel III.
Speaker 4: I think the right starting point is to remind ourselves that first we generate a lot of capital, R-E-E in the 30% range. The second element of the starting point is that although our regulatory capital is at 7%, C-T-1 at 7%, we actually operate with a target of
I think they're the right starting point is to remind ourselves that first we generate a lot of capital Roe.
In the 30% range.
The second element of the starting point is that <unk>.
Although our regulatory capital is at 7% CET one at 7%, we actually operates with a target of 10% to 11%. So thats three to 400 basis points north of the regulatory level.
Speaker 4: 10 to 11%. So that's three to four and three basis point north of the regulatory level. And what I meant to say in my comment was to say that that buffer could be consumed by the Basel III rules if they're adopted as currently drafted. Another way of saying the same thing is that our level of capital today is very healthy given those.
And what I meant to say in my comment was to say that that buffer could be consumed by either the Basel III rules if they were.
Adopted us currently drafted.
Another way of saying the same thing is that our level of capital today is very <unk>.
Given those those rules I also need to highlight the fact that.
Speaker 4: I also need to highlight the fact that in the rules themselves, the regulators.
In the rules themselves their regulators.
Speaker 4: I'll pause some questions about the affordability of these rules to businesses such as ours, and their reference to charge card, for instance, business. And as you know, over 75, 78% of our revenue comes from fees, but those fees are...
Rick Shane: The next question is coming from Rick Shane of JP Morgan. Please go ahead. Thanks everybody for taking my question and congratulations. Carrie really enjoyed working with you on Christoph. We are looking forward to more dialogue. I just have one question. There was a comment about raising the reserve rate modestly as we move forward. Obviously, that's not a function of changing economic outlook because you don't know what that will be. I'm assuming it's a mixed shift issue.
Paul some questions about the applicability of these rules to businesses such as ours <unk> referenced the charge card for instance business.
And as you know over 70, 578% of our revenue comes from fees, but those fees are stable visible such as card fees that we've talked about a bit earlier and and we are actively engaged with the regulators to figure out what's the right thing to do here.
Speaker 4: stable, visible, such as car fees that we talked about a bit earlier. And we are actively engaged with the regulators to figure out, you know, what's the right thing to do here? So we'll see where we lend. No one knows. But for now, I don't expect any change to our near term capital management policies and practices.
Christophe Lacayak: Can you talk about that a little bit in terms of what components are shifting in the mix and the different reserve rates for those products? Yeah, yeah, yeah. So, so they're trend, you know, there is like still a bit of normalization going on. So if you look at if you look at our know, I would tell you can see rates, they're fairly flat. If you squint a little bit, you're going to see a couple of basis points increase.
So we will see where we land no one knows.
But for now I don't expect any change to our near term.
Capital management policies and practices.
Speaker 1: Thank you. The next question is coming from Jeff Adelson of Morgan Stanley . Please go ahead.
Thank you. The next question is coming from Jeff Adelson of Morgan Stanley . Please go ahead.
Speaker 9: Yes, hi, things are taking my questions. Just wanted to focus a little bit on the spend versus the count group dynamics. It looks like your average spending per card or account is flattening out and your account growth is finally slowing, a little more flat, sequentially this quarter, even as you continue to add.
Yes, hi, thanks for taking my questions.
Just wanted to focus a little bit on the stand versus account growth dynamics it looks like your <unk>.
Christophe Lacayak: And that's effectively what I meant when I said that you should expect that reserve rate to increase a little bit, but there's still a little bit of normalization happening here. But as you know, well, those delinquency rates and right over rates are very strong relative to our historical performance and of course relative to peers. So there's nothing that gives me concern in that comment is just just to preant a little bit what we are seeing. Thank you.
Average spending per card or account is flattening out in your account growth is finally slowing.
More flat sequentially this quarter, even as you continue to add.
Speaker 9: 3 million new accounts or cars a quarter. And, you know, it can't be on the backdrop of your marketing a little bit lower this quarter, although it sounds like you're going to be leaning back in next quarter to hit that five and a half. So I guess my question is.
$3 million constant current quarter.
It came against the backdrop of your marketing a little bit lower this quarter, although it sounds like youre going to be meeting back in next quarter to hit that $5. Five so I guess my question is.
Speaker 9: Are you seeing something that's causing you to drive a little bit slower or count growth here or is there anything going on with attrition or anything without us?
Are you seeing something that's causing you to drive a little bit slower account growth here or is there anything going on with attrition or anything with delta.
No.
Donald Fandetti: The next question is coming from Don Fandetti of Wells Fargo. Please go ahead. Hi, good morning. Christophe, I'm the Basel III end game. Has the message is the message still unchanged? I mean, it seems like that's a pretty big increase in our WAs and that maybe you might have to ultimately dial back the buybacks at some point. Just want to get your thoughts on that. Yeah.
