What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-09 compared with 2023-02-10 · 384 added, 311 removed, 1009 unchanged (41% of the section changed)

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• Processed revenue, primarily represents revenues related to network partnership agreements, comprising royalties, fees and amounts earned for facilitating transactions on cards issued by network partners.

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

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

NON-GAAP MEASURES

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4,923 2,182 (1,419) 2,741 # 3,601 #

Expenses 41,095 33,110 27,061 7,985 24 6,049 22

Total expenses

45,079 41,095 33,110 3,984 10 7,985 24

Pretax income 10,513 9,585 10,689 928 10 (1,104) (10)

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$ 11.21 $ 9.85 $ 10.02 $ 1.36 14 % $ (0.17) (2) %

Selected Balance Sheet Data

Cash and cash equivalents $ 46,596 $ 33,914 $ 22,028 $ 12,682 37 % $ 11,886 54 %

Card Member receivables 60,411 57,613 53,645 2,798 5 3,968 7

Card Member loans 125,995 107,964 88,562 18,031 17 19,402 22

Customer deposits 129,144 110,239 84,382 18,905 17 25,857 31

Long-term debt $ 47,866 $ 42,573 $ 38,675 $ 5,293 12 % $ 3,898 10 %

Common Share Statistics (b)

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$ 1,680.1 $ 1,552.8 $ 1,284.2 $ 127 8 % $ 269 21 %

Return on average equity (c)

Billed business (Billions)

$ 1,459.6 $ 1,338.3 $ 1,089.8 $ 121 9 % $ 249 23 %

Net interest income divided by average Card Member loans 10.4 % 10.2 % 10.7 %

Net interest yield on average Card Member loans (d)

Card Member loans and receivables

Net write-off rate — principal, interest and fees (c)

2.0 % 1.0 % 0.8 %

Net write-off rate — principal only - consumer and small business (c)(d)

1.8 % 0.9 % 0.7 %

30+ days past due as a % of total - consumer and small business (e)

1.3 % 1.1 % 0.7 %

Effective tax rate 20.3 % 21.6 % 24.6 %

Return on average equity (f)

31.5 % 32.3 % 33.7 %

Common Equity Tier 1 10.5 % 10.3 % 10.5 %

Selected Balance Sheet Data

Cash and cash equivalents $ 33,914 $ 22,028 $ 32,965 $ 11,886 54 % $ (10,937) (33) %

Card Member receivables 57,613 53,645 43,701 3,968 7 9,944 23

Card Member loans 107,964 88,562 73,373 19,402 22 15,189 21

Customer deposits 110,239 84,382 86,875 25,857 31 (2,493) (3)

Long-term debt $ 42,573 $ 38,675 $ 42,952 $ 3,898 10 % $ (4,277) (10) %

# Denotes a variance of 100 percent or more

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

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

(d) Net interest yield on average Card Member loans reflects adjusted net interest income divided by average Card Member loans, computed on an annualized basis.

Adjusted net interest income and net interest yield on average Card Member loans are non-GAAP measures.

Refer to Table 8 for a reconciliation to Net interest income divided by average Card Member loans.

(c) We present a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention.

In addition, as our practice is to include uncollectible interest and/or fees as part of our total provision for credit losses, a net write-off rate including principal, interest and/or fees is also presented.

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

(e) For corporate receivables, delinquency data is tracked based on days past billing status rather than days past due.

Refer to Table 12 for 90+ days past billing metrics for corporate receivables.

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

BUSINESS ENVIRONMENT

Our results for the year demonstrate that our growth strategy is working and our business is in an even stronger position today than before the pandemic.

Spending on our network reached record levels, and credit metrics remain below pre-pandemic levels.

Our investments in product innovation, technology, people and our brand has led to increased generational relevance with Millennial and Gen Z customers, record new card acquisitions, deeper relationships with customers and expanded merchant acceptance.

For 2022, we reported net income of $7.5 billion, or $9.85 per share, compared with net income of $8.1 billion, or $10.02 per share, a year ago.

The reduction in net income reflected credit reserve builds and net losses in our Amex Ventures strategic investment portfolio in the current year compared with sizeable credit reserve releases and significant net gains in our Amex Ventures strategic investment portfolio in the prior year.

Worldwide network volumes for the year increased 21 percent compared to the prior year (24 percent on an FX-adjusted basis 1 ).

Billed business, which represented 86 percent of our total network volumes and is the most significant driver of our financial results, increased 23 percent year-over-year (25 percent on an FX-adjusted basis 1 ), demonstrating our continued ability to acquire, engage and retain high-spending, premium Card Members.

Consumer billed business grew by 24 percent year-over-year, reflecting continued strength in spending trends from our premium U.S.

consumer Card Members.

Billed business in our Commercial Services segment grew by 21 percent on a year-over-year basis, reflecting continued growth from U.S.

small and mid-sized enterprise customers, as well as continued steady recovery in spending by our U.S.

Our results for the year reflect the engagement and loyalty of our customers, the success of the investments we have made to refresh and expand our product offerings and our focus on effective risk management and expense discipline.

The successful execution of our growth strategy, along with the strength of our premium customer base and differentiated business model, drove net income of $8.4 billion, or $11.21 per share, compared with net income of $7.5 billion, or $9.85 per share, a year ago.

Billed business, the most significant driver of our financial results, increased 9 percent year-over-year.

Billed business growth was particularly strong in the first quarter, in part reflecting the negative impacts of the Omicron variant in the prior year, with a softer spend environment towards the end of the year.

Goods & Services (G&S) spend increased 6 percent year-over-year.

T&E spend grew by 19 percent on a full-year basis, reflecting ongoing demand from our premium customers, while airline spend growth slowed sequentially in the fourth quarter.

USCS billed business grew by 10 percent year-over-year, with the largest portion of this growth coming from our Millennial and Gen-Z Card Members.

ICS billed business grew by 17 percent year-over-year, driven by continued growth in spend across all regions and customer types outside the United States.

CS billed business grew by 3 percent on a year-over-year basis, reflecting the continued modest growth from U.S.

SME Card Members and decelerating growth for U.S.

large and global corporate clients.

International billed business grew by 23 percent year-over-year (36 percent on an FX-adjusted basis 1 ), driven by a strong recovery in spend across both consumer and commercial customers.

T&E spending momentum remained strong throughout the year, while year-over-year Goods & Services spending growth slowed towards the end of the year following the large pandemic recovery growth rates experienced earlier in the year.

Inflation was a modest contributor to our strong billed business growth, while the continuing strengthening of the U.S.

dollar, relative to the prior year, against most major currencies in which we operate, had a negative impact on our international billings.

Total revenues net of interest expense increased 25 percent year-over-year (27 percent on an FX-adjusted basis 1 ), reflecting strong growth in all our revenue lines.

Discount revenue, our largest revenue line, increased 25 percent year-over-year, driven primarily by the momentum in our Card Member spending volumes throughout 2022.

Net card fees increased 17 percent year over-year, as new card acquisitions reached record levels in 2022 and Card Member retention remained high, demonstrating the impact of investments we have made in our premium value propositions.

Total revenues net of interest expense increased 14 percent year-over-year, reflecting growth in all our revenue lines.

The growth in billed business drove a 9 percent increase in Discount revenue, our largest revenue line.

Net card fees increased 20 percent year-over-year, reflecting the high levels of new card acquisition and Card Member retention, as well as our cycle of product refreshes.

Service fees and other revenues increased 11 percent year-over-year, driven in part by higher travel-related revenues.

Net interest income increased 28 percent versus the prior year, primarily driven by growth in Card Member loans.

While the rising interest rate environment had a fairly neutral impact on our results for the full year, rising rates did have a modest negative impact on net interest income towards the end of the year.

Card Member loans increased 22 percent year-over-year, with the majority of growth coming from existing Card Members and was driven by ongoing strong growth in billed business, which began to moderate towards the end of the year as we lapped the steep phase of recovery.

Provisions for credit losses increased versus the prior year, reflecting a reserve build of $617 million compared with a reserve release of $2.5 billion in the prior year, and are expected to increase in 2023.

While delinquency and net write-off rates continued to increase throughout the year, these metrics remain strong, supported by the premium nature of our customer base, our risk management capabilities and risk actions we took throughout the year.

1 The foreign currency adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S.

dollars (i.e., assumes the foreign exchange rates used to determine results for the current period apply to the corresponding prior year period against which such results are being compared).

FX-adjusted revenues is a non GAAP measure.

We believe the presentation of information on a foreign currency adjusted basis is helpful to investors by making it easier to compare our performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates.

Card Member rewards, Card Member services and Business development expenses are generally correlated to volumes or are variable based on usage, and increased year-over year due to network volume growth and higher usage of travel-related benefits.

Card Member rewards expense growth was also driven by a larger proportion of billed business in categories that earn incremental rewards such as travel.

During the year, we continued to make significant investments in marketing to drive growth momentum and accelerate new card acquisitions.

Operating expenses increased 24 percent year-over-year, primarily driven by net losses in the current year associated with our Amex Ventures equity investments as compared to net gains in the prior year, as well as higher compensation costs due to an increase in our colleague base to support business growth and compensation decisions we made.

We remain focused on driving marketing and operating expense efficiencies, while continuing to invest in our growth strategy.

During the year, we returned $4.9 billion of capital to our shareholders through common share repurchases and dividend payments, while maintaining our Common Equity Tier 1 (CET1) capital ratio within our target range of 10 to 11 percent.

Net interest income increased 33 percent versus the prior year, primarily reflecting growth in our revolving loan balances, which moderated over the course of the year, as well as net yield expansion versus the prior year.

Total loans and Card Member receivables increased 13 percent year-over-year, as our Card Members continue to spend and rebuild balances.

Provisions for credit losses increased, primarily driven by higher net write-offs and a higher net reserve build in the current year, reflecting the growth in total loans and higher delinquencies.

Net write-off and delinquency rates remained best-in-class, supported by our premium global customer base, our strong focus on risk management and disciplined growth strategy.

Card Member rewards, Card Member services and Business development expenses are generally correlated to volumes or are variable based on usage and increased year-over-year primarily due to the growth in billed business and higher usage of travel-related benefits.

Marketing expense decreased 4 percent year-over-year, primarily driven by lower levels of spend on customer acquisition.

Operating expenses increased 8 percent year-over-year, primarily driven by higher compensation expense and technology costs to support business growth.

We remain focused on driving marketing and operating expense efficiencies, while continuing to increase investments in our growth strategy.

During the year, we maintained our capital ratios within our current target range of 10 to 11 percent and returned $5.3 billion of capital to our shareholders in the form of share repurchases and common stock dividends.

We plan to continue to return to shareholders the excess capital we generate while managing our CET1 capital ratio within our target range and supporting balance sheet growth.

We also expect to increase the regular quarterly dividend on common shares outstanding by 17 percent beginning with the first quarter 2024 dividend declaration.

Our performance continues to give us confidence in our business model and our strategy, and while we recognize the uncertainty of the geopolitical and macroeconomic environment, we remain focused on delivering sustainable and profitable growth.

See “Supervision and Regulation” in “Business” for information on legislative and regulatory changes that could have a material adverse effect on our results of operations and financial condition and “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” for information on potential impacts of economic, geopolitical and competitive conditions and certain litigation and regulatory matters on our business.

Our robust capital, funding and liquidity positions provide us with significant flexibility to maintain a strong balance sheet.

On January 16, 2024, we announced that we signed an agreement to sell fraud prevention solutions provider Accertify Inc., a wholly owned subsidiary we acquired in 2010, and whose operations are reported within the GMNS segment.

The transaction is subject to customary closing conditions and is expected to close in the second quarter of 2024.

Upon closing, we expect to recognize a sizeable pre-tax gain, which will be recorded as a reduction to Other expense and is expected to be substantially reinvested back into our business.

