AMERICAN EXPRESS CO 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A) EXECUTIVE OVERVIEW BUSINESS INTRODUCTION We are a globally integrated payments company with four reportable operating segments: U.S. Consumer Services (USCS), Commercial Services (CS), International Card Services (ICS) and Global Merchant and Network Services (GMNS). Corporate functions and certain other businesses and operations are included in Corporate & Other. Our range of products and services includes: • Credit card, charge card, banking and other payment and financing products • Merchant acquisition and processing, servicing and settlement, fraud prevention, and point-of-sale marketing and information products and services for merchants • Network services • Travel and lifestyle services • Expense management products and services • Other services, such as the design and operation of customer loyalty programs The following types of revenue are generated from our various products and services: • Discount revenue, our largest revenue source, primarily 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. The amount of fees charged for accepting our cards as payment, or merchant discount, varies with, among other factors, the industry in which the merchant conducts business, the merchant’s overall American Express-related transaction volume, the method of payment, the settlement terms with the merchant, the method of submission of transactions and, in certain instances, the geographic scope for the card acceptance agreement between the merchant and us (e.g., local or global) and the transaction amount. In some instances, an additional flat transaction fee is assessed as part of the merchant discount, and additional fees may be charged such as a variable fee for card-not-present transactions or for transactions using cards issued outside the United States at merchants located in the United States; • Interest income, principally represents interest earned on outstanding loan balances; • Net card fees, represent revenue earned from annual card membership fees, which vary based on the type of card and the number of cards for each account; • Service fees and other revenue, primarily represent service fees earned from merchants and other customers, foreign currency-related fees charged to Card Members, Card Member delinquency fees, travel commissions and fees, and income (losses) from our investments in which we have significant influence; and • 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” below for the definitions of certain key terms and related information appearing within this Form 10-K and “Critical Accounting Estimates” below for a discussion of certain of our accounting policies requiring significant management assumptions and judgements. NON-GAAP MEASURES We prepare our Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (GAAP). However, certain information included within this report constitutes non-GAAP financial measures. Our calculations of non-GAAP financial measures may differ from the calculations of similarly titled measures by other companies. 43 Table of Contents TABLE 1: SUMMARY OF FINANCIAL PERFORMANCE Years Ended December 31, Change Change (Millions, except percentages, per share amounts and where indicated) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Selected Income Statement Data Total revenues net of interest expense $ 65,949 $ 60,515 $ 52,862 $ 5,434 9 % $ 7,653 14 % Total revenues net of interest expense (FX-adjusted) (a) 60,179 52,833 5,770 10 7,682 15 Provisions for credit losses 5,185 4,923 2,182 262 5 2,741 # Total expenses 47,869 45,079 41,095 2,790 6 3,984 10 Pretax income 12,895 10,513 9,585 2,382 23 928 10 Income tax provision 2,766 2,139 2,071 627 29 68 3 Net income 10,129 8,374 7,514 1,755 21 860 11 Earnings per common share — diluted (b) $ 14.01 $ 11.21 $ 9.85 $ 2.80 25 % $ 1.36 14 % Selected Balance Sheet Data Cash and cash equivalents $ 40,640 $ 46,596 $ 33,914 $ (5,956) (13) % $ 12,682 37 % Card Member receivables 59,411 60,411 57,613 (1,000) (2) 2,798 5 Card Member loans 139,674 125,995 107,964 13,679 11 18,031 17 Customer deposits 139,413 129,144 110,239 10,269 8 18,905 17 Long-term debt $ 49,715 $ 47,866 $ 42,573 $ 1,849 4 % $ 5,293 12 % Common Share Statistics (c) Cash dividends declared per common share $ 2.80 $ 2.40 $ 2.08 $ 0.40 17 % $ 0.32 15 % Average common shares outstanding: Basic 712 735 751 (23) (3) (16) (2) Diluted 713 736 752 (23) (3) % (16) (2) % Selected Metrics and Ratios Network volumes (billions) $ 1,764.8 $ 1,680.1 $ 1,552.8 $ 85 5 % $ 127 8 % Billed business (billions) 1,550.9 1,459.6 1,338.3 91 6 121 9 Total loans and Card Member receivables (d) 208,317 193,492 170,993 14,825 8 22,499 13 Total loans and Card Member receivables (FX-adjusted) (a)(d) $ 190,826 $ 171,594 $ 17,491 9 % $ 21,898 13 % Card Member loans and receivables Net write-off rate — principal, interest and fees (e) 2.3 % 2.0 % 1.0 % Net write-off rate — principal only — consumer and small business (e)(f) 2.0 % 1.8 % 0.9 % 30+ days past due as a % of total — consumer and small business (g) 1.3 % 1.3 % 1.1 % Effective tax rate 21.5 % 20.3 % 21.6 % Return on average equity (h) 34.6 % 31.5 % 32.3 % Common Equity Tier 1 10.5 % 10.5 % 10.3 % # Denotes a variance of 100 percent or more (a) The foreign currency adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency conversion into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the current period apply to the corresponding prior year period against which such results are being compared). FX-adjusted Total revenues net of interest expense and Total loans and Card Member receivables are non-GAAP measures. 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. (b) Represents net income, less (i) earnings allocated to participating share awards of $76 million, $64 million and $57 million for the years ended December 31, 2024, 2023 and 2022, respectively, and (ii) dividends on preferred shares of $58 million, $58 million and $57 million for the years ended December 31, 2024, 2023 and 2022, respectively. Refer to Note 16 and Note 21 to the “Consolidated Financial Statements” for further details on preferred shares and earnings per common share (EPS), respectively. (c) Our common stock trades principally on The New York Stock Exchange under the trading symbol AXP. (d) Total loans reflects Card Member loans and Other loans. (e) 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. (f) A net write-off rate based on principal losses only is not available for corporate receivables due to system constraints. (g) 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. (h) Return on average equity (ROE) is calculated by dividing (i) net income for the period by (ii) average shareholders’ equity for the period. 44 Table of Contents BUSINESS PERFORMANCE Our strong results for the year reflect the momentum and earnings power of our business model and our continued investments for growth. We saw record levels of annual Card Member spending, strong new card acquisitions, excellent credit performance and disciplined expense management. Net income for the year was $10.1 billion, or $14.01 per share, compared with net income of $8.4 billion, or $11.21 per share, a year ago. Our full year results reflect the sale of Accertify Inc. (Accertify), which resulted in a gain of $531 million ($479 million after tax or $0.66 per share). Billed business grew by 6 percent, reflecting a stable spend environment for most of the year with an acceleration in the fourth quarter. This growth was broad-based across geographies and across both G&S and T&E categories. U.S. Consumer Services billed business grew by 7 percent year-over-year, with continued strength in spending by Millennial and Gen-Z Card Members as our products continue to resonate with these cohorts. Commercial Services billed business grew by 2 percent on a year-over-year basis, reflecting continued modest growth from U.S. small and mid-sized enterprise (SME) Card Members. Spending by existing U.S. SME Card Members declined slightly year-over-year, although we saw an improvement in small business sentiment in the fourth quarter and strong new card acquisitions for the year. International Card Services billed business grew by 11 percent year-over-year (14 percent on an FX-adjusted basis), driven by continued strong growth in spend across all regions and customer types outside the United States. 