Speaker 3: I think it becomes down to timing. And what happens is quarters happen to cut off on particular days, and that's just the way it is. But no, we're committed to the 5.5 billion overall approximately of marketing. You saw a slight sequential drop. I think we went on the $3 million for the first time in a while.
I think.
It becomes down to timing and what happens is quarters happen to cut off on particular days in.
That's just the way it is but no. We are committed to the $5 5 billion overall approximately of marketing you saw a slight sequential drop I think we went under $3 million for the first time in a while.
Christophe Lacayak: So, this is, as you know, a complicated set of rules like over a thousand pages. So, let me try to summarize it for you and the way we are thinking about Basel III. I think the right starting point is to remind ourselves that first we generate a lot of capital. Are we in the 30% range? The second element of the starting point is that although our regulatory capital is at 7% CT1 at 7%, we actually operate with a target of 10 to 11%.
Speaker 3: And, you know, we look at account growth as a card acquired from a overall revenue perspective. But...
And we look at account growth as.
Cards acquired from an overall revenue perspective, but we still see tremendous tremendous opportunities out there, which is why we've sort of signaled here more than signals. We said, we're going to raise our our marketing expense for next year as well. So no. We're not seeing anything at all that gives us pause.
Speaker 3: We still see tremendous opportunities out there, which is why we sort of signal here, more than signal, we said we're gonna raise our marketing expense for next year as well. So no, we're not seeing anything at all. That gives us pause. And we will continue to acquire those cards as long as those opportunities are out there. So you will see a higher level of marketing spending in the next quarter.
And we will continue to acquire those cards <unk>.
Cards as long as those opportunities are out there. So you will see.
Higher level of marketing spending in the next quarter.
Christophe Lacayak: So, that's 3 to 400 basis point north of the regulatory level. And what I meant to say in my comment was to say that that buffer could be consumed by the Basel III rules if they're adopted as currently drafted. Another way of saying the same thing is that our level of capital today is very healthy, you know, given those rules. I also need to highlight the fact that in the rules themselves, the regulators pause some questions about the applicability of these rules to businesses such as ours, you know, when they're referenced the charge card, for instance, business.
Speaker 1: Thank you. The next question is coming from Bill Carcati of Wolf Research. Please go ahead.
Thank you. The next question is coming from Delek CFO Research. Please go ahead.
Speaker 10: Thank you. Good morning, Steven. Christophe, welcome to the call. Morning. Morning.
Thank you.
Morning, Steven Christoph welcome to the call.
Good morning, good morning.
Can you share any initial thoughts there.
Speaker 10: the open banking rule that the CFPD recently proposed. There's a view that open banking essentially forces banks to hand over the keys to their customer relationships. I was just hoping you could speak to any opportunities that may present for MX. And then following up on the Capitol commentary, Chris, out there's a view that you could reduce your operas. If you treated your rewards expense as a counter revenue, any thoughts on that would be great.
The open banking rule that the CFPB recently proposed there is a view that.
Open banking, essentially forcing banks to hand over the keys to their customer relationships. I was just hoping you could speak to any opportunities that may present for Amex and then following up on the capital commentary, Chris There's a view that you could reduce your op risk. If you treated your rewards expense as a contra revenue.
Thoughts on that would be great. Thank you.
Speaker 3: Yeah, look as far as, said now, I think let's just go to the UK, UK said open banking for...
Yes look as far as <unk> said now I think let's just go to the U K U K is that open banking for.
Speaker 3: ten years or so and it's really had no impact on our business either positively or negatively. So I don't really see this as either a big threat or a big opportunity. And I think what I'd like to take you back to is
10 years.
Christophe Lacayak: And as you know, over 75, 78% of our revenue comes from fees, but those fees are stable, visible, such as card fees that we talked about a bit earlier. And we are actively engaged with the regulators to figure out, you know, what's the right thing to do here? So, we'll see where we land. No one knows. But for now, I don't expect any change to our near term capital management policies and practices. Thank you.
So and.
It's really had no impact on our business either positively or negatively so.
I don't really see this as a.
As either a big threat or a big opportunity and I think.
What I'd like to take you back filled two is what product we're actually offering.
Speaker 3: What product we're actually offering? We're offering a membership model product basically, which has lots of different components other than just commodity paying. And our product has...
We're offering a.
Our membership model product basically which has.
Lots of different components other than just commodity pain and.
R.
Our product has so many more benefits from a security perspective of fraud perspective, a dispute perspective then.
Speaker 4: from a security perspective, a fraud perspective, a dispute perspective, then an open banking product would have. And so I really don't see this as either an opportunity or as a threat to our business, either in the short term or in the long term. I will turn to the other question over to Christal. So on Basel, Bill,
Jeffrey Adelson: The next question is coming from Jeff Adelson of Morgan Stanley. Please go ahead. Yes, hi, thanks for taking my questions.