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

See “Supervision and Regulation” under “Business” for information on legislative and regulatory changes that could have a material adverse effect on our results of operations and financial condition and “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” for information on potential impacts of macroeconomic, geopolitical and competitive conditions and certain litigation and regulatory matters on our business.

CONSOLIDATED RESULTS OF OPERATIONS

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“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 10, 2023.

Beginning in the first quarter of 2022, we made reporting presentation changes to our Consolidated Statements of Income to separately present revenues earned from processed volumes, previously reported in Discount revenue, Other fees and commissions and Other revenue, as Processed revenue.

The remaining balances from Other fees and commissions and Other revenue were combined as Service fees and other revenue.

We also disaggregated Marketing and business development expense into Business Development expense and Marketing expense.

Prior period amounts presented herein have been recast to conform to the current period presentation;

there was no impact to Total non-interest revenues or Total expenses.

TOTAL REVENUES NET OF INTEREST EXPENSE SUMMARY

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Net card fees increased, primarily driven by growth in our premium card portfolios.

Service fees and other revenue increased, primarily driven by foreign exchange related revenues associated with Card Member cross-currency spending, higher travel commissions and fees from our consumer travel business, and growth in delinquency fees.

The increase was partially offset by a non-cash gain related to an increase in GBTG's total equity book value in the prior year.

Processed revenue increased, primarily driven by an increase in processed volumes, partially offset by the prior-year repositioning of certain of our alternative payment solutions.

Interest income increased, primarily driven by higher average Card Member loan balances and interest rates.

Interest expense increased, primarily driven by higher interest rates paid on deposits and debt outstanding.

See Table 5 for more details on proprietary cards-in-force and average fee per card.

Service fees and other revenue increased, primarily driven by foreign exchange related revenues associated with Card Member cross-currency spending and growth in delinquency fees.

Processed revenue increased, primarily driven by an increase in network partner volumes, partially offset by a decrease in volumes associated with the decommission of one of our alternative payment solutions.

See Tables 5 and 6 for more details on processed volume performance.

Interest income increased, primarily driven by higher interest rates and growth in revolving loan balances.

Interest expense increased, primarily driven by higher interest rates paid on customer deposits.

PROVISIONS FOR CREDIT LOSSES SUMMARY

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Net write-offs 937 462 129 475 # 333 #

Reserve build (release) (a)

Reserve (release) build (a)

(57) 165 (202) (222) # 367 #

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67 7 (185) 60 # 192 #

Reserve (release) build — Other receivables (a)(c)

Reserve build (release) — Other receivables (a)(c)

5 (3) (60) 8 # 57 95

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# Denotes a variance of 100 percent or more

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

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

(b) Relates to Other loans of $7.1 billion, $5.4 billion and $2.9 billion less reserves of $126 million, $59 million and $52 million, as of December 31, 2023, 2022 and 2021, respectively.

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PROVISIONS FOR CREDIT LOSSES

Card Member loans and receivables provisions for credit losses increased, primarily due to reserve builds in the current year, versus reserve releases in the prior year.

The reserve builds in the current year were primarily driven by increases in loans and receivables outstanding, higher delinquencies and changes in macroeconomic forecasts, partially offset by the release of COVID-19 pandemic-driven reserves for Card Member loans.

The reserve releases in the prior year were due to improved portfolio quality and macroeconomic forecasts, partially offset by increases in loans and receivables outstanding.

Other provisions for credit losses increased, primarily due to a net reserve build in the current year, versus a reserve release in the prior year.

The net reserve build in the current year was primarily driven by increases in non-card loans outstanding, partially offset by improved credit performance.

The reserve release in the prior year was due to improved portfolio quality and macroeconomic forecasts.

Refer to Note 3 to the “Consolidated Financial Statements” for further information regarding our reserves for credit losses.

Card Member loans provision for credit losses increased, primarily due to higher net write-offs and a higher reserve build in the current year.

The reserve build in the current year was primarily driven by an increase in loans outstanding and higher delinquencies.

The reserve build in the prior year was primarily driven by an increase in loans outstanding, higher delinquencies and deterioration in the macroeconomic outlook at that time, partially offset by a reduction in COVID-19 pandemic-driven reserves.

Card Member receivables provision for credit losses increased, primarily due to higher net write-offs, partially offset by a reserve release in the current year versus a reserve build in the prior year.

The reserve release in the current year was primarily driven by lower delinquencies, partially offset by an increase in receivables outstanding.

The reserve build in the prior year was primarily driven by higher delinquencies and an increase in receivables outstanding.

Other provisions for credit losses increased, primarily due to higher net write-offs and a higher reserve build in the current year.

The reserve build in the current year was primarily driven by an increase in non-card loans outstanding.

The reserve build in the prior year was primarily driven by an increase in non-card loans outstanding, partially offset by improved credit performance.

EXPENSES SUMMARY

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Total expenses $ 45,079 $ 41,095 $ 33,110 $ 3,984 10 % $ 7,985 24 %

Card Member rewards expense increased, primarily driven by increases in Membership Rewards and cash back rewards expenses, collectively, of $2.0 billion, and cobrand rewards expense of $1.0 billion, both of which were primarily driven by higher billed business.

The increase in Membership Rewards expense was also driven by a larger proportion of spend in categories that earn incremental rewards such as travel and a higher mix of redemptions in travel-related categories.

Card Member rewards expense increased, primarily driven by increases in Membership Rewards and cash back rewards expenses, collectively, of $680 million and cobrand rewards expense of $685 million, all of which were primarily driven by higher billed business.

The increase in Membership Rewards expense was also driven by a larger proportion of spend in categories that earn higher levels of rewards, partially offset by lower redemption costs and changes in expected redemption behaviors associated with certain products.

The Membership Rewards Ultimate Redemption Rate (URR) for current program participants was 96 percent (rounded down) at both December 31, 2023 and 2022.

Business development expense increased, primarily due to increased partner payments and client incentives, both of which were driven by higher network volumes.

Business development expense increased, primarily due to increased partner payments driven by higher contractual rates and network volumes.

Card Member services expense increased, primarily due to higher usage of travel-related benefits.

Marketing expense increased, primarily due to business investments to drive growth momentum and accelerate new card acquisitions.

Salaries and employee benefits expense increased, primarily driven by higher compensation costs, reflecting an increase in our colleague base to support business growth as well as compensation decisions made.

Other expenses increased, primarily driven by net losses on Amex Ventures investments in the current year, as compared to net gains in the prior year.

Marketing expense decreased, primarily reflecting lower levels of spending on customer acquisitions.

Salaries and employee benefits expense increased, primarily driven by higher compensation costs reflecting the continued investment in our colleagues to support business growth and changes in the value of deferred compensation.

Other, net expenses increased, primarily driven by higher technology costs, foreign exchange losses related to the devaluation of the Argentine peso, a reserve associated with a merchant exposure for Card Member purchases and the FDIC special assessment described in “Supervision and Regulation — Other Banking Regulations” under “Business”, all of which were partially offset by lower net losses on Amex Ventures investments and lower professional services expenses.

The effective tax rate was 20.3 percent and 21.6 percent for 2023 and 2022, respectively.

The reduction in the effective tax rate primarily reflected discrete tax benefits in the current year related to the resolution of prior-year tax items.

The tax rates in both years reflected the level of pretax income in relation to recurring permanent tax benefits and the geographic mix of business.

The reduction in the effective tax rate primarily reflected changes in the geographic mix of income.

The tax rates in both years reflected discrete tax benefits related to the resolution of prior-year tax items.

SELECTED CARD-RELATED STATISTICAL INFORMATION

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$ 24,059 $ 23,496 $ 20,392 2 15

Average discount rate

2.34 % 2.30 % 2.28 %

Average fee per card (dollars) (a)

$ 92 $ 82 $ 74 12 % 11 %

Discount revenue as a % of Billed business

2.29% 2.30% 2.25%

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

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Merchant industry billed business metrics

G&S-related (75% and 81% of billed business for 2022 and 2021, respectively)

T&E-related (25% and 19% of billed business for 2022 and 2021, respectively)

Airline-related (6% and 3% of billed business for 2022 and 2021, respectively)

G&S spend (72% and 75% of billed business for 2023 and 2022, respectively)

T&E spend (28% and 25% of billed business for 2023 and 2022, respectively)

Airline spend (7% and 6% of billed business for 2023 and 2022, respectively)

23 % 24 % 119 % 125 %

(a) The foreign currency adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S.

(a) The foreign currency adjusted information assumes a constant exchange rate between the periods being compared for purposes of conversion into U.S.

dollars (i.e., assumes the foreign exchange rates used to determine results for the current year apply to the corresponding prior-year period against which such results are being compared).

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(Millions, except percentages and where indicated) 2023 2022 2021 2023 vs.

Card Member loans and receivables:

Net write-off rate — principal, interest and fees (a)

2.0 % 1.0 % 0.8 %

Net write-off rate — principal only - consumer and small business (a)(b)

1.8 % 0.9 % 0.7 %

30+ days past due as a % of total - consumer and small business (c)

1.3 % 1.1 % 0.7 %

Card Member loans:

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$ 114.8 $ 95.4 $ 76.1 20 25

Net write-off rate — principal, interest and fees (b)

Net write-off rate — principal, interest and fees (a)

2.2 % 1.1 % 1.2 %

Net write-off rate — principal only (b)

Net write-off rate — principal only (a)

1.8 % 0.9 % 0.9 %

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880 627 (73) 40 #

Net write-offs — principal and fees less recoveries (c)

Net write-offs — principal and fees less recoveries (e)

(937) (462) (129) # #

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% of receivables 0.3 % 0.4 % 0.1 %

Net write-off rate — principal and fees (b)(c)(d)

Net write-off rate — principal and fees (a)(e)

1.6 % 0.8 % 0.3 %

Net write-off rate — principal only - consumer and small business (a)(b)

1.8 % 0.9 % 0.3 %

30+ days past due as a % of total - consumer and small business (c)

1.1 % 1.3 % 0.6 %

# Denotes a variance of 100 percent or more

(a) Other includes foreign currency translation adjustments.

(b) We present a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention.

(a) We present a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention.

(c) The net write-off rate for the year ended December 31, 2021 includes a $37 million partial recovery in Card Member receivables related to a corporate client bankruptcy, which had resulted in a write-off in the year ended December 31, 2020 in the ICS segment.

(d) Refer to Tables 10, 12 and 14 for Net write-off rate — principal only and 30+ days past due metrics for U.S.

consumer receivables, U.S.

small business receivables and International small business and consumer receivables, respectively.

A net write-off rate based on principal losses only and delinquency data for periods other than 90+ days past billing for corporate receivables are not available due to system constraints.

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

Refer to Table 12 for 90+ days past billing metrics for corporate receivables.

(d) Other includes foreign currency translation adjustments.

(e) The net write-off rate for the year ended December 31, 2021 includes a $37 million partial recovery in Card Member receivables related to a corporate client bankruptcy, which had resulted in a write-off in the year ended December 31, 2020 in the ICS segment.

NET INTEREST YIELD ON AVERAGE CARD MEMBER LOANS

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Refer to “Glossary of Selected Terminology” for the definitions of these terms.

Refer to the “Glossary of Selected Terminology” below for the definitions of these terms.

We believe adjusted net interest income is useful to investors because it represents the interest expense and interest income attributable to our Card Member loan portfolio and is a component of net interest yield on average Card Member loans, which provides a measure of profitability of our Card Member loan portfolio.

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We consider a combination of factors when evaluating the composition of our reportable operating segments, including the results reviewed by the chief operating decision maker, economic characteristics, products and services offered, classes of customers, product distribution channels, geographic considerations (primarily United States versus outside the United States) and regulatory considerations.

Refer to Note 24 to the “Consolidated Financial Statements” and Part I, Item 1.