1 The continued global expansion of our merchant network contributed to our growth, as we added millions of new merchant locations globally in 2024 and continued to increase coverage across our top international countries. Total revenues net of interest expense increased 9 percent year-over-year (10 percent on an FX-adjusted basis). 1 Growth in billed business drove a 5 percent increase in Discount revenue, our largest revenue line. Net card fees increased 16 percent year-over-year, reflecting high levels of new card acquisitions and Card Member retention, as well as the ongoing execution of our product refresh strategy. Net interest income increased 18 percent versus the prior year, outpacing growth in Total loans and Card Member receivables of 8 percent year-over-year, primarily due to higher growth in our revolving loan balances. The growth in Total loans and Card Member receivables and revolving loan balances both moderated over the course of the year. During the fourth quarter, we reclassified $758 million of Card Member loans related to the Lowe’s small business cobrand portfolio from held for investment to held for sale (HFS). Provisions for credit losses increased, primarily driven by higher net write-offs, partially offset by a lower reserve build compared to last year. Net write-off and delinquency rates were relatively stable throughout the year and remain 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, which are generally correlated to volumes or are variable based on usage, collectively grew slightly faster than revenues as we continue to enhance our value propositions, drive Card Member engagement and acquire more Card Members on premium products. Marketing expense increased 16 percent year-over-year, as we invested at an elevated level in growth initiatives, including acquiring high spending, high credit-quality customers. During the year we acquired a record 13 million proprietary new cards. Operating expenses decreased 2 percent, primarily reflecting the gain recognized on the sale of Accertify and our continued operating expense discipline. We remain focused on driving marketing and operating expense efficiencies over time. During the year, we maintained our capital ratios within our current target range of 10 to 11 percent and returned $7.9 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 approximately 17 percent beginning with the first quarter 2025 dividend declaration. Our robust capital, funding and liquidity positions provide us with significant flexibility to maintain a strong balance sheet. Our performance continues to give us confidence in our business model and while we recognize the uncertainty of the geopolitical and macroeconomic environment and the evolving regulatory and competitive landscape, we remain committed to executing on our strategy to deliver sustainable and profitable long-term growth. See “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. 1 The foreign currency adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency conversion into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the current period apply to the corresponding prior year period against which such results are being compared). FX-adjusted revenues is a non-GAAP measure. We believe the presentation of information on a foreign currency adjusted basis is helpful to investors by making it easier to compare our performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates. 45 Table of Contents CONSOLIDATED RESULTS OF OPERATIONS The discussions in both “Consolidated Results of Operations” and “Business Segment Results of Operations” provide commentary on the variances for the year ended December 31, 2024 compared to the year ended December 31, 2023, as presented in the accompanying tables. For a discussion of the financial condition and results of operations for 2023 compared to 2022, please refer to Part II, Item 7. “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, 2023, filed with the SEC on February 9, 2024. TABLE 2: TOTAL REVENUES NET OF INTEREST EXPENSE SUMMARY Years Ended December 31, Change Change (Millions, except percentages) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Discount revenue $ 35,192 $ 33,416 $ 30,739 $ 1,776 5 % $ 2,677 9 % Net card fees 8,449 7,255 6,070 1,194 16 1,185 20 Service fees and other revenue 5,129 5,005 4,521 124 2 484 11 Processed revenue 1,636 1,705 1,637 (69) (4) 68 4 Total non-interest revenues 50,406 47,381 42,967 3,025 6 4,414 10 Total interest income 23,795 19,983 12,658 3,812 19 7,325 58 Total interest expense 8,252 6,849 2,763 1,403 20 4,086 # Net interest income 15,543 13,134 9,895 2,409 18 3,239 33 Total revenues net of interest expense $ 65,949 $ 60,515 $ 52,862 $ 5,434 9 % $ 7,653 14 % # Denotes a variance of 100 percent or more TOTAL REVENUES NET OF INTEREST EXPENSE Discount revenue increased, primarily driven by an increase in billed business of 6 percent. See Tables 5 and 6 for more details on billed business performance. Net card fees increased, primarily driven by growth in our premium card portfolios. See Table 5 for more details on proprietary new card acquisitions, proprietary cards-in-force and average fee per card. Service fees and other revenue increased, primarily driven by increases in foreign exchange related revenues associated with Card Member cross-currency spending, loyalty coalition-related fees and merchant service fees, partially offset by Accertify revenues included in the prior year. Processed revenue decreased, and was relatively flat on an FX-adjusted basis. 2 See Tables 5 and 6 for more details on processed volume performance. Interest income increased, primarily driven by growth in revolving loan balances and higher interest rates. Interest expense increased, primarily driven by higher interest rates paid on, and growth in, customer deposits and long-term debt. 2 Refer to footnote 1 on page 45 for details regarding foreign currency adjusted information. 46 Table of Contents TABLE 3: PROVISIONS FOR CREDIT LOSSES SUMMARY Years Ended December 31, Change Change (Millions, except percentages) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Card Member loans Net write-offs $ 3,515 $ 2,486 $ 1,066 $ 1,029 41 % $ 1,420 # % Reserve build (release) (a) 594 1,353 448 (759) (56) 905 # Total 4,109 3,839 1,514 270 7 2,325 # Card Member receivables Net write-offs 773 937 462 (164) (18) 475 # Reserve build (release) (a) 1 (57) 165 58 # (222) # Total 774 880 627 (106) (12) 253 40 Other Net write-offs — Other loans 187 107 22 80 75 85 # Net write-offs — Other receivables 44 25 15 19 76 10 67 Reserve build (release) — Other loans (a) 69 67 7 2 3 60 # Reserve build (release) — Other receivables (a) 2 5 (3) (3) (60) 8 # Total 302 204 41 98 48 163 # Total provisions for credit losses $ 5,185 $ 4,923 $ 2,182 $ 262 5 % $ 2,741 # % # Denotes a variance of 100 percent or more (a) Refer to the “Glossary of Selected Terminology” below for a definition of reserve build (release). PROVISIONS FOR CREDIT LOSSES Card Member loans provision for credit losses increased, primarily due to higher net write-offs driven by growth in loans outstanding, 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. The reserve build in the prior year was primarily driven by an increase in loans outstanding and higher delinquencies. Card Member receivables provision for credit losses decreased, primarily due