Open banking product would have and so.
I really don't see this as either an opportunity or is it as a threat.
Stephen Squeri: Just wanted to focus a little bit on the spend versus the concrete dynamics. It looks like your average spending per card or account is flattening out and your account growth is finally slowing a little more flat sequentially this quarter, even as you continue to add three million new accounts or cars a quarter. And, you know, it came against the backdrop of your marketing a little bit lower this quarter, although it sounds like you're going to be leaning back in next quarter to hit that five and a half.
Our business either in the short term or in or in the long term I will turn the other question over to Christophe So on Basel.
Speaker 4: Here, there are various things that we're discussing with regulators. I don't think it would be useful to go through the list here this morning on the call.
There are various things that we're discussing with regulators.
I don't think it would be useful to go through the list here. This morning on the call.
Speaker 4: But you raise either an important element here, which is that nothing is really changing in our business, right? It was still doing...
But you raise either an important element here, which is that nothing is really changing in our business right. We're still doing the exact same thing and so.
Stephen Squeri: So, I guess my question is, are you seeing something that's causing you to drive a little bit slower account growth here, or is there anything going on with attrition or anything without the No, I think it becomes down to timing and what happens is quarters happen to cut off on particular days and that's just the way it is. But no, we're committed to the 5.5 billion overall approximately of marketing. You saw a slight sequential drop.
Speaker 4: the exact same thing. And so we need to figure out with regulators what the right level of capital here and not be dependent upon accounting treatment or anything like that. So.
We need to figure out with regulators, what the right level of capital here and not be dependent upon the accounting treatment or anything like that so so.
Speaker 4: So, you know, twirly to discuss this in detail, when we have more clarity, we'll provide you with a ton of out-of-three detail.
Too early to discuss these in detail when we have more clarity we will provide you with with a ton of Basel III detail.
Speaker 1: Thank you. The next question is coming from Dominic Gabriel of Oppenheimer. Please go ahead.
Thank you. The next question is coming from Dominic Gabriel with Oppenheimer. Please go ahead.
Stephen Squeri: I think we went on the 3 million for the first time in a while. And we look at account growth as cards acquired from a overall revenue perspective, but we still see tremendous opportunities out there which is why we sort of signaled here more than signals. We said we're going to raise our marketing expense for next year as well. So no, we're not seeing anything at all. That gives us pause. And we will continue to acquire those cards as long as those opportunities are out there. So you will see a higher level of marketing spending in the next quarter. Thank you.
Speaker 11: Good morning, pleasure to meet everybody. And Carrie, thanks so much for all the help. I was just curious on your card member rewards as a percentage of build business. It's stepped down quite nicely, quarter over quarter and year over year. I was just curious if you're seeing anything in particular on the utilization of rewards recently, or any commentary around that. Thank you so much.
Hi, good morning.
Pleasure to be entered by any Kerry. Thanks, so much for all the help.
I was just curious on your.
Card member rewards as a percentage of billed business it stepped down quite.
Quite nicely quarter over quarter and year over year I was just curious if youre seeing anything in particular on the on the utilization of rewards recently.
Or any commentary around around that thank you so much.
Speaker 4: Yeah. So yes, and our total VCE, I call dad, was lower this quarter at 40%. So as you know,
Yeah. So.
Yes.
Our total VC I called out was slower this quarter about 40% so.
As you know.
Speaker 4: Variable car member engagement and reward is the biggest, is the biggest number there. It's a very large expense base. So we're constantly looking at when we do product refreshes, when we launch products.
Bill Carcache: The next question is coming from Bill Carcache, a full free search. Please go ahead. Thank you.
Variable card member engagement and rewards. It's the biggest it's the biggest number there. It's a very large expense base. So we are constantly looking at when we do product refreshes when we.
Stephen Squeri: Good morning, Stephen. Christoff, welcome to the call. Morning, morning. Can you share any initial thoughts on the open banking rule that the CFPB recently proposed? There's a view that open banking essentially forces banks to hand over the keys to their customer relationships. I was just hoping you could speak to any opportunities that may present for MX. Following up on the Capitol commentary, Christoff, there's a view that you could reduce your operas.
Launch products, we look at we're looking at ways to make sure that these value proposition works best and we price for this and there is always changes theres always changes as well in terms of how the club members choose to redeem their points from one quarter to another.
Speaker 4: We're looking at ways to make sure that this value for position works best and we price for this.
Speaker 4: And there's always changes, there's always changes as well in terms of how the conmembers choose to redeem their points from one quarter to another.