“Business” for additional discussion of products and services that comprise each segment.

Effective for the third quarter of 2022, we realigned our reportable segments to reflect organizational changes announced during the second quarter of 2022.

Prior periods presented herein have been recast to conform to the new reportable operating segments, which are:

USCS, CS, ICS and GMNS, with corporate functions and certain other businesses and operations included in Corporate & Other.

Refer to Note 24 to the “Consolidated Financial Statements” for additional information.

Refer to Note 24 to the “Consolidated Financial Statements” and “Business” for additional discussion of products and services that comprise each segment.

Effective as of the second quarter of 2023, our U.S.

travel and lifestyle services (TLS) results, which were previously reported within the USCS segment, are now reported within both USCS and CS segments, allocated based on customer usage.

Results of the reportable operating segments generally treat each segment as a stand-alone business.

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Service costs are allocated based on activities directly attributable to the segment, and overhead expenses are allocated based on the relative levels of revenue and Card Member loans and receivables.

As a proportion of Salaries and employee benefits and other expenses, allocated costs remain relatively consistent from period to period.

Increases in expenses year-over-year driven by allocated costs primarily reflect the changes in salaries and employee benefit costs and other costs related to our technology or servicing organizations and the growth in business volume within our operating segments.

CONSUMER SERVICES

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Total revenues net of interest expense after provisions for credit losses 25,261 22,893 19,841 2,368 10 3,052 15

Card Member rewards, business development, Card Member services and marketing

15,393 13,535 10,665 1,858 14 2,870 27

Salaries and employee benefits and other operating expenses

4,435 3,958 3,218 477 12 740 23

Total expenses 19,828 17,493 13,883 2,335 13 3,610 26

6 unchanged sentences

Discount revenue increased 10 percent, primarily driven by an increase in U.S.

consumer billed business of 24 percent.

consumer billed business.

See Tables 5, 6 and 10 for more details on billed business performance.

Net card fees increased 21 percent, primarily driven by growth in our premium card portfolios.

Service fees and other revenue increased 50 percent, primarily driven by higher travel commissions and fees from our consumer travel business, as well as growth in delinquency fees.

Net interest income increased 26 percent, primarily driven by an increase in average Card Member loan balances.

Total revenues net of interest expense increased in 2021 compared to 2020, primarily driven by higher Discount revenue, reflecting billed business growth, partially offset by decreased Net interest income, primarily reflecting lower revolving Card Member loan balances.

Service fees and other revenue increased 5 percent, primarily driven by higher travel commissions and fees from our consumer travel business and growth in delinquency fees, partially offset by the change in the allocation of TLS revenues described above.

Interest income increased, primarily driven by higher interest rates and growth in revolving loan balances.

Interest expense increased, primarily driven by a higher cost of funds.

PROVISIONS FOR CREDIT LOSSES

Card Member loans and receivables provisions for credit losses increased, primarily due to reserve builds in the current year, versus reserve releases in the prior year.

The reserve builds in the current year were primarily driven by an increase in loans outstanding, higher delinquencies and changes in macroeconomic forecasts, partially offset by the release of COVID-19 pandemic-driven reserves for Card Member loans.

The reserve releases in the prior year were due to improved portfolio quality and macroeconomic forecasts, partially offset by increases in loans and receivables outstanding.

Provisions for credit losses decreased in 2021 compared to 2020, primarily driven by reserve releases in 2021, versus reserve builds in 2020.

Total expenses increased, primarily driven by higher Card Member rewards expense and Card Member services expense.

Card Member rewards expense increased, primarily driven by higher billed business and a larger proportion of spend in categories that earn incremental rewards such as travel and a higher mix of redemptions in travel-related categories.

Business development expense increased, primarily due to increased partner payments driven by higher billed business.

Card Member services expense increased, primarily driven by higher usage of travel-related benefits.

Marketing expense increased, primarily due to business investments to drive growth momentum and accelerate new card acquisitions.

Salaries and employee benefits and other expenses increased, primarily due to higher compensation costs and higher service costs.

Total expenses increased in 2021 compared to 2020, primarily driven by higher customer engagement and marketing expenses, reflecting higher billed business and increases in marketing investments to continue building growth momentum.

Card Member loans provision for credit losses increased, primarily due to higher net write-offs and a higher reserve build in the current year.

The reserve build in the current year was primarily driven by an increase in loans outstanding and higher delinquencies.

The reserve build in the prior year was driven by an increase in loans outstanding, higher delinquencies and changes in macroeconomic forecasts at that time, partially offset by the release of COVID-19 pandemic-driven reserves.

The reserve release in the current year was primarily driven by lower delinquencies and a decrease in receivables outstanding.

The reserve build in the prior year was primarily driven by higher delinquencies and an increase in receivables outstanding.

Total expenses increased, primarily driven by higher Card Member rewards expense, Business development expense, and Card Member services expense.

Card Member rewards expense increased, primarily driven by higher billed business.

The increase was also driven by a larger proportion of spend in categories that earn higher levels of rewards, partially offset by lower redemption costs and changes in expected redemption behaviors associated with certain products.

Business development expense increased, primarily due to increased partner payments driven by higher contractual rates and billed business.

Card Member services expense increased, primarily due to higher usage of travel-related benefits.

Marketing expense decreased, reflecting lower levels of spending on customer acquisitions.

Salaries and employee benefits and other expenses increased, primarily due to an increase in allocated service costs, partially offset by the change in the allocation of TLS servicing costs described above.

USCS SELECTED STATISTICAL INFORMATION

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30+ days past due as a % of total 0.8 % 0.9 % 0.4 %

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

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

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

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Total revenues net of interest expense after provisions for credit losses 13,463 13,004 11,331 459 4 1,673 15

Card Member rewards, business development, Card Member services and marketing

7,422 7,238 5,762 184 3 1,476 26

Salaries and employee benefits and other operating expenses

3,180 2,886 2,633 294 10 253 10

Total expenses 10,602 10,124 8,395 478 5 1,729 21

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TOTAL REVENUES NET OF INTEREST EXPENSE

Non-interest revenues increased, primarily driven by higher Discount revenue.

Discount revenue increased 25 percent, primarily driven by an increase in commercial billed business of 21 percent.

Non-interest revenues increased, primarily driven by higher Discount revenue and Service fees and other revenue.

Discount revenue increased 4 percent, primarily driven by an increase in commercial billed business.

See Tables 5, 6 and 12 for more details on billed business performance.

Net card fees increased 18 percent, primarily driven by growth in our premium card portfolios.

Service fees and other revenue increased 60 percent, primarily due to higher foreign exchange related revenues associated with Card Member cross-currency spending and higher delinquency fees.

Processed revenue decreased 71 percent, primarily driven by the prior-year repositioning of certain of our alternative payment solutions.

Net interest income increased 27 percent, primarily driven by higher revolving Card Member loan balances.

Total revenues net of interest expense increased in 2021 compared to 2020, primarily driven by increased Discount revenue, reflecting billed business growth, and increased Net interest income, primarily reflecting a lower cost of funds, partially offset by lower revolving Card Member loan balances.

Service fees and other revenue increased 53 percent, largely driven by the change in the allocation of TLS revenues described above, as well as growth in delinquency fees.

Interest income increased, primarily driven by higher interest rates and growth in revolving loan balances.

Interest expense increased, primarily driven by a higher cost of funds.

PROVISIONS FOR CREDIT LOSSES

Card Member loans provision for credit losses increased, primarily due to a reserve build in the current year, versus a reserve release in the prior year.

The reserve build in the current year was primarily driven by an increase in loans outstanding, higher delinquencies and changes in macroeconomic forecasts, partially offset by the release of COVID-19 pandemic-driven reserves.

The reserve release in the prior year was driven by improved portfolio quality and macroeconomic forecasts, partially offset by an increase in loans outstanding.

Card Member receivables provision for credit losses increased, primarily due to a reserve build in the current year, versus a reserve release in the prior year, and higher net write-offs in the current year.

The reserve build in the current year was primarily driven by higher delinquencies and an increase in receivables outstanding.

The reserve release in the prior year was driven by improved portfolio quality and macroeconomic forecasts, partially offset by an increase in receivables outstanding.

Provisions for credit losses decreased in 2021 compared to 2020, primarily driven by reserve releases in 2021, versus reserve builds in 2020.

Total expenses increased, primarily driven by Card Member rewards expense and Business development expense.

Card Member rewards expense increased, primarily driven by higher billed business as well as a larger proportion of spend in categories that earn incremental rewards such as travel and a higher mix of redemptions in travel-related categories.

Business development expense increased, primarily due to increased client incentive payments driven by higher billed business.

Card Member services expense increased, primarily driven by higher usage of travel-related benefits.

Marketing expense increased, primarily due to business investments to drive growth momentum and accelerate new card acquisitions.

Salaries and employee benefits and other expenses increased, primarily due to higher compensation costs and higher service costs.

Card Member loans provision for credit losses increased, primarily due to higher net write-offs and a higher reserve build in the current year.

The reserve build in the current year was primarily driven by an increase in loans outstanding and higher delinquencies.

The reserve release in the current year was primarily driven by lower delinquencies and a decrease in receivables outstanding.

The reserve build in the prior year was primarily driven by higher delinquencies and an increase in receivables outstanding.

Total expenses increased, primarily driven by higher Operating expenses and Card Member services expense.

Card Member rewards expense increased, primarily driven by a larger proportion of spend in categories that earn higher levels of rewards, as well as higher billed business, partially offset by lower redemption costs and changes in expected redemption behaviors associated with certain products.

Business development expense increased, primarily due to increased partner payments, primarily driven by higher billed business.

Card Member services expense increased, primarily due to higher usage of travel-related benefits.

Marketing expense decreased, reflecting lower levels of spending on customer acquisitions.

Salaries and employee benefits and other expenses increased, primarily due to an increase in allocated service costs, which includes an allocation of TLS servicing costs as described above.

CS SELECTED STATISTICAL INFORMATION

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0.4 % 0.6 % 0.3 %

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

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

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

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Total revenues net of interest expense after provisions for credit losses 9,703 8,477 7,478 1,226 14 999 13

Card Member rewards, business development, Card Member services and marketing

5,669 4,962 3,995 707 14 967 24

Salaries and employee benefits and other operating expenses

3,061 2,937 2,554 124 4 383 15

Total expenses 8,730 7,899 6,549 831 11 1,350 21

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ICS also provides services to our international customers, including travel and lifestyle services, and manages certain international joint ventures and our loyalty coalition businesses.

For 2022, ICS reported pretax income of $578 million, compared with $929 million a year ago.

Results for this segment were significantly impacted by the strengthening of the U.S.

TOTAL REVENUES NET OF INTEREST EXPENSE

Non-interest revenues increased across all revenue categories, primarily driven by Discount revenue and Service fees and other revenues.

Discount revenue increased 25 percent (37 percent on a FX-adjusted basis), primarily reflecting an increase in billed business of 23 percent (36 percent on a FX-adjusted basis).

Non-interest revenues increased across all revenue categories, primarily driven by higher Discount revenue and Net card fees.

Discount revenue increased 17 percent, primarily reflecting an increase in billed business.

See Tables 5, 6 and 14 for more details on billed business performance.

Net card fees increased 3 percent (14 percent on a FX-adjusted basis), primarily driven by growth in our premium card portfolios, partially offset by changes in foreign exchange rates.

Service fees and other revenue increased 39 percent (52 percent on a FX-adjusted basis), primarily due to higher foreign exchange-related revenues associated with Card Member cross-currency spending, and higher income from equity method investments, which included a portion of the revenue allocated to a joint venture partner as described in Business development expense below, versus a net loss in the prior year.

Processed revenue increased 28 percent (35 percent on a FX-adjusted basis), primarily driven by an increase in processed volumes.