to lower net write-offs, partially offset by a reserve release in the prior year. The reserve release in the prior year was primarily driven by lower delinquencies, partially offset by an increase in receivables outstanding. Other provision for credit losses increased, primarily due to higher net write-offs. 47 Table of Contents TABLE 4: EXPENSES SUMMARY Years Ended December 31, Change Change (Millions, except percentages) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Card Member rewards $ 16,599 $ 15,367 $ 14,002 $ 1,232 8 % $ 1,365 10 % Business development 5,886 5,657 4,943 229 4 714 14 Card Member services 4,782 3,968 2,959 814 21 1,009 34 Marketing 6,040 5,213 5,458 827 16 (245) (4) Salaries and employee benefits 8,198 8,067 7,252 131 2 815 11 Other, net 6,364 6,807 6,481 (443) (7) 326 5 Total expenses $ 47,869 $ 45,079 $ 41,095 $ 2,790 6 % $ 3,984 10 % EXPENSES Card Member rewards expense increased, driven by increases in Membership Rewards and cash back rewards expenses, collectively, of $705 million, and cobrand rewards expense of $527 million, all of which were primarily driven by higher billed business. In the second half of the year, the increase in Membership Rewards expense was also driven by an increase in the Ultimate Redemption Rate (URR) and slightly higher redemption costs reflecting a shift in the mix of Card Member redemptions. The Membership Rewards URR for current program participants was 96 percent (rounded down) at both December 31, 2024 and 2023. Business development expense increased, primarily due to increased partner payments driven by higher network volumes, partially offset by lower client incentives and a prior-year charge related to revenue allocated to a joint venture partner. Card Member services expense increased, primarily due to growth in premium card accounts, contributing to a higher usage of travel-related benefits. Marketing expense increased, reflecting higher levels of spending on customer acquisition and other growth initiatives. Salaries and employee benefits expense increased, primarily driven by higher incentive and compensation costs, partially offset by lower restructuring costs. Other expenses decreased, primarily driven by the gain recognized on the sale of Accertify, foreign exchange-related gains and net gains on Amex Ventures investments, partially offset by an increase in legal reserves, higher professional service costs and a charge associated with an increase in international non-income tax reserves. 48 Table of Contents INCOME TAXES The effective tax rate was 21.5 percent and 20.3 percent for 2024 and 2023, respectively. The increase in the effective tax rate primarily reflected discrete tax benefits in the prior year. TABLE 5: SELECTED CARD-RELATED STATISTICAL INFORMATION Change Change Years Ended December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Network volumes (billions) $ 1,764.8 $ 1,680.1 $ 1,552.8 5 % 8 % Billed business $ 1,550.9 $ 1,459.6 $ 1,338.3 6 9 Processed volumes $ 213.9 $ 220.5 $ 214.5 (3) 3 Cards-in-force (millions) 146.5 141.2 133.3 4 6 Proprietary cards-in-force 83.6 80.2 76.7 4 5 Basic cards-in-force (millions) 123.3 118.7 111.5 4 6 Proprietary basic cards-in-force 64.3 61.7 59.1 4 4 Average proprietary basic Card Member spending (dollars) $ 24,608 $ 24,059 $ 23,496 2 2 Average fee per card (dollars) (a) $ 103 $ 92 $ 82 12 % 12 % Proprietary new cards acquired (millions) 13.0 12.2 12.5 Discount revenue as a % of Billed business 2.27% 2.29% 2.30% (a) Average fee per card is computed on an annualized basis based on proprietary Net card fees divided by average proprietary total cards-in-force. TABLE 6: NETWORK VOLUMES-RELATED STATISTICAL INFORMATION 2024 2023 Year over Year Percentage Increase (Decrease) Percentage Increase (Decrease) Assuming No Changes in FX Rates (a) Year over Year Percentage Increase (Decrease) Percentage Increase (Decrease) Assuming No Changes in FX Rates (a) Network volumes 5 % 6 % 8 % 9 % Total billed business 6 7 9 9 U.S. Consumer Services 7 10 Commercial Services 2 2 3 3 International Card Services 11 14 17 18 Processed volumes (3) — 3 6 Merchant industry billed business metrics G&S spend (73% and 72% of billed business for 2024 and 2023, respectively) 7 6 6 6 T&E spend (27% and 28% of billed business for 2024 and 2023, respectively) 5 % 8 % 19 % 19 % (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). 49 Table of Contents TABLE 7: SELECTED CREDIT-RELATED STATISTICAL INFORMATION As of or for the Years Ended December 31, Change Change (Millions, except percentages) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Card Member loans and receivables: Net write-off rate — principal, interest and fees (a) 2.3 % 2.0 % 1.0 % Net write-off rate — principal only — consumer and small business (a)(b) 2.0 % 1.8 % 0.9 % 30+ days past due as a % of total — consumer and small business (c) 1.3 % 1.3 % 1.1 % Card Member loans: Card Member loans $ 139,674 $ 125,995 $ 107,964 11 % 17 % Credit loss reserves: Beginning balance $ 5,118 $ 3,747 $ 3,305 37 13 Provisions — principal, interest and fees 4,109 3,839 1,514 7 # Net write-offs — principal less recoveries (2,894) (2,043) (837) 42 # Net write-offs — interest and fees less recoveries (621) (443) (229) 40 93 Other (d) (33) 18 (6) # # Ending balance $ 5,679 $ 5,118 $ 3,747 11 37 % of loans 4.1 % 4.1 % 3.5 % % of past due 288 % 297 % 348 % Average loans $ 130,758 $ 114,816 $ 95,369 14 20 Net write-off rate — principal, interest and fees (a) 2.7 % 2.2 % 1.1 % Net write-off rate — principal only (a) 2.2 % 1.8 % 0.9 % 30+ days past due as a % of total 1.4 % 1.4 % 1.0 % Card Member receivables: Card Member receivables $ 59,411 $ 60,411 $ 57,613 (2) 5 Credit loss reserves: Beginning balance $ 174 $ 229 $ 64 (24) # Provisions — principal and fees 774 880 627 (12) 40 Net write-offs — principal and fees less recoveries (773) (937) (462) (18) # Other (d) (4) 2 — # — Ending balance $ 171 $ 174 $ 229 (2) % (24) % % of receivables 0.3 % 0.3 % 0.4 % Net write-off rate — principal and fees (a) 1.3 % 1.6 % 0.8 % Net write-off rate — principal only — consumer and small business (a)(b) 1.5 % 1.8 % 0.9 % 30+ days past due as a % of total — consumer and small business (c) 0.9 % 1.1 % 1.3 % # Denotes a variance of 100 percent or more (a) We present a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, as our practice is to include uncollectible interest and/or fees as part of our total provision for credit losses, a net write-off rate including principal, interest and/or fees is also presented. (b) A net write-off rate based on principal losses only is not available for corporate receivables due to system constraints. (c) For corporate receivables, delinquency data is tracked based on days past billing status rather than days past due. Refer to Table 12 for 90+ days past billing metrics for corporate receivables. (d) Other includes foreign currency translation adjustments. 