Speaker 4: As you know, we also adding constantly new redemption partners that change the mix in terms of their weighted average cost per point. So there's at any point in time, a lot of variables that will impact that ratio. We are very focused on making sure that we have the right ratio versus revenue. And we also have the right value proposition that we'd be compelling in the marketplace.
We also adding constantly new redemption partners that changed the mix in terms of their weighted average cost per point. So this at any point in time, a lot of variables that will impact that that ratio. We are very focused on making sure that we have the right ratio versus <unk>.
Stephen Squeri: If you treated your rewards expense as a cultural revenue. Any thoughts on that would be great. Thank you. Yeah, look, as far as said now, I think let's just go to the UK UK said open banking for 10 years or so. And it's really had no impact on our business, either positively or negatively. So I don't really see this as either a big threat or big opportunity. And I think what I'd like to take you back to is what product we're actually offering.
And we also have the right value proposition that will be compelling in the marketplace. So it's a little bit lower this quarter.
Speaker 4: So it's a little bit lower this quarter. I think we said 42% for the full year because we are seeing that it's a bit better as well from a full year standpoint.
I think we said 42% for the full year, because we are seeing a.
A bit better as well from a full year standpoint.
Stephen Squeri: We're offering a membership model product, basically, which has lots of different components other than just commodity paying. And our product has so many more benefits from a security perspective, a fraud perspective, a dispute perspective, then an open banking product would have. And so I really don't see this as either an opportunity or as a threat to our business, either in the short term or in the long term.
Speaker 4: It's still going to be an area of investments for us. It drives a lot of growth as well. That's one of the key reasons why Conmembers sign up for the cards and engage with it. And we're going to keep working on those value propositions and make sure that we have the right balance.
It's still going to be near a year of investments for us it drives a lot of growth as well.
That's one of the key reason why card members sign up for for the Cogs and engaged with it and we get are we going to keep working on those on those value propositions and make sure that we have the right balance here.
Speaker 3: The other point I'll add is that within our value propositions because of our...
The only other point I'll add is that within within our value propositions because.
Of our.
Really premium card base.
Speaker 3: Lots and lots of partners want to work with us and include benefits within our value propositions to reach our card members. And so when you look at the overall value proposition, it's just not rewards based, it is partner based and there are different mechanisms from a funding perspective of how that all works out. So that's part and parcel of our value proposition as well.
Christophe Lacayak: I will turn the other question over to Christoff. So on Basel, Bill, there are various things that we're discussing with regulators. I don't think it would be useful to go through the list here this morning on the call. But you raise either an important element here, which is that nothing is really changing in our business, right. We're still doing the exact same thing. And so we need to figure out with regulators what the right level of capital here and not be dependent upon accounting treatment or anything like that. So you know, twirly to discuss this in detail, when we have more clarity, we'll provide you with the top of all three details. Thank you.
Lots and lots of partners want to work with US and include benefits within our value propositions to reach our card members and so when you look at the overall value proposition. It's just not rewards base. It is partnered based and there are different mechanisms from a funding perspective of how that all works out.
So that's part and parcel of our value proposition as well.
Speaker 1: Thank you. The next question is coming from Aaron Saganovic of City. Please go ahead.
Thank you. The next question is coming from Karen <unk> of Citi. Please go ahead.
Speaker 12: Thanks. You continue to outperform on credit, at least, you know.
Thanks, you continue to outperform on on credit at least.
Very much relative to your peers.
Speaker 12: low pre-pandemic levels. What are your thoughts on...
Below pre pandemic levels, what are your thoughts on.
Net charge offs heading into 2024, and maybe you could touch a little bit on.
Speaker 12: and maybe you could touch a little bit on how the seasoning.
Dominick Gabriele: The next question is coming from Dominick Gabriele of Oppenheimer. Please go ahead. Good morning. Pleasure to meet everybody and Kerry. Thanks so much for all the help. I was just curious on your card member rewards as a percentage of build business. It's stepped down quite nicely, quarter over quarter and year over year. I was just curious if you're seeing anything in particular. On the utilization of rewards recently or any commentary around that. Thank you so much.
Hi.
Seasoning curves are happening for your recent vintages.
Speaker 4: Yeah, yeah. So, you know, when I get to give you a lot of details about 2024 on this call, we plan to do that in at the beginning of next year when we speak about 2024 guidance. But what I can tell you is that the starting point for us of our credit performance and all our credit decisions is the quality of the products and the fact that
Yes, yes.
So we're not going to give you a lot of details about 2024 on this call we plan to do that and at the beginning of next year. When we speak about 2024 guidance, but what I can tell you is that the starting point for us of our credit performance in all of our <unk>.
Decisions is the quality of the products.
And the fact that either trucks.