Net interest income increased 19 percent (25 percent on a FX-adjusted basis), primarily driven by an increase in average Card Member loan balances, partially offset by higher cost of funds driven by higher interest rates.

Total revenues net of interest expense increased in 2021 compared to 2020, primarily driven by increased Discount revenue, reflecting billed business growth, partially offset by decreased Net interest income, primarily reflecting lower yields and lower revolving Card Member loan balances.

2 Refer to footnote 1 on page 42 for details regarding foreign currency adjusted information.

Net card fees increased 17 percent, primarily driven by growth in our premium card portfolios.

Service fees and other revenue increased 9 percent, primarily driven by foreign exchange related revenues associated with Card Member cross-currency spending and growth in delinquency fees.

Interest income increased, primarily driven by growth in revolving loan balances and higher interest rates.

Interest expense increased, primarily driven by a higher cost of funds.

PROVISIONS FOR CREDIT LOSSES

Card Member loans and receivables provisions for credit losses increased, primarily due to reserve builds in the current year, versus reserve releases in the prior year, and higher net write-offs in the current year.

The reserve builds in the current year were primarily driven by an increase in loans and receivables outstanding and higher delinquencies.

The reserve releases in the prior year were driven by improved portfolio quality and macroeconomic forecasts, partially offset by an increase in loans and receivables outstanding.

Provisions for credit losses decreased in 2021 compared to 2020, primarily driven by reserve releases in 2021, versus reserve builds in 2020.

Total expenses increased, primarily driven by higher Card Member rewards expense and Business development expense.

Business development expense increased, primarily driven by a charge related to revenue allocated to a joint venture partner for certain categories of transactions.

Card Member loans provision for credit losses increased, primarily due to higher net write-offs, partially offset by a lower reserve build in the current year.

The reserve build in the current year was primarily driven by an increase in loans outstanding, partially offset by the performance of portfolios in certain international markets.

The reserve build in the prior year was primarily driven by an increase in loans outstanding and higher delinquencies.

The reserve release in the current year was primarily driven by lower delinquencies, partially offset by an increase in receivables outstanding.

The reserve build in the prior year was primarily driven by an increase in receivables outstanding and higher delinquencies.

Total expenses increased, primarily driven by higher Card Member rewards expense and Card Member services expense.

Card Member rewards expense increased, primarily driven by higher billed business.

Business development expense decreased, primarily driven by a prior-year charge related to revenue allocated to a joint venture partner, partially offset by an increase in partner payment expenses driven by higher billed business.

Card Member services expense increased, primarily driven by higher usage of travel-related benefits.

Marketing expense decreased, but was flat when adjusted for changes in foreign exchange rates.

Salaries and employee benefits and other expenses increased, primarily due to higher compensation costs and higher service costs.

Marketing expense decreased, reflecting lower levels of spending on customer acquisitions.

Salaries and employee benefits and other expenses increased, primarily due to an increase in allocated service costs, partially offset by lower compensation costs.

ICS SELECTED STATISTICAL INFORMATION

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0.5 % 0.5 % 0.3 %

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

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

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

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Corporate receivables delinquency data for periods other than 90+ days past billing and the net write-off rate based on principal losses only are not available due to system constraints.

(f) Refer to Table 7 footnote (c).

(f) Refer to Table 7 footnote (e).

GLOBAL MERCHANT AND NETWORK SERVICES

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Total revenues net of interest expense after provisions for credit losses 7,369 6,468 5,166 901 14 1,302 25

Business development, Card Member services and marketing

1,655 1,611 1,547 44 3 64 4

Salaries and employee benefits and other operating expenses

2,058 1,903 1,745 155 8 158 9

Total expenses 3,713 3,514 3,292 199 6 222 7

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TOTAL REVENUES NET OF INTEREST EXPENSE

Non-interest revenues increased across all revenue categories, primarily driven by Discount revenue and Service fees and other revenues.

Non-interest revenues increased across all revenue categories, primarily driven by higher Discount revenue and Service fees and other revenues.

Discount revenue increased 7 percent, primarily driven by an increase in billed business.

See Tables 5 and 6 for more details on billed business performance.

Service fees and other revenue increased 28 percent, primarily due to higher foreign currency-related revenue.

Service fees and other revenue increased 14 percent, primarily due to higher foreign exchange related revenues associated with Card Member cross-currency spending.

Processed revenue increased 6 percent, primarily driven by higher processed volumes.

GMNS receives an interest expense credit relating to internal transfer pricing due to its merchant payables.

Net interest income increased, primarily due to a higher interest expense credit, largely driven by an increase in average merchant payables related to billed business growth and higher interest rates.

Total revenues net of interest expense increased in 2021 compared to 2020, primarily driven by higher Discount revenue, reflecting higher billed business, and increased Net interest income, primarily due to a higher interest expense credit, reflecting an increase in average merchant payables related to year-over-year billed business growth.

Total expenses increased, primarily driven by higher Salaries and employee benefits expense, reflecting higher compensation costs, as well as higher Business development expense, primarily resulting from increased partner payments driven by higher network volumes.

Total expenses increased in 2021 compared to 2020, primarily driven by higher Business development and Marketing expenses, reflecting increased partner payments, driven by higher network volumes, as well as increased spend on initiatives to support merchant engagement.

Net interest income increased, primarily due to a higher interest expense credit, largely driven by higher interest rates.

Total expenses increased, primarily driven by higher Operating expenses.

Business development expense increased, primarily due to increased partner payments driven by higher network volumes.

Marketing expense increased, primarily driven by higher levels of spending on merchant engagement and other growth initiatives.

Salaries and employee benefits and other expenses increased, primarily due to a reserve associated with a merchant exposure for Card Member purchases, an increase in allocated service costs and higher compensation costs.

CORPORATE & OTHER

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Corporate & Other pretax loss was $2.4 billion and $2.2 billion in 2023 and 2022, respectively.

The increase in the pretax loss was primarily driven by net losses on Amex Ventures investments in the current year, as compared to net gains in the prior year, a non-cash gain in the prior year related to an increase in GBTG's total equity book value and higher compensation costs in the current year.

The increase in the pretax loss was primarily driven by changes in the value of deferred compensation, higher current and incentive compensation costs and a contribution to the American Express Foundation, all of which were partially offset by lower net losses on Amex Ventures investments.

CONSOLIDATED CAPITAL RESOURCES AND LIQUIDITY

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• A broad, deep and diverse set of funding sources to finance our assets and meet operating requirements;

• Liquidity programs that enable us to continuously meet expected future financing obligations and business requirements for at least a twelve-month period in the event we are unable to continue to raise new funds under our regular funding programs during a substantial weakening in economic conditions.

• Liquidity programs that enable us to continuously meet expected future financing obligations and business requirements for at least a twelve-month period under a variety of adverse circumstances.

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

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We believe capital allocated to growing businesses with a return on risk-adjusted equity in excess of our costs will generate shareholder value.

Our objective is to retain sufficient levels of capital generated through net income and other sources, such as the exercise of stock options by employees, to maintain a strong balance sheet, provide flexibility to support future business growth, and distribute excess capital to shareholders through dividends and share repurchases.

Our objective is to retain sufficient levels of capital generated through net income and other sources, such as the exercise of stock options by colleagues, to maintain a strong balance sheet, provide flexibility to support future business growth and distribute excess capital to shareholders through dividends and share repurchases.

See “Dividends and Share Repurchases” below.

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As a bank holding company, we are subject to regulatory requirements administered by the U.S.

federal banking agencies.

federal bank regulatory agencies.

The Federal Reserve has established specific capital adequacy guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items.

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bank subsidiary, American Express National Bank (AENB), could affect our status as a financial holding company and cause the banking regulators with oversight of American Express or AENB to take actions that could limit our business operations.

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

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

We maintain certain flexibility to shift capital across our businesses as appropriate.

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

On July 27, 2023, the U.S.

federal bank regulatory agencies issued a notice of proposed rulemaking that would significantly revise U.S.

regulatory capital requirements for large banking organizations, including American Express Company and AENB.

See “Supervision and Regulation — Capital and Liquidity Regulation” under “Business” for more information.

The following table presents our regulatory risk-based capital and leverage ratios and those of AENB, as of December 31, 2023:

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

Refer to “Capital and Liquidity Regulation” under “Supervision and Regulation” and Note 22 to our “Consolidated Financial Statements” for additional information.

Refer to “Supervision and Regulation — Capital and Liquidity Regulation” under “Business” and Note 22 to the “Consolidated Financial Statements” for additional information.

The following table presents American Express Company’s regulatory risk-based capital and risk-weighted assets as of December 31, 2023:

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Total Risk-Based Capital Ratio — Calculated as the sum of Tier 1 capital and Tier 2 capital, divided by risk-weighted assets.

Tier 2 capital is the sum of the reserve for loan and receivable credit losses adjusted for the CECL final rules (limited to 1.25 percent of risk-weighted assets), and $870 million of eligible subordinated notes, adjusted for capital held by insurance subsidiaries.

The $870 million of eligible subordinated notes includes the $750 million subordinated debt issued in May 2022 and the $120 million remaining Tier 2 capital credit for the $600 million subordinated debt issued in December 2014.

Tier 2 capital is the sum of the allowance for credit losses adjusted for the CECL final rules (limited to 1.25 percent of risk-weighted assets), and $1,250 million of eligible subordinated notes, adjusted for capital held by insurance subsidiaries.

The $1,250 million of eligible subordinated notes includes the $500 million subordinated debt issued in July 2023 and the $750 million subordinated debt issued in May 2022.

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

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

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

As of January 1, 2024, we have phased in 75 percent of such amount.

Refer to “Capital and Liquidity Regulation” under Part 1, Item 1.

“Business - Supervision and Regulation” for additional details.

As a Category IV firm, we participated in the Federal Reserve's supervisory stress tests in 2022.

On August 4, 2022, the Federal Reserve confirmed our SCB of 2.5 percent, which resulted in a minimum CET1 ratio of 7 percent, effective October 1, 2022.

Refer to “Supervision and Regulation — Capital and Liquidity Regulation” under “Business” for additional details.

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

We were not subject to the Federal Reserve’s supervisory stress tests in 2023 and will be participating in the Federal Reserve’s supervisory stress tests in 2024.

We submitted our annual capital plan to the Federal Reserve in April 2023.

On July 27, 2023, the Federal Reserve confirmed our SCB of 2.5 percent, which resulted in a minimum CET1 ratio of 7 percent, effective October 1, 2023 to September 30, 2024.

DIVIDENDS AND SHARE REPURCHASES

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These dividend and share repurchase amounts collectively represent approximately 62 percent of total capital generated during the year.

We plan to increase the regular quarterly dividend on our common shares outstanding by approximately 15 percent, from 52 cents to 60 cents per share, beginning with the first quarter 2023 dividend declaration.

We plan to increase the regular quarterly dividend on our common shares outstanding by 17 percent, from 60 cents to 70 cents per share, beginning with the first quarter 2024 dividend declaration.

In addition, during the year ended December 31, 2023, we paid $58 million in dividends on non-cumulative perpetual preferred shares outstanding.

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our capital levels and regulatory capital requirements;

regulatory guidance or restrictions, actual and forecasted business results;

regulatory guidance or restrictions;

actual and forecasted business results;

economic and market conditions;

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and the supervisory stress test process.

We may conduct share repurchases through a variety of methods, including open market purchases, 10b5-1 plans, privately negotiated transactions (including employee benefit plans) or other purchases, including block trades, accelerated share repurchase programs or any combination of such methods as market conditions warrant and at prices we deem appropriate.

We may conduct share repurchases through a variety of methods, including open market purchases, plans intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act, privately negotiated transactions or other purchases, including block trades, accelerated share repurchase programs or any combination of such methods as market conditions warrant and at prices we deem appropriate.