50 Table of Contents TABLE 8: NET INTEREST YIELD ON AVERAGE CARD MEMBER LOANS Years Ended December 31, (Millions, except percentages) 2024 2023 2022 Net interest income $ 15,543 $ 13,134 $ 9,895 Exclude: Interest expense not attributable to our Card Member loan portfolio (a) 3,599 2,943 1,268 Interest income not attributable to our Card Member loan portfolio (b) (3,599) (2,896) (1,023) Adjusted net interest income (c) $ 15,543 $ 13,181 $ 10,140 Average Card Member loans including loans held for sale (d) $ 130,817 $ 114,816 $ 95,369 Net interest income divided by average Card Member loans (c) 11.9 % 11.4 % 10.4 % Net interest yield on average Card Member loans (c) 11.9 % 11.5 % 10.6 % (a) Primarily represents interest expense attributable to maintaining our corporate liquidity pool and funding Card Member receivables. (b) Primarily represents interest income attributable to Other loans, interest-bearing deposits and the fixed income investment portfolios. (c) Adjusted net interest income and net interest yield on average Card Member loans are non-GAAP measures. Refer to 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. Net interest yield on average Card Member loans reflects adjusted net interest income divided by average Card Member loans, computed on an annualized basis. Net interest income divided by average Card Member loans, computed on an annualized basis, a GAAP measure, includes elements of total interest income and total interest expense that are not attributable to the Card Member loan portfolio, and thus is not representative of net interest yield on average Card Member loans. (d) For purposes of the calculation of net interest yield on Card Member loans, average loans includes loans held for sale (HFS) as we continue to recognize interest income on these loans until they are sold. Refer to Note 1 to the Consolidated Financial Statements for further information on loans HFS. 51 Table of Contents BUSINESS SEGMENT RESULTS OF OPERATIONS 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 “Business” for additional discussion of products and services that comprise each segment. Results of the reportable operating segments generally treat each segment as a stand-alone business. The management reporting process that derives these results allocates revenue and expense using various methodologies as described below. TOTAL REVENUES NET OF INTEREST EXPENSE We allocate discount revenue and certain other revenues among segments using a transfer pricing methodology. Within the USCS, CS and ICS segments, discount revenue generally reflects the issuer component of the overall discount revenue generated by each segment’s Card Members; within the GMNS segment, discount revenue generally reflects the network and acquirer component of the overall discount revenue being allocated. Net card fees, processed revenue and certain other revenues are directly attributable to the segment in which they are reported. Interest and fees on loans and certain investment income is directly attributable to the segment in which it is reported. Interest expense represents an allocated funding cost based on a combination of segment funding requirements and internal funding rates. PROVISIONS FOR CREDIT LOSSES The provisions for credit losses are directly attributable to the segment in which they are reported. EXPENSES Card Member rewards and Card Member services expenses are included in each segment based on the actual expenses incurred. Business development and Marketing expenses are included in each segment based on the actual expenses incurred. Global brand advertising is primarily allocated to the segments based on the relative levels of revenue. Salaries and employee benefits and other expenses reflect both costs incurred directly within each segment, as well as allocated expenses. The allocated expenses include service costs, which primarily reflect salaries and benefits associated with our technology and customer servicing groups, and overhead expenses. 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. 52 Table of Contents U.S. CONSUMER SERVICES TABLE 9: USCS SELECTED INCOME STATEMENT DATA Years Ended December 31, Change Change (Millions, except percentages) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Revenues Non-interest revenues $ 20,137 $ 18,464 $ 16,440 $ 1,673 9 % $ 2,024 12 % Interest income 14,430 12,336 8,457 2,094 17 3,879 46 Interest expense 3,140 2,684 983 456 17 1,701 # Net interest income 11,290 9,652 7,474 1,638 17 2,178 29 Total revenues net of interest expense 31,427 28,116 23,914 3,311 12 4,202 18 Provisions for credit losses 3,029 2,855 1,021 174 6 1,834 # Total revenues net of interest expense after provisions for credit losses 28,398 25,261 22,893 3,137 12 2,368 10 Expenses Card Member rewards, business development and Card Member services 14,329 12,808 10,791 1,521 12 2,017 19 Marketing 3,051 2,585 2,744 466 18 (159) (6) Salaries and employee benefits and other operating expenses 4,641 4,435 3,958 206 5 477 12 Total expenses 22,021 19,828 17,493 2,193 11 2,335 13 Pretax segment income $ 6,377 $ 5,433 $ 5,400 $ 944 17 % $ 33 1 % # Denotes a variance of 100 percent or more USCS issues a wide range of proprietary consumer cards and provides services to U.S. consumers, including travel and lifestyle services as well as banking and non-card financing products. USCS also manages our dining platform that provides digital tools for restaurants and reservation bookings for diners. TOTAL REVENUES NET OF INTEREST EXPENSE Non-interest revenues increased across all revenue categories, primarily driven by higher Discount revenue and Net card fees. Discount revenue increased 7 percent, primarily driven by an increase in U.S. consumer billed business. See Tables 5, 6 and 10 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 5 percent, primarily driven by revenue from the sale of reward points and higher delinquency fees, partially offset by lower travel commissions and fees from our Amex Travel business. 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 due to segment net asset growth and higher interest rates. PROVISIONS FOR CREDIT LOSSES 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. The reserve build in the prior year was primarily driven by an increase in loans outstanding and higher delinquencies. Card Member receivables provision for credit losses decreased, primarily due to a higher reserve release and lower net write-offs in the current year. The reserve releases in both the current and prior years were primarily driven by lower delinquencies and a decrease in receivables outstanding. Other provision for credit losses increased, primarily due to higher net write-offs and a higher reserve build in the current year. The reserve builds in both the current and prior years were primarily driven by increases in Other loans outstanding. 53 Table of Contents EXPENSES Total expenses increased, primarily driven by higher Card Member rewards, Card Member services and Marketing expenses. Card Member rewards expense increased, primarily driven by higher billed business. In the second half of the year, the increase in Membership Rewards expense was also driven by an increase in the URR and slightly higher redemption costs reflecting a shift in the mix of Card Member redemptions. Business development expense increased, primarily due to increased partner payments driven by higher billed business. Card Member services expense increased, primarily due to growth in premium card accounts, contributing to a higher usage of travel-related benefits. Marketing expense increased, reflecting higher levels of spending on customer acquisition and other growth initiatives. Salaries and employee benefits and other expenses increased, primarily due to an increase in allocated service costs. 54 Table of Contents TABLE 10: USCS SELECTED STATISTICAL INFORMATION As of or for the Years Ended December 31, Change Change (Millions, except percentages and where indicated) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Billed business (billions) $ 654.8 $ 610.8 $ 553.0 7 % 10 % Proprietary cards-in-force 46.3 43.8 41.7 6 5 Proprietary basic cards-in-force 32.5 30.7 29.2 6 5 Average proprietary basic Card Member spending (dollars) $ 20,707 $ 20,303 $ 19,514 2 4 Total segment assets $ 114,228 $ 107,158 $ 94,444 7 13 Card Member loans: Total loans $ 92,632 $ 83,207 $ 72,660 11 15 Average loans $ 85,264 $ 75,975 $ 63,720 12 19 Net write-off rate — principal, interest and fees (a) 2.7 % 2.2 % 1.1 % Net write-off rate — principal only (a) 2.2 % 1.7 % 0.9 % 30+ days past due as a % of total 1.4 % 1.4 % 1.0 % Calculation of Net Interest Yield on Average Card Member Loans: Net interest income $ 11,290 $ 9,652 $ 7,474 Exclude: Interest expense not attributable to our Card Member loan portfolio (b) 198 192 139 Interest income not attributable to our Card Member loan portfolio (c) (557) (386) (228) Adjusted net interest income (d) $ 10,931 $ 9,458 $ 7,385 Average Card Member loans $ 85,264 $ 75,975 $ 63,720 Net interest income divided by average Card Member loans (d) 13.2 % 12.7 % 11.7 % Net interest yield on average Card Member loans (d) 12.8 % 12.4 % 11.6 % Card Member receivables: Total receivables $ 14,419 $ 14,789 $ 14,263 (3) % 4 % Net write-off rate — principal and fees (a) 1.2 % 1.3 % 0.6 % Net write-off rate — principal only (a) 1.1 % 1.2 % 0.6 % 30+ days past due as a % of total 0.6 % 0.8 % 0.9 % (a) Refer to Table 7 footnote (a). (b) Refer to Table 8 footnote (a). (c) Refer to Table 8 footnote (b). (d) Refer to Table 8 footnote (c). 