Speaker 4: premium conmembers. That's the starting point, right? We have a very talented risk organization. We have a very disciplined execution of our race decision, but it starts with the quality of the product and that's the key differentiator. These are the our peers and that's what we focused on. And as you know, we've said this many times on this cold, if anything,
Premium card members, that's the starting point right.
Christophe Lacayak: So yes, and our total VCE, I call dad was lower this quarter at 40%. So as you know, variable card member engagement and rewards is the biggest number there. It's a very large expense base. So we constantly looking at when we do product refreshes when we launch products, we look at we're looking at ways to make sure that these value for position works best and we price for this. And there's always changes.
We have a very talented risk organization, we have a very disciplined execution of our risk decision, but it starts with the quality of the product and thats. The key differentiator vis vis our peers and and Thats, what we focused on and as you know we've said this many times on this.
<unk> if anything.
Speaker 4: We are focused even more on the premiumness of their portfolio. We are the new conmembers, because you're talking about vintage, the new conmembers we're bringing in, 70% of those consumer conmembers are joining the franchise on a fee-paying promise.
We are focused even more on the premium ness.
Either the portfolio.
Christophe Lacayak: There's always changes as well in terms of how the con members choose to redeem their points from one quarter to another. As you know, we also adding constantly new redemption partners that change the mix in terms of their weighted average cost per point. So there's at any point in time a lot of variables that will impact that that ratio. We are very focused on making sure that we have the right ratio versus revenue and we also have the right value proposition that we be compelling in the marketplace.
We are the new card members, because youre talking about vintages in equal members, we bringing in 70% of those consumer card members are joining the franchise on a fee paying product.
Speaker 4: That's a big statement to join the franchise. And so, you know, that's what we use to start projecting out. You know, there's still, as I've said before, there's still a little bit of, of either COVID-nories and normalization going on, but we are very pleased with our credit performance that we're saying. And as you pointed out, you know, the GAB versus competitors, if anything is increasing further.
That's a big statement to join the franchise and so.
That's what we use to start projecting out.
They are still as I've said before there is still a little bit of of either COVID-19 noise and normalization going on but we are very pleased with our credit performance that we're seeing and as you pointed out the.
Christophe Lacayak: So it's a little bit lower this quarter. You know, I think, you know, we said 42% for the food here because we are seeing, you know, that it's a bit better as well from a foodier standpoint. It's still going to be an area of investments for us. It drives a lot of growth as well. So that's one of the key reason why con members sign up for for the cards and engage with it and you know, we're going to we're going to keep working on those on those value propositions and make sure that we have the right balance here.
The gap versus competitors, if anything is increasing further.
Speaker 1: Thank you. The next question is coming from Craig Moore of F.T. Partners. Please go ahead.
Okay excuse me. Thank you. The next question is coming from Craig Maurer of Ft Partners. Please go ahead.
Speaker 4: Good morning. Thanks for taking the questions and congrats, carrying cardicum, your new roles.
Yes, good morning, thanks for taking the questions.
Congrats carrying cardiac time your new roles.
Okay.
Speaker 4: The net interest yield on card number loans saw a nice improvement.
The net interest yield on card member loans saw a nice improvement.
Christophe Lacayak: The only other point I'll add is that within, you know, within our value propositions because of our really premium part base, lots and lots of partners want to work with us and include benefits within our value propositions to reach our card members. And so, you know, when you look at the overall value proposition, it's just not rewards base. It is partner based and there are different mechanisms from a funding perspective of how that all works out. So that's part and parcel of our value proposition as well.
Speaker 4: quarter of 50 basis points quarter and quarter and we're now above Q419 and while I understand what rates are doing the increase was pretty substantial this quarter so I was versus prior quarter so I was wondering how we should expect that to trend and secondly
In the quarter 50 basis points quarter on quarter.
Moving now above Q4, 19, and while I understand what rates are doing the.
The increase was produced substantial this quarter.
So I was versus prior quarters. So I was wondering.
You should expect that to trend.
unknown: Thank you.
And secondly.
Speaker 4: Given your visibility due to the accounting treatment of card fees, how should we expect that to trend over the common quarters considering it's decelerated for several quarters in a row? Thank you. Yeah, yeah. So on the yield,
Given your visibility due to the accounting treatment.
Card fees.
How should we expect that to trend over the coming quarters, considering it's decelerated.
For several quarters in a row. Thank you.
So on their on their yield.
Aaron Suganovic: The next question is coming from Aaron Suganovic of city. Please go ahead. Thanks. You continue to outperform on on credit, at least, you know, very much relative to your peers and in below pre pandemic levels. You know, what are your thoughts on on net charge offs heading into 2024 and maybe you could touch a little bit on on how the the seasoning curves are happening for your recent advantages. Yeah, yeah.
Speaker 4: They're the key thing here. There are many moving parts, right? They are, you know, in terms of the funding, in terms of their pricing, in terms of their... There is a...