FUNDING STRATEGY

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We have in place a funding policy covering American Express Company and all of our subsidiaries.

Our global proprietary card-issuing businesses generate significant assets in both domestic and international Card Member lending and receivable activities.

Our financing needs are in large part a consequence of our proprietary card-issuing businesses, where we generally pay merchants for card transactions prior to reimbursement by Card Members and therefore fund the merchant payments during the period Card Member loans and receivables are outstanding.

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We seek to achieve diversity and cost efficiency in our funding sources by maintaining scale and market relevance in deposits, unsecured debt and asset securitizations, and access to secured borrowing facilities and a committed bank credit facility.

We expect the balance of our direct deposits to continue to grow.

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

Our funding plan is primarily driven by the size and mix of business asset growth, our liquidity position and choice of funding sources, as well as cash requirements generated by the redemptions of deposits by our customers, the maturities of debt outstanding and related interest payments.

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UNSECURED DEBT RATINGS

American Express Entity Moody's S&P Fitch

American Express Company Long Term A2 BBB+ A

Short Term N/A A-2 F1

Outlook Stable Stable Stable

American Express Entity Moody’s

American Express Company Long Term A2

Short Term N/R

Outlook Stable

American Express Travel Related Services Company, Inc.

Long Term A2 A- A

Short Term Prime-1 A-2 F1

Outlook Stable Stable Stable

American Express National Bank Long Term A3 A- A

Short Term Prime-1 A-2 F1

Outlook Stable Stable Stable

American Express Credit Corporation Long Term A2 A- A

Short Term N/A N/A N/A

Outlook Stable Stable Stable

Short Term P-1

Outlook Stable

American Express National Bank Long Term A3

Short Term P-1

Outlook Stable

American Express Credit Corporation Long Term A2

Short Term N/R

Outlook Stable

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

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We believe our funding mix, including the proportion of U.S.

retail deposits insured by the Federal Deposit Insurance Corporation (FDIC) to total funding, should reduce the impact that credit rating downgrades would have on our funding capacity and costs.

retail deposits insured by the FDIC to total funding, should reduce the impact that credit rating downgrades would have on our funding capacity and costs.

On August 29, 2023, the U.S.

federal bank regulatory agencies issued a notice of proposed rulemaking that would require covered bank holding companies such as American Express Company to issue and maintain minimum amounts of eligible external long-term debt and certain insured depository institutions such as AENB to issue and maintain minimum amounts of eligible internal long-term debt.

See “Supervision and Regulation — Capital and Liquidity Regulation” under “Business” for more information.

DEPOSIT PROGRAMS

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These funds are currently insured up to an amount that is at least $250,000 per account holder through the FDIC;

as of December 31, 2023, approximately 92 percent of these deposits were insured.

Our ability to obtain deposit funding and offer competitive interest rates is dependent on, among other factors, the capital level of AENB.

Direct retail deposits offered by AENB is our primary deposit product channel, which makes FDIC-insured high-yield savings account and certificates of deposit (CDs) products available directly to consumers.

AENB also offers checking account products and sources deposits through third-party distribution channels as needed to meet our overall funding objectives.

Direct retail deposits offered by AENB is our primary deposit product channel, which makes FDIC-insured high-yield savings account, certificates of deposit (CDs), business checking and consumer rewards checking account products available directly to customers.

As of December 31, 2023, our direct retail deposit program had approximately 2.4 million accounts.

AENB also sources deposits through third-party distribution channels as needed to meet our overall funding objectives.

CDs carry stated maturities while high-yield savings account, checking account and third-party sweep deposit products do not.

We manage the duration of our maturing obligations, including CDs, to reduce concentration and refinancing risk.

As of December 31, 2023, we had $129.1 billion in deposits.

Refer to Note 7 to the “Consolidated Financial Statements” for a further description of these deposits and scheduled maturities of certificates of deposits.

The following table sets forth the average interest rate we paid on different types of deposits during the years ended December 31, 2023, 2022 and 2021.

Changes in the average interest rate we paid on our deposits were primarily due to the impact of higher market interest rates offered for retail deposits.

AVERAGE INTEREST RATES PAID ON DEPOSITS

Year ended December 31,

2023 2022 2021

(Millions, except percentages)

Average Balance Interest Expense Average Interest Rate Average Balance Interest Expense Average Interest Rate Average Balance Interest Expense Average Interest Rate

Savings and transaction accounts $ 86,102 $ 3,357 3.9 % $ 71,458 $ 967 1.4 % $ 65,694 $ 275 0.4 %

Certificates of deposit:

Direct 4,407 159 3.6 1,708 33 1.9 1,930 37 1.9

Third-party (brokered) 13,945 518 3.7 7,649 221 2.9 4,163 102 2.4

Sweep accounts — Third-party (brokered) 15,676 824 5.3 15,039 301 2.0 13,081 41 0.3

retail interest-bearing deposits

$ 120,130 $ 4,858 4.0 % $ 95,854 $ 1,522 1.6 % $ 84,868 $ 455 0.5 %

SHORT-TERM FUNDING PROGRAMS

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American Express Company:

Fixed Rate Senior Notes (weighted-average coupon rate of 3.60%) $ 10.2

Fixed Rate Senior Notes (coupon of 4.90%)

Floating Rate Senior Notes (compounded SOFR (a) plus weighted-average spread of 103 basis points)

Fixed-to-Floating Rate Senior Notes (4.42% coupon during the fixed rate period and compounded SOFR (a) plus 1.76% during the floating rate period)

Fixed-to-Floating Rate Subordinated Notes (4.989% coupon during the fixed rate period and compounded SOFR (a)

plus 2.255% during the floating rate period)

Fixed-to-Floating Rate Senior Notes (weighted-average coupon of 5.54% during the fixed rate period and compounded SOFR (a) plus weighted-average spread of 137 basis points during the floating rate period)

Fixed-to-Floating Rate Subordinated Notes (coupon of 5.63% during the fixed rate period and compounded SOFR (a) plus spread of 193 basis points during the floating rate period)

American Express Credit Account Master Trust:

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Our liquidity objective is to maintain access to a diverse set of on- and off-balance sheet liquidity sources.

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

These include, but are not limited to, an event where we are unable to raise new funds under our regular funding programs during a substantial weakening in economic conditions.

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

• Maintaining diversified funding sources (refer to the “Funding Strategy” section for more details);

• Maintaining diversified funding sources (refer to “Funding Strategy” above for more details);

• Maintaining unencumbered liquid assets and off-balance sheet liquidity sources;

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• Establishing clear objectives for liquidity risk management, including compliance with regulatory requirements.

We seek to maintain access to a diverse set of on-balance sheet and off-balance sheet liquidity sources, including cash and other liquid assets, committed bank credit facilities and secured borrowing facilities.

We seek to maintain access to a diverse set of on-balance sheet and off-balance sheet liquidity sources, including cash and other liquid assets, secured borrowing facilities and a committed bank credit facility.

Through our U.S.

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Scenarios under our liquidity risk policy include market-wide, firm-specific and combined liquidity stresses.

Additionally, we anticipate becoming a Category III firm in 2024 and thus being subject to the regulatory requirements under LCR and NSFR rules.

We consider other factors in determining the amount and type of liquidity we maintain, such as economic and financial market conditions, seasonality in business operations, growth in our businesses, potential acquisitions or dispositions, the cost and availability of alternative liquidity sources and credit rating agency guidelines and requirements.

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

As of December 31, 2023 and 2022, we had $46.6 billion and $33.9 billion in Cash and cash equivalents, respectively.

Refer to “Cash Flows” below for a discussion of the major drivers impacting cash flows for the year ended December 31, 2023.

The investment income we receive on liquidity resources has historically been less than the interest expense on the sources of funding for these balances.

The level of future net interest income or costs depends on the amount of liquidity resources we maintain and the difference between our cost of funding these amounts and their investment yields.

From time to time, including during 2023, interest income may exceed the interest expense associated with the liquidity portfolio.

Depending on the interest rate environment, our funding composition and the amount of liquidity resources we maintain, the level of future net interest income or expense associated with our liquidity resources will vary.

Securitized Borrowing Capacity

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We also maintained our committed, revolving, secured borrowing facility, with a maturity date of September 15, 2026, which gives us the right to sell up to $3.0 billion face amount of eligible AAA certificates from the American Express Credit Account Master Trust (the Lending Trust).

Both facilities are used in the ordinary course of business to fund working capital needs, as well as to further enhance our contingent funding resources.

These facilities enhance our contingent funding resources and are also used in the ordinary course of business to fund working capital needs.

As of December 31, 2023, no amounts were drawn on the Charge Trust facility or the Lending Trust facility.

Federal Reserve Discount Window

As an insured depository institution, AENB may borrow from the Federal Reserve Bank of San Francisco, subject to the amount of qualifying collateral that it may pledge.

The Federal Reserve has indicated that both credit and charge card receivables are a form of qualifying collateral for secured borrowings made through the discount window.

Whether specific assets will be considered qualifying collateral and the amount that may be borrowed against the collateral remain at the discretion of the Federal Reserve.

As of December 31, 2022, we had approximately $102.8 billion in U.S.

credit card loans and charge card receivables that could be sold over time through our securitization trusts or pledged in return for secured borrowings to provide further liquidity, subject in each case to applicable market conditions and eligibility criteria.

Committed Bank Credit Facility

In addition to the secured borrowing facilities described above, as of December 31, 2022 we maintained a committed syndicated bank credit facility of $3.5 billion with a maturity date of October 15, 2024.

As of December 31, 2023, we maintained a committed syndicated bank credit facility of $4.0 billion.

During the quarter ended December 31, 2023, we extended this facility by two years to mature on October 20, 2026, and increased the maximum borrowing capacity from $3.5 billion to $4.0 billion.

The availability of the credit facility is subject to our maintenance of a minimum CET1 risk-based capital ratio of 4.5 percent, with certain restrictions in relation to either accessing the facility or distributing capital to common shareholders in the event our CET1 risk-based capital ratio falls between 4.5 percent and 6.5 percent.

It does not contain a material adverse change clause, which might otherwise preclude borrowing under the facility, nor is it dependent on our credit rating.

As of December 31, 2022, we were in compliance with the covenants contained in the credit facility and no amounts were drawn on the facility.

We use this facility from time to time in the ordinary course of business to fund working capital needs.

As of December 31, 2023, we were in compliance with the covenants contained in the credit facility and no amount was drawn on the facility.

This facility enhances our contingent funding resources and is also used in the ordinary course of business to fund working capital needs.

Any undrawn portion of this facility could serve as a backstop for the amount of commercial paper outstanding.

Other Sources of Liquidity

In addition to cash and other liquid assets and the secured borrowing facilities and committed bank credit facility described above, as an insured depository institution, AENB may borrow from the Federal Reserve Bank of San Francisco through the discount window against the U.S.

credit card loans and charge card receivables that it pledged.

As of December 31, 2023, AENB had available borrowing capacity of $60.4 billion based on the amount and collateral valuation of receivables that were pledged to the Federal Reserve Bank of San Francisco.

Whether specific assets will be considered qualifying collateral and the amount that may be borrowed against the collateral remain at the discretion of the Federal Reserve.

Following its regular annual review, the Federal Reserve updated the collateral margins for amounts pledged by its member banks, effective November 1, 2023, which reduced AENB’s available borrowing capacity through the discount window.

Due to regulatory restrictions, liquidity generated by AENB can generally be used only to fund obligations within AENB, and transfers to the parent company or non-bank affiliates may be subject to prior regulatory approval.

Off-balance Sheet Arrangements

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

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

In 2021, the net cash provided by operating activities was primarily driven by cash generated from net income for the period and higher net operating liabilities, resulting from an increase in Membership Rewards liability and higher accounts payable to merchants related to growth in billed business.