55 Table of Contents COMMERCIAL SERVICES TABLE 11: CS SELECTED INCOME STATEMENT DATA Years Ended December 31, Change Change (Millions, except percentages) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Revenues Non-interest revenues $ 13,219 $ 12,931 $ 12,196 $ 288 2 % $ 735 6 % Interest income 4,374 3,328 2,070 1,046 31 1,258 61 Interest expense 1,734 1,483 697 251 17 786 # Net interest income 2,640 1,845 1,373 795 43 472 34 Total revenues net of interest expense 15,859 14,776 13,569 1,083 7 1,207 9 Provisions for credit losses 1,389 1,313 565 76 6 748 # Total revenues net of interest expense after provisions for credit losses 14,470 13,463 13,004 1,007 7 459 4 Expenses Card Member rewards, business development and Card Member services 6,504 6,332 6,116 172 3 216 4 Marketing 1,319 1,090 1,122 229 21 (32) (3) Salaries and employee benefits and other operating expenses 3,142 3,180 2,886 (38) (1) 294 10 Total expenses 10,965 10,602 10,124 363 3 478 5 Pretax segment income $ 3,505 $ 2,861 $ 2,880 $ 644 23 % $ (19) (1) % # Denotes a variance of 100 percent or more CS issues a wide range of proprietary corporate and small business cards and provides services to U.S. businesses, including payment and expense management, banking and non-card financing products. CS also issues proprietary corporate cards and provides services to select global corporate clients. TOTAL REVENUES NET OF INTEREST EXPENSE Non-interest revenues increased, primarily driven by higher Discount revenue and Net card fees. Discount revenue increased 2 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 12 percent, primarily driven by growth in our premium card portfolios. Service fees and other revenue decreased 7 percent, primarily driven by lower travel commissions and fees from our Amex Travel business. 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 due to segment net asset growth and higher interest rates. PROVISIONS FOR CREDIT LOSSES 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. The reserve build in the prior year was primarily driven by an increase in loans outstanding and higher delinquencies. Card Member receivables provision for credit losses decreased, primarily due to lower net write-offs, partially offset by a reserve release in the prior year. The reserve release in the prior year was primarily driven by lower delinquencies and a decrease in receivables outstanding. 56 Table of Contents EXPENSES Total expenses increased, primarily driven by higher Marketing and Card Member rewards expenses, partially offset by a decrease in Operating expenses and Business development expense. Card Member rewards expense increased, primarily driven by higher billed business and slightly higher redemption costs in the second half of the year, partially offset by a decrease in the Membership Rewards URR. Business development expense decreased, primarily due to lower client incentives, partially offset by increased partner payments due to higher billed business. Card Member services expense increased, primarily due to growth in premium card accounts, contributing to a higher usage of travel-related benefits. Marketing expense increased, reflecting higher levels of spending on customer acquisition and other growth initiatives. Salaries and employee benefits and other expenses decreased, primarily driven by a decrease in allocated service costs and lower restructuring costs, partially offset by higher compensation. 57 Table of Contents TABLE 12: CS SELECTED STATISTICAL INFORMATION As of or for the Years Ended December 31, Change Change (Millions, except percentages and where indicated) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Billed business (billions) $ 526.5 $ 516.0 $ 499.5 2 % 3 % Proprietary cards-in-force 15.4 15.4 14.9 — 3 Average Card Member spending (dollars) $ 34,130 $ 33,745 $ 35,202 1 (4) Total segment assets $ 58,969 $ 55,361 $ 51,411 7 8 Card Member loans: Total loans $ 29,647 $ 25,838 $ 21,406 15 21 Average loans $ 28,518 $ 23,877 $ 19,271 19 24 Net write-off rate — principal, interest and fees (a) 2.7 % 2.0 % 0.8 % Net write-off rate — principal only (a) 2.3 % 1.7 % 0.7 % 30+ days past due as a % of total 1.5 % 1.4 % 0.9 % Calculation of Net Interest Yield on Average Card Member Loans: Net interest income $ 2,640 $ 1,845 $ 1,373 Exclude: Interest expense not attributable to our Card Member loan portfolio (b) 765 711 430 Interest income not attributable to our Card Member loan portfolio (c) (325) (204) (89) Adjusted net interest income (d) $ 3,080 $ 2,352 $ 1,714 Average Card Member loans including loans held for sale (e) $ 28,576 $ 23,877 $ 19,271 Net interest income divided by average Card Member loans (d) 9.2 % 7.7 % 7.1 % Net interest yield on average Card Member loans (d) 10.8 % 9.9 % 8.9 % Card Member receivables: Total receivables $ 24,945 $ 26,222 $ 26,876 (5) % (2) % Net write-off rate — principal and fees (f) 1.3 % 1.5 % 0.7 % Net write-off rate — principal only (a) — small business 1.9 % 2.1 % 0.9 % 30+ days past due as a % of total — small business 1.3 % 1.5 % 1.6 % 90+ days past billing as a % of total (f) — corporate 0.4 % 0.4 % 0.6 % (a) Refer to Table 7 footnote (a). (b) Refer to Table 8 footnote (a). (c) Refer to Table 8 footnote (b). (d) Refer to Table 8 footnote (c). (e) Refer to Table 8 footnote (d). (f) For corporate receivables, delinquency data is tracked based on days past billing status rather than days past due. A Card Member account is considered 90 days past billing if payment has not been received within 90 days of the Card Member’s billing statement date. In addition, if we initiate collection procedures on an account prior to the account becoming 90 days past billing, the associated Card Member receivable balance is classified as 90 days past billing. Corporate receivables delinquency data for periods other than 90+ days past billing and the net write-off rate based on principal losses only are not available due to system constraints. 58 Table of Contents INTERNATIONAL CARD SERVICES TABLE 13: ICS SELECTED INCOME STATEMENT DATA Years Ended December 31, Change Change (Millions, except percentages) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Revenues Non-interest revenues $ 10,369 $ 9,472 $ 8,262 $ 897 9 % $ 1,210 15 % Interest income 2,331 2,076 1,453 255 12 623 43 Interest expense 1,239 1,118 654 121 11 464 71 Net interest income 1,092 958 799 134 14 159 20 Total revenues net of interest expense 11,461 10,430 9,061 1,031 10 1,369 15 Provisions for credit losses 726 727 584 (1) — 143 24 Total revenues net of interest expense after provisions for credit losses 10,735 9,703 8,477 1,032 11 1,226 14 Expenses Card Member rewards, business development and Card Member services 5,243 4,588 3,816 655 14 772 20 Marketing 1,235 1,081 1,146 154 14 (65) (6) Salaries and employee benefits and other operating expenses 3,226 3,061 2,937 165 5 124 4 Total expenses 9,704 8,730 7,899 974 11 831 11 Pretax segment income $ 1,031 $ 973 $ 578 $ 58 6 % $ 395 68 % ICS issues a wide range of proprietary consumer, small business and corporate cards outside the United States. ICS also provides services to our international customers, including travel and lifestyle services, and manages certain international joint ventures and our loyalty coalition business. TOTAL REVENUES NET OF INTEREST EXPENSE Non-interest revenues increased, primarily driven by higher Discount revenue and Net card fees. Discount revenue increased 10 percent (13 percent on an FX-adjusted basis), primarily reflecting an increase in billed business. 