The key thing here there are many moving parts right. They are.
As you know in terms of the funding in terms of pricing in terms of their.
There is a vintages, but there are key the biggest element that is driving that small increase in the yield is the revolve rate. So the share the revolving balances the interest bearing balances in our total.
Speaker 4: But the key, the biggest element that is driving that a small increase in the yield is the revolver rate. So they share the revolving balances, the interest bearing balances in our total loan balances is actually increasing a little bit. And that's an outcome of our tenured con-rembers.
Christophe Lacayak: So, you know, we're not going to give you a lot of details about 2024 on this call. We're planning to do that in at the beginning of next year when we speak about 2024 guidance, but what I can tell you is that the starting point for us of our credit performance and all our credit decisions, is the quality of the products? And the fact that it attracts, you know, premium card members, that's the starting point, right?
Loan balances.
Is increasing a little bit and that's an outcome of our tenured com members rebuilding their balances which is.
Speaker 4: rebuilding their balances, which is something we've called that for several quarters now. And I just want to point out again that...
Something we've pulled out for several quarters now and I just want to point out again.
Speaker 4: Most of that growth is coming from, most of that growth, IE 70% is coming from Tainted Conmembers that we know well and we can enter right well. So that's the key driver behind the yield improvement. When it comes to car fees, you write, we have good visibility because we are monetized those fees over 12 months. We see that trend. So you should expect that trend to continue all of this, IE, the growth rate to moderate,
Most of that growth is coming from most of that growth I E. 70% is coming from <unk> Khan members that we knew well and we can underwrite well so that's the key driver.
Behind the yield improvement when it comes to card fees you are right we have good visibility.
Christophe Lacayak: We have a very talented risk organization, we have a very disciplined execution of our race decision, but it starts with the quality of the product and that's the key differentiator. These are the our peers and and that's what we focused on. And as you know, we've said this many times on this cold, if anything, we are focused even more on the premiumness of their, you know, their portfolio. We are, you know, the new con members, because you're talking about vintage, the new con members we're bringing in 70% of those consumer con members are joining the franchise on a fee-paying product.
Because we amortize those fees over 12 months. So so we see that trend. So you should expect that that trend to continue or Lutz I E. The growth rate to moderate as.
Speaker 4: As I say, there are a key driver to this is going to be the cycle of product refreshes.
As I said are a key driver to this is going to be this cycle of product refreshes and it's also going to be a function of us investing more marketing dollars, bringing on more fee paying card members and that dynamic is just going to <unk> is going to play out. So you should expect in the next few quarters a bit of a moderation there.
Speaker 4: And it's also going to be a function of us investing more marketing dollars, bringing on more fee-paying conmembers. And that dynamic is just going to play out. So you should expect, you know, in the next few quarters, a bit of a moderation there. But I need to call out that it's a moderation from a very high level. And as we used to say on this call, even during the pandemic, that
Sure.
But I need to call out that it's a moderation from theory high level and as we used to say on this call even during the pandemic that specific category was still growing so there's still going to grow strongly in double digit right and if you go back to the pandemic we were growing in that.
Christophe Lacayak: That's a big statement to join the franchise. And so, you know, that's what we use to start projecting out. You know, they're still, as I've said before, they're still a little bit of either COVID noise and normalization going on, but we are very pleased with their credit performance that we're saying. And as you pointed out, either the gap versus competitors, if anything, is increasing further. Excuse me.
unknown: Thank you.
Speaker 3: specific category was still growing. So it's still gonna grow strongly in double digit. Right. And if you go back to the pandemic, we were growing in the 10 to 11%. And so when you...
10% to 11% and so when you look at.
Speaker 3: The outsides, what's called the outsides growth rates that we had in Q3 and Q4 of 2022, you had not acquired cards in really in 2020, and so when you got to that amortization in the third and fourth quarter of 2021, it was lower, so the growth rate was a little bit, a little bit higher as we got in there, but you know, look, we're pretty happy with 19% growth rate over numbers that continue to get bigger.
The outsized, let's call it the outsized growth rates that we had in Q3 and Q4 of 2022.
You had not acquired cards in really in 2020, and so when you when you got to that amortization in the third and fourth quarter of 2021. It was lower so the growth rate was a little bit a little bit higher as we got in there, but look we're pretty happy with 19% growth rate over.
Craig Moore: The next question is coming from Craig Moore of F.T. Partners. Please go ahead.
Christophe Lacayak: Good morning. Thanks for taking the questions and congrats, Carrie, and Cardic on your new roles. The net interest yield on card member loans saw a nice improvement in the quarter of 50 basis points quarter on quarter and we're now above 2419. And while I understand what rates are doing, the increase was pretty substantial this quarter. So I was versus prior quarter. So I was wondering how we should expect that to trend.