In 2023, the net cash provided by operating activities was primarily driven by cash generated from net income for the period and higher net operating liabilities, primarily driven by higher book overdrafts due to timing differences arising in the ordinary course of business, higher accounts payable to merchants and an increase in the Membership Rewards liability related to growth in billed business.

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

Cash Flows from Investing Activities

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

In 2023, the net cash used in investing activities was primarily driven by higher Card Member loan and receivable balances, resulting from higher Card Member spending, partially offset by net maturities of investment securities.

In 2022, the net cash used in investing activities was primarily driven by higher Card Member loan and receivable balances, resulting from higher Card Member spending and net purchases of investment securities.

In 2021, the net cash used in investing activities was primarily driven by higher Card Member loan and receivable balances, resulting from higher Card Member spending, partially offset by net maturities of our investment securities.

Cash Flows from Financing Activities

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

In 2022, the net cash provided by financing activities was primarily driven by growth in customer deposits and net proceeds from debt, partially offset by share repurchases and dividend payments.

In 2021, the net cash used in financing activities was primarily driven by share repurchases, net debt repayments, decreases in customer deposits, dividends and redemption of preferred shares, partially offset by the proceeds from the issuance of preferred shares.

In both 2023 and 2022, the net cash provided by financing activities was primarily driven by growth in customer deposits and net proceeds from debt, partially offset by share repurchases and dividend payments.

RISK MANAGEMENT

We use our comprehensive Enterprise-wide Risk Management (ERM) program to identify, aggregate, monitor, measure, report and manage risks.

The program also defines our risk appetite, governance, culture and capabilities.

The implementation and execution of the ERM program is headed by our Chief Risk Officer.

Risk management is overseen by our Board of Directors through three Board committees:

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The Board monitors the “tone at the top,” our risk culture, and oversees emerging and strategic risks.

We use our comprehensive Enterprise Risk Management (ERM) program to identify, aggregate, monitor, measure, report and manage risks.

The program also defines our risk appetite, governance, culture and capabilities.

The implementation and execution of the ERM program is headed by our Chief Risk Officer.

The Risk Committee reviews and concurs with the appointment, replacement, performance and compensation of our Chief Risk Officer and receives regular updates from the Chief Risk Officer on key risks and exposures.

The Risk Committee of our Board of Directors provides oversight of our ERM framework, processes and methodologies.

The Risk Committee approves our ERM policy.

The ERM policy governs risk governance, risk oversight and risk appetite, including credit risk (at both the individual and institutional levels), operational risk (e.g., operations, legal, conduct, third-party, information technology, information security, data management, privacy and people risks), compliance risk, reputational risk, market risk, funding and liquidity risk, model risk, strategic and business risk, country risk and environmental, social and governance risk.

The ERM policy defines and governs risk governance, risk oversight and risk appetite, including credit risk (at both the individual and institutional levels), operational risk (e.g., operations and process, legal, conduct, third-party, information technology, information security, data management, privacy and people risks), compliance risk, reputational risk, market risk, funding and liquidity risk, model risk, strategic and business risk, country risk and emerging risks (e.g., climate risk).

Risk appetite defines the authorized risk limits to control exposures within our risk capacity and risk tolerance, including stressed forward-looking scenarios.

In addition, it establishes principles for risk taking in the aggregate and for each risk type, and is supported by a comprehensive system for monitoring performance (including limits and escalation triggers) and assessing control programs.

The Risk Committee reviews our risk profile against the tolerances specified in the Risk Appetite Framework, including significant risk exposures, risk trends in our portfolios and major risk concentrations.

On an ongoing basis, the Risk Committee reviews our risk profile against the tolerances specified in the Risk Appetite Framework, including significant risk exposures, risk trends in our portfolios and major risk concentrations.

The Risk Committee also provides oversight of our compliance with Regulatory capital and liquidity standards, and our Internal Capital Adequacy Assessment Process, including the CCAR submissions.

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We use the operational risk framework to identify, measure, monitor and report inherent and emerging operational risks.

This framework, supervised by the ORMC, consists of (a) operational risk event capture, (b) a project office to coordinate issue management and control enhancements, (c) key risk indicators, and (d) process and entity-level risk assessments.

The framework requires the assessment of operational risk events to determine root causes, impact to customers and/or us, and resolution plan accountability to correct any defect, remediate customers, and enhance controls and testing to mitigate future issues.

The impact is assessed from an operational, financial, brand, regulatory compliance and legal perspective.

Information and Cyber Security

We define information and cyber security risk as the risk that a security incident could impact the confidentiality, integrity or availability of American Express customer, colleague or proprietary information.

Our information and cyber security program is designed to protect information systems from unauthorized access, use, disclosure, disruption, modification, or destruction.

The program is built upon a foundation of advanced security technology, a well-staffed and highly trained team of experts, and operations based on the National Institute of Standards and Technology Cybersecurity Framework.

This consists of controls designed to identify, protect, detect, respond and recover from information and cyber security incidents.

We continue to invest in enhancements to cyber security capabilities and engage in industry and government forums to promote advancements to the broader financial services cyber security ecosystem.

See “A major information or cyber security incident or an increase in fraudulent activity could lead to reputational damage to our brand and material legal, regulatory and financial exposure, and could reduce the use and acceptance of our products and services” under “Risk Factors” for additional information.

The framework includes programs established for risk management activities related to processes and the launch of new products and services.

The framework also defines guidelines and risk management requirements for the (a) identification of operational risk events, (b) related control enhancements and (c) reporting of key trends and escalation of risks.

Outcomes from the operational risk framework are discussed and escalated to various risk management committees and incorporated within our accountability framework for executive compensation.

Information Security and Cybersecurity

We define information security and cybersecurity risk as the risk that the confidentiality, integrity or availability of American Express information and information systems are impacted by unauthorized or unintended access, use, disclosure, modification or destruction.

Our Technology Risk and Information Security (TRIS) program, which is our enterprise information security and cybersecurity program, is designed to (i) ensure the security, confidentiality, integrity and availability of our information and information systems;

(ii) protect against any anticipated threats or hazards to the security, confidentiality, integrity or availability of such information;

and (iii) protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to us, our colleagues or our customers.

The program is built upon a foundation of advanced security technology, employs a highly trained team of experts, and is designed to operate in alignment with global regulatory requirements.

The TRIS program includes controls designed to identify, protect, detect, respond to and recover from information security and cybersecurity incidents.

We continue to assess the risks and changes in the cyber environment, invest in enhancements to our cybersecurity capabilities and engage in industry and government forums to promote advancements in our cybersecurity capabilities as well as the broader financial services cybersecurity ecosystem.

See “Cybersecurity” and “ A major information or cybersecurity incident or an increase in fraudulent activity could lead to reputational damage to our brand and material legal, regulatory and financial exposure, and could reduce the use and acceptance of our products and services ” under “Risk Factors” for additional information.

Information Technology

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We define privacy risk as the risk of financial loss, reputational damage, or regulatory or legal action resulting from decisions related to the violation of applicable laws, rules, regulations, contractual obligations, or the non-adherence to privacy policies, disclosures, or standards that apply to the processing of personal data.

The Global Privacy Policy establishes the privacy framework and defines the American Express Data Protection & Privacy Principles, which governs the way we collect, use, store, share, transmit, delete or otherwise process our customer and colleague personal data globally.

The Global Privacy Policy, which establishes the privacy framework and defines the American Express Data Protection & Privacy Principles, governs the way we collect, use, store, share, transmit, delete or otherwise process our customer and colleague personal data globally.

Chaired by the Chief Privacy Officer, the Privacy Risk Management Committee, a sub-committee of the ORMC, provides oversight and governance for our privacy program.

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Refer to Note 13 to the “Consolidated Financial Statements” for further discussion of our derivative financial instruments.

As of December 31, 2022, a hypothetical, immediate 100 basis point increase in market interest rates would have a detrimental impact of approximately $141 million on our annual net interest income.

This measure first projects net interest income over the following twelve-month time horizon considering forecasted business growth and anticipated future market interest rates.

The detrimental impact from rate changes is then measured by instantaneously increasing or decreasing the anticipated future interest rates by 100 basis points.

To measure the sensitivity of net interest income to interest rate changes, we first project net interest income over the following twelve-month time horizon considering forecasted business growth and anticipated future market interest rates.

The impact from rate changes is then measured by instantaneously increasing or decreasing the anticipated future interest rates by the amounts set forth in Table 23 below.

Our current net interest income sensitivity analysis shows higher interest rates would have a detrimental impact on our net interest income.

Our estimated repricing risk assumes that our interest-rate sensitive assets and liabilities that reprice within the twelve-month horizon generally reprice by the same magnitude, subject to applicable interest rate caps or floors, as benchmark rates change.

It is further assumed that, within our interest-rate sensitive liabilities, certain deposits reprice at lower magnitudes than benchmark rate movements, and the magnitude of this repricing in turn depends on, among other factors, the direction of rate movements.

It is further assumed that, within our interest-rate sensitive liabilities, certain deposits reprice at lower magnitudes than benchmark rate movements, and the magnitude of this repricing in turn could depend on, among other factors, the direction of rate movements.

These assumptions are consistent with historical deposit repricing experience in the industry and within our own portfolio.

Actual changes in our net interest income will depend on many factors, and therefore may differ from our estimated risk to changes in market interest rates.

SENSITIVITY ANALYSIS OF INTEREST RATE CHANGES ON ANNUAL NET INTEREST INCOME AS OF DECEMBER 31, 2023

(Millions) Instantaneous Parallel Rate Shocks (a)

+200bps +100bps -100bps -200bps

$ (276) $ (105) $ 74 $ 142

(a) Negative values represent a reduction in net interest income.

We use economic value of equity to inform us of the potential impacts from interest rate changes on the net present value of our assets and liabilities under a variety of interest rate scenarios.

Economic value of equity is calculated based on our existing assets, liabilities and derivatives, and does not incorporate projected changes in our balance sheet.

Key assumptions used in this calculation include the term structure of interest rates, as well as deposit repricing and liquidation profiles used to inform duration and cash flow schedules.

The economic value of equity is calculated under multiple interest rate scenarios, including baseline and immediate upward and immediate downward interest rate shocks, to assess its sensitivity to changes in interest rates.

Our current sensitivity profile demonstrates that our economic value of equity generally decreases in a declining interest rate scenario and increases in an increasing interest rate scenario.

The level of this sensitivity is managed within board-approved policy limits.

Foreign Exchange Risk

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dollar would be approximately $242 million as of December 31, 2023.

To a much lesser extent, we are also subject to market risk arising from activities conducted by our Foreign Exchange International Payments business.

We aim to minimize market risk from these activities through hedging, where appropriate, and the establishment of limits.

The actual impact of interest rate and foreign exchange rate changes will depend on, among other factors, the timing of rate changes, the extent to which different rates do not move in the same direction or in the same direction to the same degree, changes in the cost, volume and mix of our hedging activities and changes in the volume and mix of our businesses.

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Funding and liquidity risk is managed by the Funding and Liquidity Committee.

To manage this risk, we seek to maintain access to a diverse set of cash, readily-marketable securities and contingent sources of liquidity, such that we can continuously meet our business requirements and expected future financing obligations for at least a twelve-month period in the event we are unable to raise new funds under our regular funding programs during a substantial weakening in economic conditions.

These include, but are not limited to, an event where we are unable to raise new funds under our regular funding programs during a substantial weakening in economic conditions.

We consider the trade-offs between maintaining too much liquidity, which can be costly and limit financial flexibility, and having inadequate liquidity, which may result in financial distress during a liquidity event.

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The Funding and Liquidity Committee reviews forecasts of our aggregate and subsidiary cash positions and financing requirements, approves funding plans designed to satisfy those requirements under normal and stressed conditions, establishes guidelines to identify the amount of liquidity resources required and monitors positions and determines any actions to be taken.