3 See Tables 5, 6 and 14 for more details on billed business performance. Net card fees increased 16 percent (20 percent on an FX-adjusted basis), primarily driven by growth in our premium card portfolios. 3 Service fees and other revenue increased 2 percent, primarily driven by higher foreign exchange related revenues associated with Card Member cross-currency spending and loyalty coalition-related fees, partially offset by a benefit in the prior year related to a portion of the revenue allocated to a joint venture partner as described in Business development expense below, as well as lower delinquency fees. Interest income increased, primarily driven by growth in revolving loan balances, partially offset by lower interest rates. Interest expense increased, primarily driven by a higher cost of funds due to segment net asset growth. PROVISIONS FOR CREDIT LOSSES 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 lower delinquencies. The reserve build in the prior year was primarily driven by an increase in loans outstanding, partially offset by the performance of portfolios in certain international markets. Card Member receivables provision for credit losses decreased, primarily due to lower net write-offs, partially offset by 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 receivables outstanding. The reserve release in the prior year was primarily driven by lower delinquencies, partially offset by an increase in receivables outstanding. 3 Refer to footnote 1 on page 45 for details regarding foreign currency adjusted information. 59 Table of Contents EXPENSES Total expenses increased, primarily driven by higher Card Member rewards, Card Member services and Operating expenses. Card Member rewards expense increased, primarily driven by higher billed business and an increase in the Membership Rewards URR, partially offset by lower redemption costs. Business development expense increased, primarily due to increased partner payments driven by higher billed business, partially offset by a prior-year charge related to revenue allocated to a joint venture partner. Card Member services expense increased, primarily due to growth in premium card accounts, contributing to a higher usage of travel-related benefits. Marketing expense increased, reflecting higher levels of spending on customer acquisition and other growth initiatives. Salaries and employee benefits and other expenses increased, primarily due to a charge associated with an increase in international non-income tax reserves and higher allocated service costs, partially offset by a one-time fee from a partner. 60 Table of Contents TABLE 14: ICS SELECTED STATISTICAL INFORMATION As of or for the Years Ended December 31, Change Change (Millions, except percentages and where indicated) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Billed business (billions) $ 366.9 $ 329.5 $ 281.6 11 % 17 % Proprietary cards-in-force 21.9 21.0 20.1 4 4 Proprietary basic cards-in-force 16.4 15.6 14.9 5 5 Average proprietary basic Card Member spending (dollars) $ 22,965 $ 21,550 $ 19,519 7 10 Total segment assets $ 42,879 $ 42,234 $ 36,891 2 14 Card Member loans - consumer and small business: Total loans $ 17,395 $ 16,950 $ 13,844 3 22 Average loans $ 16,976 $ 14,964 $ 12,314 13 22 Net write-off rate — principal, interest and fees (a) 2.5 % 2.5 % 1.4 % Net write-off rate — principal only (a) 2.1 % 2.1 % 1.2 % 30+ days past due as a % of total 1.2 % 1.3 % 1.2 % Calculation of Net Interest Yield on Average Card Member Loans: Net interest income $ 1,092 $ 958 $ 799 Exclude: Interest expense not attributable to our Card Member loan portfolio (b) 496 475 270 Interest income not attributable to our Card Member loan portfolio (c) (56) (62) (28) Adjusted net interest income (d) $ 1,532 $ 1,371 $ 1,041 Average Card Member loans $ 16,976 $ 14,964 $ 12,378 Net interest income divided by average Card Member loans (d) 6.4 % 6.4 % 6.5 % Net interest yield on average Card Member loans (d) 9.0 % 9.2 % 8.4 % Card Member receivables: Total receivables $ 20,047 $ 19,400 $ 16,474 3 % 18 % Net write-off rate — principal and fees (e) 1.4 % 2.1 % 1.3 % Net write-off rate — principal only (a) — consumer and small business 1.5 % 2.2 % 1.4 % 30+ days past due as a % of total — consumer and small business 0.8 % 1.0 % 1.3 % 90+ days past billing as a % of total (e) — corporate 0.4 % 0.5 % 0.5 % (a) Refer to Table 7 footnote (a). (b) Refer to Table 8 footnote (a). (c) Refer to Table 8 footnote (b). (d) Refer to Table 8 footnote (c). (e) For corporate receivables, delinquency data is tracked based on days past billing status rather than days past due. A Card Member account is considered 90 days past billing if payment has not been received within 90 days of the Card Member’s billing statement date. In addition, if we initiate collection procedures on an account prior to the account becoming 90 days past billing, the associated Card Member receivable balance is classified as 90 days past billing. Corporate receivables delinquency data for periods other than 90+ days past billing and the net write-off rate based on principal losses only are not available due to system constraints. 61 Table of Contents GLOBAL MERCHANT AND NETWORK SERVICES TABLE 15: GMNS SELECTED INCOME STATEMENT AND OTHER DATA Years Ended December 31, Change Change (Millions, except percentages and where indicated) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Revenues Non-interest revenues $ 6,729 $ 6,620 $ 6,123 $ 109 2 % $ 497 8 % Interest income 52 57 23 (5) (9) 34 # Interest expense (703) (719) (329) 16 2 (390) # Net interest income 755 776 352 (21) (3) 424 # Total revenues net of interest expense 7,484 7,396 6,475 88 1 921 14 Provisions for credit losses 42 27 7 15 56 20 # Total revenues net of interest expense after provisions for credit losses 7,442 7,369 6,468 73 1 901 14 Expenses Business development and Card Member services 1,148 1,218 1,192 (70) (6) 26 2 Marketing 411 437 419 (26) (6) 18 4 Salaries and employee benefits and other operating expenses 1,485 2,058 1,903 (573) (28) 155 8 Total expenses 3,044 3,713 3,514 (669) (18) 199 6 Pretax segment income 4,398 3,656 2,954 742 20 702 24 Network volumes (billions) 1,764.8 1,680.1 1,552.8 $ 85 5 $ 127 8 Total segment assets $ 17,712 $ 23,714 $ 20,005 (25) % 19 % # Denotes a variance of 100 percent or more GMNS operates a global payments network that processes and settles card transactions, acquires merchants and provides multi-channel marketing programs and capabilities, services and data analytics, leveraging our global integrated network. GMNS manages our partnership relationships with third-party card issuers, merchant acquirers and a prepaid reloadable and gift card program manager, licensing the American Express brand and extending the reach of the global network. TOTAL REVENUES NET OF INTEREST EXPENSE Non-interest revenues increased, primarily driven by higher Discount revenue, partially offset by lower Processed revenue. Discount revenue increased 3 percent, primarily driven by an increase in billed business, partially offset by lower average merchant discount rates. See Tables 5 and 6 for more details on billed business performance. Service fees and other revenue increased 1 percent, primarily driven by higher merchant service fees and foreign exchange-related revenues associated with Card Member cross-currency spending, largely offset by Accertify revenues included in the prior year. Processed revenue decreased 2 percent and increased 4 percent on an FX-adjusted basis. 