Over numbers that continue to get bigger.
Speaker 1: Thank you. Our final question will come from me, Herbatiya. Thank America. Please go ahead.
Thank you. Our final question will come from me here Bastia of Bank of America. Please go ahead.
Speaker 13: Hi, thanks for taking my questions, squeezing me in here. And congratulations to Christophe, Gary and God.
Hi, Thanks for taking my questions squeezing me in here.
Congratulations to Christoph Gary in prostate.
Speaker 13: I wanted to maybe switch from talking about the card products that you know the whole cause been talking about a little bit and maybe just talk a little bit about the non-card products. I think other loans and receivables will now up over 10 billion in total now. Obviously, been an area where you spent a lot of time in there.
I wanted to maybe switch from talking about the cloud products that you know the whole call has been talking about a little bit and maybe just talk a little bit about the non core products I think other loans and receivables is now over $10 billion in total now.
Christophe Lacayak: And secondly, given your visibility due to the accounting treatment of of card fees. How should we expect that to trend over the common quarters, considering it's decelerated for several quarters in a row. Thank you. So on their yield, they're the key thing here. There are many moving parts, right? They are, you know, as you know, in terms of the funding in terms of their pricing in terms of their. There's advantages. But their key, the biggest element that is driving that a small increase in the yield is the revolver rate.
Obviously been an area, where you've spent a lot of time investing in may.
Speaker 13: Maybe just talk a little bit about that both on the consumer and commercial side. Where are you seeing some of the strongest growth? How do you expect that to trend? How much is that contributing to?
Maybe just talk a little bit about that both on the consumer and commercial side, where are you seeing some of the strongest growth. How do you expect that to Craig how much is that contributing to <unk>.
Speaker 3: Inquip use and etc. Thanks. Yeah, so let me sort of just hit from a strategic perspective of what we're what we're trying to do. And you know, even at 10 billion, it's still a relatively small, small piece.
Interest yields.
Et cetera. Thanks, Yes, so let me sort of just hit from a strategic perspective of what we what we're trying to do and even at $10 billion, it's still a relatively small small piece.
Speaker 3: One of the things we try to do from a small business perspective is to make sure that
One of the things we tried to do from a small business perspective is to make sure that we can provide a variety of working capital needs to our small business small business customers and in that case. It can be non card loans for working capital that can be shorter term loans for up to two years.
Speaker 3: We can provide a variety of working capital needs.
Speaker 3: to our small business, small business customers. And...
Christophe Lacayak: So they share the revolving balances, the interest bearing balances in our total loan balances is actually is increasing a little bit. And that's an outcome of our tenured come members rebuilding their balances, which is something we've called that for several quarters now. And I just want to point out again that, you know, most of that growth is coming from most of that growth. 70% is coming from tenured come members that that we know well and we can enter right well.
Speaker 3: In that case, it can be non-card loans for working capital. It can be shorter term loans for, you know, up to two years or so forth. And I think, you know, part of that was the overall cabbagiac position that we did.
And I think.
Part of that was the overall cabbage acquisition that we did too.
Speaker 3: to be able to do that because what we wanted to do and it goes along with what we did with sort of our checking account as well as we wanted to make sure that we could provide for small businesses
To be able to do that because what we wanted to do and it goes along with what we did with <unk>.
Our checking account as well as we wanted to make sure that we could provide for small businesses.
Speaker 3: a host of products and services from having a check-it transaction account.
A host of products and services from having a check of transaction account, having a lending product, having a charge product in and having working capital loans and so I think that really that really fits in but.
Speaker 3: having a lending product, having a charge product, and then having a working capital loans. So I think that really fits.
Christophe Lacayak: So that's the key driver behind the yield improvement. When it comes to card fees, you right, we have good visibility because we're monetized those fees over 12 months. So, so we see that trend. And so you should expect that that trend to to continue all this IE the growth rate to moderate. As I said, there are key driver to this is going to be the cycle of product refreshes. And it's also going to be a function of us investing more marketing dollars bringing on more fee paying con members.
Speaker 3: That's not the driver of growth for us in that segment. From a consumer perspective, what we've continued to try to do is to really grow our organic footprint.
That's not the driver of growth for us in that segment from a consumer perspective, what we've continued to try to do is to really grow our organic footprint with our consumers.
Speaker 3: with our consumers. And you know, that you can go back in history. It started as a charge card and then we put lending and then we put pay over time and you know, plan it within the product and came up with it.
You can go back in history. It started as a charge card and then we put lending and then we've put <unk>.
Hey over time and planet within the product and came up with the savings account and a debit product and also a small component of personal loans. So.
Speaker 3: savings account and a debit product and also a small component of personal loans. And so, you know, we've been judicious and careful about how we've gone about that. But I think it's an important ad.