Our liquidity risk management processes are designed in alignment with regulatory guidelines.

As discussed in more detail under “Supervision and Regulation — Enhanced Prudential Standards” and “— Capital and Liquidity Regulation” under “Business,” we anticipate becoming a Category III firm in 2024 under U.S.

federal bank regulatory agencies’ rules that tailor the application of enhanced prudential standards, which would result in heightened capital, liquidity and prudential requirements, including more stringent liquidity risk management requirements.

MODEL RISK MANAGEMENT PROCESS

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Policies and procedures establish country risk escalation thresholds to control and limit exposure, driven by processes that enable the monitoring of conditions in countries where we have exposure.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) AND CLIMATE-RELATED RISK

CLIMATE-RELATED RISK

Environmental, social and governance (ESG) risks, with an emphasis on climate-related risk, are currently identified as an “emerging risk” within our risk governance framework.

We define climate-related risk as:

(1) risks related to the transition to a low-carbon economy, which may include extensive changes pertaining to policy, legal, technology, market and reputational risks, and (2) risks related to the physical impacts of climate change, typically driven by acute physical risk such as increased severity of extreme weather events (e.g., cyclones, hurricanes, floods) and chronic physical risk which are longer-term shifts in climate patterns (e.g., sea level rise, chronic heat waves).

(1) risks related to the transition to a low-carbon economy, which may include extensive changes pertaining to policy, legal, technology, market and reputational risks, and (2) risks related to the physical impacts of climate change, typically driven by acute physical risks such as increased severity of extreme weather events (e.g., cyclones, hurricanes, floods) and chronic physical risks which are longer-term shifts in climate patterns (e.g., sea level rise, chronic heat waves).

Such transition and physical risk events driven by climate change can have broad impact on our customers, operations, suppliers and business.

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We are currently performing a risk identification process for climate-related risk to determine the meaningfulness and measurability of the risk.

Furthermore, ESG risks, with an emphasis on climate-related risk, are currently identified as an “emerging risk” within our risk governance framework.

CRITICAL ACCOUNTING ESTIMATES

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Reserves for Card Member credit losses represent our best estimate of the expected credit losses in our outstanding portfolio of Card Member loans and receivables as of the balance sheet date.

The CECL methodology, which became effective January 1, 2020, requires us to estimate lifetime expected credit losses by incorporating historical loss experience, as well as current and future economic conditions over a reasonable and supportable period (R&S Period) beyond the balance sheet date.

The CECL methodology requires us to estimate lifetime expected credit losses by incorporating historical loss experience, as well as current and future economic conditions over a reasonable and supportable period (R&S Period) beyond the balance sheet date.

In estimating expected credit losses, we use a combination of statistically based models and analysis of the results produced by these models to determine the quantitative and qualitative components of our total balance sheet reserves for credit losses.

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The WAC per point assumption is derived from 12 months of redemptions and is adjusted as appropriate for certain changes in redemption costs that are not representative of future cost expectations and expected developments in redemption patterns.

We periodically evaluate our liability estimation process and assumptions based on developments in redemption patterns, cost per point redeemed, partner contract changes and other factors.

We periodically evaluate our liability estimation process and assumptions based on changes in cost per point redeemed, partner contract changes and developments in redemption patterns, which may be impacted by product refreshes, changes in redemption options and mix of proprietary cards-in-force.

The process of estimating the Membership Rewards liability includes a high degree of judgment.

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OTHER MATTERS

As previously disclosed, we identified during an internal review that over time certain current and former U.S.

Card Members with multiple cards were not credited certain Membership Rewards points that they had earned.

We completed our review of this matter in the fourth quarter of 2022, which resulted in an immaterial impact to our Consolidated Financial Statements for the year ended December 31, 2022.

RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS

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

RECENTLY ADOPTED AND ISSUED ACCOUNTING STANDARDS

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

GLOSSARY OF SELECTED TERMINOLOGY

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

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

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

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

Asset securitizations — Asset securitization involves the transfer and sale of loans or receivables to a special-purpose entity created for the securitization activity, typically a trust.

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The securitized loans and receivables of our Lending Trust and Charge Trust (collectively, the Trusts) are reported as assets and the securities issued by the Trusts are reported as liabilities on our Consolidated Balance Sheets.

Average discount rate — This calculation is generally designed to reflect the average pricing at all merchants accepting American Express cards and represents the percentage of network volumes retained by us from spend at merchants we acquire, or from merchants acquired by third parties on our behalf, net of amounts retained by such third parties.

The average discount rate, together with billed business, drive our discount revenue.

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

Capital ratios — Represents the minimum standards established by regulatory agencies as a measure to determine whether the regulated entity has sufficient capital to absorb on- and off-balance sheet losses beyond current loss accrual estimates.

Refer to the Capital Strategy section under “Consolidated Capital Resources and Liquidity” for further related definitions under Basel III.

Refer to “Consolidated Capital Resources and Liquidity — Capital Strategy” above for further related definitions under Basel III.

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

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Charge cards — Represents cards that generally carry no pre-set spending limits and are primarily designed as a method of payment and not as a means of financing purchases.

Each charge card transaction is authorized based on its likely economics reflecting a Card Member’s most recent credit information and spend patterns.

Each transaction on a charge card with no pre-set spending limit is authorized based on its likely economics reflecting a Card Member’s most recent credit information and spend patterns.

Charge Card Members must pay the full amount of balances billed each month, with the exception of balances that can be revolved under lending features offered on certain charge cards, such as Pay Over Time and Plan It, that allow Card Members to pay for eligible purchases with interest over time.

Cobrand cards — Cards issued under cobrand agreements with selected commercial partners.

Cobrand cards — Represents cards issued under cobrand agreements with selected commercial partners.

Pursuant to the cobrand agreements, we make payments to our cobrand partners, which can be significant, based primarily on the amount of Card Member spending and corresponding rewards earned on such spending and, under certain arrangements, on the number of accounts acquired and retained.

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Plan It), grace periods, and rate and fee structures.

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

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

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

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

Interest expense — Includes interest incurred primarily to fund Card Member loans and receivables, general corporate purposes and liquidity needs.

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Reserve build represents the amount by which the provision for credit losses exceeds net write-offs, while reserve release represents the amount by which net write-offs exceed the provision for credit losses.

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

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

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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Factors that could cause actual results to differ materially from these forward-looking statements, include, but are not limited to, the following:

• our ability to grow earnings per share in the future, which will depend in part on revenue growth, credit performance and the effective tax rate remaining consistent with current expectations and our ability to continue investing at high levels in areas that can drive sustainable growth (including our brand, value propositions, customers, colleagues, technology and coverage), controlling operating expenses, effectively managing risk and executing our share repurchase program, any of which could be impacted by, among other things, the factors identified in the subsequent paragraphs as well as the following:

fiscal and monetary policies and macroeconomic conditions, such as recession risks, effects of inflation, higher interest rates, labor shortages or higher rates of unemployment, supply chain issues, energy costs and the continued effects of the pandemic;

geopolitical instability, including the ongoing military conflict between Russia and Ukraine;

the impact of any future contingencies, including, but not limited to, restructurings, investment gains or losses, impairments, changes in reserves, legal costs and settlements, the imposition of fines or civil money penalties and increases in Card Member remediation;

• our ability to grow earnings per share in the future, which will depend in part on revenue growth, credit performance and the effective tax rate remaining consistent with current expectations and our ability to continue investing at high levels in areas that can drive sustainable growth (including our brand, value propositions, customers, colleagues, marketing, technology and coverage), controlling operating expenses, effectively managing risk and executing our share repurchase program, any of which could be impacted by, among other things, the factors identified in the subsequent paragraphs as well as the following:

macroeconomic conditions, such as recession risks, changes in interest rates, effects of inflation, labor shortages and strikes or higher rates of unemployment, supply chain issues, energy costs and fiscal and monetary policies;

geopolitical instability, including the ongoing Ukraine and Israel wars and tensions involving China and the United States;

the impact of any future contingencies, including, but not limited to, legal costs and settlements, the imposition of fines or monetary penalties, increases in Card Member remediation, investment gains or losses, restructurings, impairments and changes in reserves;

issues impacting brand perceptions and our reputation;

impacts related to new or renegotiated cobrand and other partner agreements;

impacts related to new or renegotiated cobrand and other partner agreements and joint ventures;

and the impact of regulation and litigation, which could affect the profitability of our business activities, limit our ability to pursue business opportunities, require changes to business practices or alter our relationships with Card Members, partners and merchants;

• our ability to grow revenues net of interest expense and the sustainability of our future growth, which could be impacted by, among other things, the factors identified above and in the subsequent paragraphs, as well as the following:

a slowdown or increase in volatility in consumer and business spending volumes;

the strengthening of the U.S.

dollar beyond expectations;

an inability to address competitive pressures, innovate in our products and services, expand into value-adding products and services and implement strategies and business initiatives, including within the premium consumer space, commercial payments and the global merchant network;

the continued effects of the COVID-19 pandemic, including the spread and severity of the virus, the availability and effectiveness of treatments and vaccines, the imposition of further containment measures and the lingering impacts on customer behaviors, spending and travel patterns, any of which could further exacerbate the effects on economic activity and travel-related revenues;

spending volumes and the spending environment not being consistent with expectations, including T&E spend growing slower than expected, further slowing in spend by U.S.

small and mid-sized enterprise or U.S.

large and global corporate customers, or a general slowdown or increase in volatility in consumer and business spending volumes;

changes in foreign currency exchange rates;

an inability to address competitive pressures, innovate and expand our products and services, leverage the advantages of our differentiated business model, attract customers across generations and age cohorts, including Millennial and Gen Z customers and implement strategies and business initiatives, including within the premium consumer space, commercial payments and the global merchant network;

the effects of the end of the moratorium on student loan repayments;

the impact of the decommissioning of one of our alternative payment solutions;

and merchant discount rates changing by a greater or lesser amount than expected;

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higher Card Member attrition rates;

the pace of Card Member acquisition activity;

and our inability to address competitive pressures, develop attractive value propositions and implement our strategy of refreshing card products and enhancing benefits and services;

• net interest income, the effects of interest rates and the growth rate of loans outstanding being higher or lower than expectations, which could be impacted by, among other things, the behavior and financial strength of Card Members and their actual spending, borrowing and paydown patterns;

the pace of Card Member acquisition activity and demand for our fee-based products;

and our inability to address competitive pressures, develop attractive premium value propositions and implement our strategy of refreshing card products, enhancing benefits and services and continuing to innovate with respect to our products;

• net interest income, the effects of changes in interest rates and the growth of loans and Card Member receivables outstanding, and the portion of which that is interest bearing, being higher or lower than expectations, which could be impacted by, among other things, the behavior and financial strength of Card Members and their actual spending, borrowing and paydown patterns;

our ability to effectively manage risk and enhance Card Member value propositions;

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the yield on Card Member loans not remaining consistent with current expectations;

our deposit levels or the interest rates we offer on deposits changing from current expectations;

and the effectiveness of our strategies to capture a greater share of existing Card Members’ spending and borrowings, and attract new, and retain existing, customers;

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changes in consumer behavior that affect loan and receivable balances (such as paydown and revolve rates);

the credit profiles of new customers acquired;

the enrollment in, and effectiveness of, financial relief programs and the performance of accounts as they exit from such programs;

collections capabilities and recoveries of previously written-off loans and receivables;

and governmental actions that provide forms of relief with respect to certain loans and fees, such as limiting debt collections efforts and encouraging or requiring extensions, modifications or forbearance;

• the actual amount we spend on marketing in the future, which will be based in part on continued changes in the macroeconomic and competitive environment and business performance;

our ability to realize marketing efficiencies, optimize investment spending and drive increases in revenue;

the effectiveness of management's investment optimization process, management’s identification and assessment of attractive investment opportunities and the receptivity of Card