4 GMNS receives an interest expense credit relating to internal transfer pricing due to its merchant payables. Net interest income decreased, primarily due to a lower interest expense credit, largely driven by a decrease in interest rates in international markets, partially offset by higher average merchant payables. 4 Refer to footnote 1 on page 45 for details regarding foreign currency adjusted information. 62 Table of Contents EXPENSES Total expenses decreased, primarily driven by lower Operating expenses. Business development expense decreased, primarily due to decreased partner payments driven by lower volumes from certain network issuing partners. Marketing expense decreased, reflecting lower levels of spending on merchant engagement and other growth initiatives. Salaries and employee benefits and other expenses decreased, primarily driven by the gain recognized on the sale of Accertify included in the Other, net component of operating expenses, partially offset by an increase in allocated service costs. 63 Table of Contents CORPORATE & OTHER Corporate functions and certain other businesses are included in Corporate & Other. Corporate & Other pretax loss was $2.4 billion in both 2024 and 2023. Increases in foreign exchange gains and net gains on Amex Ventures investments year-over-year were offset largely by an increase in legal reserves. CONSOLIDATED CAPITAL RESOURCES AND LIQUIDITY Our balance sheet management objectives are to maintain: • A solid and flexible equity capital profile; • A broad, deep and diverse set of funding sources to finance our assets and meet operating requirements; and • Liquidity programs that enable us to continuously meet expected future financing obligations and business requirements for at least a twelve-month period under a variety of adverse circumstances. We continue to see volatility in the capital markets due to a variety of factors and manage our balance sheet to reflect evolving circumstances. CAPITAL STRATEGY We believe capital allocated to growing businesses with a return on risk-adjusted equity in excess of our costs will generate shareholder value. Our objective is to retain sufficient levels of capital generated through net income and other sources, such as the issuance of subordinated debt and preferred shares, as well as the exercise of stock options by colleagues, to maintain a strong balance sheet, provide flexibility to support future business growth and distribute excess capital to shareholders through dividends and share repurchases. See “Dividends and Share Repurchases” below. The level and composition of our consolidated capital position are determined through our Internal Capital Adequacy Assessment Process, which takes into account our business activities, as well as marketplace conditions and requirements or expectations of credit rating agencies, regulators and shareholders, among others. As a bank holding company, we are subject to regulatory requirements administered by the U.S. 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. Failure to maintain minimum regulatory capital levels at American Express or our U.S. 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 our minimum regulatory requirements, specifically within a 10 to 11 percent target range for American Express Company’s Common Equity Tier 1 (CET1) risk-based capital ratio. We maintain certain flexibility to shift capital across our businesses as appropriate. For example, we may infuse additional capital into subsidiaries to maintain capital at targeted levels in consideration of debt ratings and regulatory requirements. These infused amounts can affect the capital and liquidity positions at American Express Company or at our subsidiaries. We report our capital ratios using the Basel III capital definitions and the Basel III standardized approach for calculating risk-weighted assets. As discussed above, we became a Category III firm in the third quarter of 2024 and thus are subject to a CET1 countercyclical capital buffer requirement (if enacted by the Federal Reserve) and a minimum supplementary leverage ratio. See “Supervision and Regulation — Capital and Liquidity Regulation” under “Business” for more information. 64 Table of Contents The following table presents our regulatory risk-based capital and leverage ratios and those of AENB, as of December 31, 2024: TABLE 16: REGULATORY RISK-BASED CAPITAL AND LEVERAGE RATIOS Effective Minimum (a) Ratios as of December 31, 2024 Risk-Based Capital Common Equity Tier 1 7.0 % American Express Company 10.5 % American Express National Bank 11.6 Tier 1 8.5 American Express Company 11.2 American Express National Bank 11.6 Total 10.5 American Express Company 13.2 American Express National Bank 13.2 Tier 1 Leverage 4.0 American Express Company 9.8 American Express National Bank 9.6 Supplementary Leverage Ratio 3.0 % American Express Company 8.3 American Express National Bank 8.0 % (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 “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, 2024: TABLE 17: REGULATORY RISK-BASED CAPITAL COMPONENTS AND RISK-WEIGHTED ASSETS American Express Company ($ in Billions) December 31, 2024 Risk-Based Capital Common Equity Tier 1 $ 24.9 Tier 1 Capital 26.4 Tier 2 Capital 4.7 Total Capital 31.1 Risk-Weighted Assets 235.8 Average Total Assets to calculate the Tier 1 Leverage Ratio 268.8 Total Leverage Exposure to calculate the Supplementary Leverage Ratio $ 317.0 The following are definitions for our regulatory risk-based capital and leverage ratios, which are calculated as per standard regulatory guidance: Risk-Weighted Assets — Assets are weighted for risk according to a formula used by the Federal Reserve to conform to capital adequacy guidelines. On- and off-balance sheet items are risk weighted, with off-balance sheet items converted to balance sheet equivalents, using risk conversion factors, before being assigned a risk weight. Off-balance sheet exposures comprise a minimal part of the total risk-weighted assets. Common Equity Tier 1 Risk-Based Capital Ratio — Calculated as CET1 capital, divided by risk-weighted assets. CET1 capital is common shareholders’ equity, adjusted for ineligible goodwill and intangible assets and certain deferred tax assets. CET1 capital is also adjusted for the CECL final rules, as described below. 65 Table of Contents Tier 1 Risk-Based Capital Ratio — Calculated as Tier 1 capital divided by risk-weighted assets. Tier 1 capital is the sum of CET1 capital, preferred shares and third-party non-controlling interests in consolidated subsidiaries, adjusted for capital held by insurance subsidiaries. We have $1.6 billion of preferred shares outstanding to help address a portion of the Tier 1 capital requirements in excess of common equity requirements. See Note 16 to the “Consolidated Financial Statements” for additional information on our preferred shares. 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 allowable allowance for credit losses adjusted for the CECL final rules, and $1,750 million of eligible subordinated notes, adjusted for capital held by insurance subsidiaries. The $1,750 million of eligible subordinated notes includes the $500 million subordinated debt issued in April 2024, the $500 million subordinated debt issued in July 2023 and the $750 million subordinated debt issued in May 2022. Tier 1 Leverage Ratio — Calculated as Tier 1 capital divided by average total consolidated assets for the most recent quarter. Supplementary Leverage Ratio — Calculated as Tier 1 capital divided by total leverage exposure. Total leverage exposure includes total average on-balance sheet assets and certain off-balance sheet exposures, less amounts permitted to be deducted from Tier 1 capital. 