Christophe Lacayak: And that dynamic is just going to is going to play out. So you should expect either in the next few quarters, a bit of a moderation there. But I need to call out that it's a moderation from a very high level. And as we used to stay on the skull, even during the pandemic, that specific category was still growing. So it's still going to grow strongly in double digit, right. And if you go back to the pandemic, we were growing in the 10 to 11%.
We've been judicious and careful about how we've gone about that but I think it's an important add to make sure that our customers are not going to our competitors when they need products and services like that so that's that's the sort of strategic sort of backdrop on on why we have that.
Speaker 3: to make sure that our customers are not going to our competitors when they need products and services like that. So that's the sort of strategic sort of backdrop on why we have that.
Christophe Lacayak: And so when you look at the outsides, what's called the outsides growth rates that we had in Q3 and Q4 of 2022, you did you had not acquired cards in really in 2020. And so when you when you got to that amortization in the third and fourth quarter of 2021, it was lower. So the growth rate was a little bit a little bit higher as we got in there. But you know, look, we're pretty happy with 19% growth rate over over numbers that continue to get bigger. Thank you.
Speaker 2: And with that we will bring the call to an end. Thank you for joining today's call and for your continued interest in America.
Okay and with that we'll bring the call to an end. Thank you for joining today's call and for your continued interest in American Express the IR team will be available for any follow up questions operator.
Speaker 2: The IRK will be available for any follow-up questions. Operator, cut to you.
Ladies and gentlemen.
Speaker 1: The webcast replay will be available on our Investor Relations website at ir.americanexpress.com shortly after the call. You can also access a digital replay of the call at 877-660-6853 or 201-612-7415.
Webcast replay will be available on our Investor Relations website at IR Dot American Express Dot com. Shortly after the call you can also access a digital replay of the call at 8776606853.
20161 to 7415.
Mihir Bhatia: Our final question will come from Mihir Bhatia, thank America, please go ahead. Hi, thanks for taking my question, squeezing me in here. Congratulations to Christophe, Kerri and Kartik, yeah.
Speaker 1: Access Code 13740799 after 1pm Eastern time on October 20th, through October 27th.
That's code 13740799 after one P M. Eastern time on October 20th through October 27.
Speaker 1: That will conclude our conference call for today. Thank you for your participation. You may now disconnect.
That will conclude our conference call for today. Thank you for your participation you may now disconnect.
Stephen Squeri: I wanted to maybe switch from talking about the card products that you know the whole cause been talking about a little bit, and maybe just talk a little bit about the non-card products. I think other loans and receivables will now up over $10 billion. In total now, obviously, in an area where you spent a lot of time investing in maybe just talk a little bit about that, both on the consumer and commercial side. Where are you seeing some of the strongest growth? How do you expect that trend? How much is that contributing to increased yields and etc. Thanks.
Speaker 14: It P and another.
Speaker 14: And sur.
Okay.
Stephen Squeri: Yeah, so let me sort of just hit from a strategic perspective of what we're what we're trying to do, and even at $10 billion, it's still a relatively small piece. One of the things we try to do from a small business perspective is to make sure that we can provide a variety of working capital needs to our small business customers. And in that case, it can be non-card loans for working capital that can be shorter term loans for, you know, up to two years or so forth.
Stephen Squeri: And I think, you know, part of that was the overall cabbag acquisition that we did to be able to do that because what we wanted to do, and it goes along with what we did with sort of our checking account as well, is we wanted to make sure that we could provide four small businesses a host of products and services from having a check that transaction account. Having a lending product, having a charge product, and having a working capital loans. And so I think that really that really fits in, but, you know, that's not the driver of growth for us in that segment.
Stephen Squeri: From a consumer perspective, what we've continued to try to do is to really grow our organic footprint with our consumers. And, you know, that you can go back in history and start it as a charge card and then we put lending and then we put pay over time and, you know, plan it within the product and came up with a savings account and a debit product and also a small component of personal loans.
Stephen Squeri: And so, you know, we've been judicious and careful about how we've gone about that. But I think it's an important ad to make sure that our customers are not going to our competitors when they need products and services like that. So that's that's the sort of strategic sort of backdrop on on why we have that.
unknown: Okay.
Operator: And with that, we will bring the call to an end. Thank you for joining today's call and for your continued interest in American Express. The IRK will be available for any follow-up questions operator. Ladies and gentlemen, the webcast replay will be available on our investor relations website at ir.americanexpress.com shortly after the call. You can also access a digital replay of the call at 877-660-6853 or 201-612-7415. Access code 1374-0799 after 1 p.m. Eastern time on October 20th through October 27th.
Operator: That will conclude our conference call for today. Thank you for your participation.
Operator: You may now disconnect.