Members and prospective customers to advertising and customer acquisition initiatives and our ability to balance expense control and investments in the business;

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

• the actual amount to be spent on Card Member rewards and services and business development, and the relationship of these variable customer engagement costs to revenues, which could be impacted by continued changes in macroeconomic conditions and Card Member behavior as it relates to their spending patterns (including the level of spend in bonus categories), the redemption of rewards and offers (including travel redemptions) and usage of travel-related benefits;

the costs related to reward point redemptions;

higher-than-expected customer remediation expenses;

related to reward point redemptions;

further enhancements to product benefits to make them attractive to Card Members and prospective customers, potentially in a manner that is not cost-effective;

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and the pace and cost of the expansion of our global lounge collection;

• our ability to control operating expenses and the actual amount we spend on operating expenses in the future, which could be impacted by, among other things, salary and benefit expenses to attract and retain talent, including with respect to an increased colleague headcount;

• the actual amount we spend on marketing in the future, which will be based in part on continued changes in the macroeconomic and competitive environment and business performance;

management’s decisions regarding the timing of spending on marketing and the effectiveness of management’s investment optimization process;

management’s identification and assessment of attractive investment opportunities;

management’s ability to develop attractive premium value propositions and drive customer demand;

the receptivity of Card Members and prospective customers to advertising and customer acquisition initiatives;

our ability to realize marketing efficiencies and balance expense control and investments in the business;

• our ability to control operating expenses, including relative to future revenue growth, and the actual amount we spend on operating expenses in the future, which could be impacted by, among other things, salary and benefit expenses to attract and retain talent;

a persistent inflationary environment;

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supply chain issues;

information security or compliance expenses or consulting, legal and other professional services fees, including as a result of litigation or internal and regulatory reviews;

the level of M&A activity and related expenses;

information or cyber security incidents;

the payment of civil money penalties, disgorgement, restitution, non-income tax assessments and litigation-related settlements;

compliance expenses and consulting, legal and other professional services fees, including as a result of litigation or internal and regulatory reviews;

regulatory assessments;

the level of M&A activity and related expenses, including the completion of our sale of Accertify Inc.;

information or cybersecurity incidents;

the payment of fines, penalties, disgorgement, restitution, non-income tax assessments and litigation-related settlements;

the performance of Amex Ventures and other of our investments;

impairments of goodwill or other assets;

and the impact of changes in foreign currency exchange rates on costs;

• our tax rate not remaining consistent with expectations, which could be impacted by, among other things, further changes in tax laws and regulation, our geographic mix of income, unfavorable tax audits and other unanticipated tax items;

• changes affecting our plans regarding the return of capital to shareholders, including increasing the level of our dividend, which will depend on factors such as capital levels and regulatory capital ratios;

changes in the stress testing and capital planning process and new guidance from the Federal Reserve;

and the impact of changes in foreign currency exchange rates on costs, such as due to the devaluation of foreign currencies;

• our tax rate not remaining consistent with expectations, which could be impacted by, among other things, further changes in tax laws and regulation (or related legislative or regulatory inaction), the timing and manner of the implementation of tax guidelines by jurisdictions, our geographic mix of income, unfavorable tax audits and other unanticipated tax items;

• changes affecting our plans regarding the return of capital to shareholders, including increasing the level of our dividend, which will depend on factors such as our capital levels and regulatory capital ratios;

changes in the stress testing and capital planning process and new rulemakings and guidance from the Federal Reserve and other banking regulators, including changes to regulatory capital requirements, such as final rules resulting from the U.S.

federal bank regulatory agencies’ capital rule proposal;

our results of operations and financial condition;

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and the economic environment and market conditions in any given period;

• changes in the substantial and increasing worldwide competition in the payments industry, including competitive pressure that may materially impact the prices charged to merchants that accept American Express cards, the desirability of our premium card products, competition for new and existing cobrand relationships, competition from new and non-traditional competitors and the success of marketing, promotion and rewards programs;

• changes affecting the expected timing for closing the sale of Accertify Inc., the amount of the potential gain we recognize upon the closing and the portion of such gain management determines to reinvest back into our business, which will depend on regulatory and other approvals, consultation requirements, the execution of ancillary agreements, the cost and availability of financing for the purchaser to fund the transaction and the potential loss of key customers, vendors and other business partners and management’s decisions regarding future operations, strategies and business initiatives;

• changes in the substantial and increasing worldwide competition in the payments industry, including competitive pressure that may materially impact the prices charged to merchants that accept American Express cards, the desirability of our premium card products, competition for new and existing cobrand relationships, competition with respect to new products, services and technologies, competition from new and non-traditional competitors and the success of marketing, promotion and rewards programs;

• our ability to expand our leadership in the premium consumer space, which will be impacted in part by competition, brand perceptions (including perceptions related to merchant coverage) and reputation, and our ability to develop and market new benefits and value propositions that appeal to Card Members and new customers, offer attractive services and rewards programs and build greater customer loyalty, which will depend in part on identifying and funding investment opportunities, addressing changing customer behaviors, new product innovation and development, Card Member acquisition efforts and enrollment processes, including through digital channels, continuing to realize the benefits from strategic partnerships and evolving our infrastructure to support new products, services and benefits;

• our ability to build on our leadership in commercial payments, which will depend in part on competition, the willingness and ability of companies to use credit and charge cards for procurement and other business expenditures as well as use our other products and services for financing needs, perceived or actual difficulties and costs related to setting up card-based B2B payment platforms, our ability to offer attractive value propositions and new products to potential customers, our ability to enhance and expand our payment and lending solutions, and build out a multi-product digital ecosystem to integrate our broad product set, which is dependent on our continued investment in capabilities, features, functionalities, platforms and technologies;

• our ability to expand merchant coverage globally and our success, as well as the success of OptBlue merchant acquirers and network partners, in signing merchants to accept American Express, which will depend on, among other factors, the value propositions offered to merchants and merchant acquirers for card acceptance, the awareness and willingness of Card Members to use American Express cards at merchants, scaling, marketing and expanding programs to increase card usage, identifying new-to-plastic industries and businesses as they form, working with commercial buyers and suppliers to establish B2B acceptance, increasing coverage in priority international cities and countries and key industry verticals, and executing on our plans in China and for continued technological developments, including capabilities that allow for greater digital integration and modernization of our authorization platform;

• our ability to stay on the leading edge of technology and digital payment and travel solutions, which will depend in part on our success in evolving our products and processes for the digital environment, developing new features in the Amex app and enhancing our digital channels, building partnerships and executing programs with other companies, effectively utilizing artificial intelligence and increasing automation to address servicing and other customer needs, and supporting the

use of our products as a means of payment through online and mobile channels, all of which will be impacted by investment levels, new product innovation and development and infrastructure to support new products, services, benefits and partner integrations;

• our ability to grow internationally, which could be impacted by regulation and business practices, such as those capping interchange or other fees, mandating network access, favoring local competitors or prohibiting or limiting foreign ownership of certain businesses;

• our ability to expand merchant coverage globally and our success, as well as the success of OptBlue merchant processors and network partners, in signing merchants to accept American Express, which will depend on, among other factors, the value propositions offered to merchants and merchant acquirers for card acceptance, the awareness and willingness of Card

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

• our ability to successfully invest in and compete with respect to technological developments and digital payment and travel solutions, which will depend in part on our success in evolving our products and processes for the digital environment, developing new features in the Amex app and enhancing our digital channels, building partnerships and executing programs with other companies, effectively utilizing artificial intelligence and machine learning and increasing automation to address servicing and other customer needs, and supporting the use of our products as a means of payment through online and mobile channels, all of which will be impacted by investment levels, new product innovation and development and infrastructure to support new products, services, benefits and partner integrations;

• our ability to grow internationally, which could be impacted by regulation and business practices, such as those capping interchange or other fees, mandating network access or data localization, favoring local competitors or prohibiting or limiting foreign ownership of certain businesses;

our inability to tailor products and services to make them attractive to local customers;

competitors with more scale, local experience and established relationships with relevant customers, regulators and industry participants;

the success of our network partners in acquiring Card Members and/or merchants;

political or economic instability or regional hostilities, including as a result of the war in Ukraine and related geopolitical impacts, which could affect commercial activities;

our ability to tailor products and services to make them attractive to local customers;

and competitors with more scale and experience and more established relationships with relevant customers, regulators and industry participants;

political or economic instability or regional hostilities, including as a result of the Ukraine and Israel wars;

• a failure in or breach of our operational or security systems, processes or infrastructure, or those of third parties, including as a result of cyberattacks, which could compromise the confidentiality, integrity, privacy and/or security of data, disrupt our operations, reduce the use and acceptance of American Express cards and lead to regulatory scrutiny, litigation, remediation and response costs, and reputational harm;

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• our ability to implement our ESG strategies and initiatives, which depend in part on the amount and efficacy of our investments in product innovations, marketing campaigns, our supply chain and operations, and philanthropic, colleague and community programs;

customer behaviors;

customer preferences and behaviors;

and the cost and availability of solutions for a low carbon economy;

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limit our ability to pursue business opportunities or conduct business in certain jurisdictions;

require changes to business practices or alter our relationships with Card Members, partners, merchants and other third parties, including our ability to continue certain cobrand relationships in the EU;

exert further pressure on the merchant discount rates and our network business;

result in increased costs related to regulatory oversight, litigation-related settlements, judgments or expenses, restitution to Card Members or the imposition of fines or civil money penalties;

require changes to business practices or governance, or alter our relationships with Card Members, partners, merchants and other third parties, including our ability to continue certain cobrand relationships in the EU;

exert further pressure on merchant discount rates and our network business;

alter the competitive landscape;

result in increased costs related to regulatory oversight and compliance, litigation-related settlements, judgments or expenses, restitution to Card Members or the imposition of fines or monetary penalties;

materially affect capital or liquidity requirements, results of operations or ability to pay dividends;

or result in harm to the American Express brand;

• changes in the financial condition and creditworthiness of our business partners, such as bankruptcies, restructurings or consolidations, including of cobrand partners and merchants that represent a significant portion of our business, such as the airline industry, network partners or financial institutions that we rely on for routine funding and liquidity, which could materially affect our financial condition or results of operations;

• factors beyond our control such as a further escalation of the war in Ukraine and other military conflicts, future waves of COVID-19 cases, the severity and contagiousness of new variants, severe weather conditions, natural disasters, power loss, disruptions in telecommunications, terrorism and other catastrophic events, any of which could significantly affect demand for and spending on American Express cards, delinquency rates, loan and receivable balances and other aspects of our business and results of operations or disrupt our global network systems and ability to process transactions.

A further description of these uncertainties and other risks can be found in “Risk Factors” above and our other reports filed with the SEC.

• changes in the financial condition and creditworthiness of our business partners, such as bankruptcies, restructurings or consolidations, including of cobrand partners, merchants that represent a significant portion of our business, network partners or financial institutions that we rely on for routine funding and liquidity, which could materially affect our financial condition or results of operations;

• factors beyond our control such as global economic and business conditions, consumer and business spending generally, unemployment rates, geopolitical conditions, including further escalations or widening of ongoing military conflicts, adverse developments affecting third parties, including other financial institutions, merchants or vendors, as well as severe weather conditions, natural disasters, power loss, disruptions in telecommunications, health pandemics, terrorism and other catastrophic events, any of which could significantly affect demand for and spending on American Express cards, delinquency rates, loan and receivable balances, deposit levels and other aspects of our business and results of operations or disrupt our global network systems and ability to process transactions.

A further description of these uncertainties and other risks can be found in “Risk Factors” and our other reports filed with the SEC.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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What changed 10-K

Item 7. Management’s Discussion and Analysis