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, 2025, we have phased in 100 percent of such amount. We continue to include accumulated other comprehensive income (loss) in regulatory capital. We participated in the Federal Reserve’s supervisory stress tests in 2024. We submitted our annual capital plan to the Federal Reserve in April 2024. On August 28, 2024, the Federal Reserve confirmed our SCB of 2.5 percent, which resulted in a minimum CET1 ratio of 7 percent, effective October 1, 2024 to September 30, 2025. DIVIDENDS AND SHARE REPURCHASES We return capital to common shareholders through dividends and share repurchases. The share repurchases reduce common shares outstanding and generally more than offset the issuance of new shares as part of employee compensation plans. During the year ended December 31, 2024, we returned $7.9 billion to our shareholders in the form of share repurchases of $5.9 billion and common stock dividends of $2.0 billion. We repurchased 23.9 million common shares at an average price of $242.65 in 2024. These dividend and share repurchase amounts collectively represent approximately 76 percent of total capital generated during the year. We plan to increase the regular quarterly dividend on our common shares outstanding by 17 percent, from 70 cents to 82 cents per share, beginning with the first quarter 2025 dividend declaration. In addition, during the year ended December 31, 2024, we paid $58 million in dividends on non-cumulative perpetual preferred shares outstanding. Refer to Note 16 to the “Consolidated Financial Statements” for additional information on our preferred shares. Our decisions on capital distributions depend on various factors, including: our capital levels and regulatory capital requirements; regulatory guidance or restrictions; actual and forecasted business results; economic and market conditions; revisions to, or revocation of, the Federal Reserve’s authorization of our capital plan; and the supervisory stress test process. 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. 66 Table of Contents FUNDING STRATEGY Our principal funding objective is to maintain broad and well-diversified funding sources to allow us to finance our global businesses and to maintain a strong liquidity profile. Our funding strategy and activities are integrated into our asset-liability management activities. We have in place a funding policy covering American Express Company and all of our subsidiaries. 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. In addition, we maintain a liquidity position to meet regulatory requirements and support our business activities. We aim to satisfy these financing needs with a diverse set of funding sources. The diversity of funding sources by type of instrument, by tenor and by investor base, among other factors, mitigates the impact of disruptions in any one type of instrument, tenor or investor. We seek to achieve diversity and cost efficiency in our funding sources by maintaining scale and market relevance in deposits, unsecured debt and asset securitizations and access to secured borrowing facilities and a committed bank credit facility. In particular, we are focused on continuing to grow our direct deposit program as a funding source. 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 withdrawals of deposits by our customers, the maturities of debt outstanding and related interest payments. In executing our funding plan, we aim to maintain a balanced debt maturity profile with an appropriate mix of short-term and long-term refinancing requirements. FUNDING PROGRAMS AND ACTIVITIES We had the following customer deposits and consolidated debt outstanding as of December 31: TABLE 18: SUMMARY OF CUSTOMER DEPOSITS AND CONSOLIDATED DEBT (Billions) 2024 2023 Customer deposits $ 139.4 $ 129.1 Short-term borrowings 1.4 1.3 Long-term debt 49.7 47.9 Total customer deposits and debt $ 190.5 $ 178.3 We may redeem from time to time certain debt securities prior to the original contractual maturity dates in accordance with the optional redemption provisions of those debt securities. Our funding plan for the full year 2025 includes, among other sources, approximately $9.0 billion to $13.0 billion of unsecured term debt issuance and approximately $6.0 billion to $10.0 billion of secured term debt issuance. Actual funding activities can vary from our plans due to various factors, such as future business growth, the impact of global economic, political and other events on market capacity and funding needs, demand for securities offered by us, regulatory changes, ability to securitize and sell loans and receivables, and the performance of loans and receivables previously sold in securitization transactions. Many of these factors are beyond our control. Our equity capital and funding strategies are designed, among other things, to maintain appropriate and stable unsecured debt ratings from the major credit rating agencies: Moody’s Investor Services (Moody’s), Standard & Poor’s (S&P) and Fitch Ratings (Fitch). Such ratings help support our access to cost-effective unsecured funding as part of our overall funding strategy. Our asset securitization activities are rated separately. 67 Table of Contents TABLE 19: UNSECURED DEBT RATINGS American Express Entity Moody’s S&P Fitch American Express Company Long Term A2 A- A Short Term N/R A-2 F1 Outlook Stable Stable Stable American Express Travel Related Services Company, Inc. Long Term A2 A A Short Term P-1 A-1 F1 Outlook Stable Stable Stable American Express National Bank Long Term A3 A A Short Term P-1 A-1 F1 Outlook Stable Stable Stable American Express Credit Corporation Long Term A2 A A Short Term N/R N/R N/R Outlook Stable Stable Stable These ratings are not a recommendation to buy or hold any of our securities and they may be revised or revoked at any time at the sole discretion of the rating organization. Downgrades in the ratings of our unsecured debt or asset securitization program securities could result in higher funding costs, as well as higher fees related to borrowings under our unused credit facilities. Declines in credit ratings could also reduce our borrowing capacity in the unsecured debt and asset securitization capital markets. We believe our funding mix, including the proportion of U.S. direct deposits insured by the FDIC to total funding, should reduce the impact that credit rating downgrades would have on our funding capacity and costs. In August, 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 We offer deposits within our U.S. bank subsidiary, AENB. These funds are currently insured up to an amount that is at least $250,000 per depositor, per ownership category through the FDIC; as of December 31, 2024, approximately 92 percent of these deposits were insured. Our ability to obtain deposit funding and offer competitive interest rates is dependent on, among other factors, the capital level of AENB. The direct deposit program offered by AENB is our primary deposit product channel, which makes FDIC-insured high-yield savings account, certificates of deposit (CDs), business checking and consumer rewards checking account products available directly to customers. As of December 31, 2024, our direct deposit program had approximately 3.3 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, 2024, we had $139.4 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 rates we paid on different types of deposits during the years ended December 31, 2024, 2023 and 2022. 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. TABLE 20: AVERAGE INTEREST RATES PAID ON DEPOSITS Year ended December 31, 2024 2023 2022 (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 accounts $ 101,705 $ 4,210 4.1 % $ 84,913 $ 3,320 3.9 % $ 70,990 $ 961 1.4 % Checking accounts 1,677 29 1.7 1,189 37 3.1 468 6 1.3 Certificates of deposit: Direct 4,978 211 4.2 4,407 159 3.6 1,708 33 1.9 Third-party (brokered) 9,718 397 4.1 13,945 518 3.7 7,649 221 2.9 Sweep accounts — Third-party (brokered) 15,419 845 5.5 15,676 824 5.3 15,039 301 2.0 Total U.S. interest-bearing deposits $ 133,497 $ 5,692 4.3 % $ 120,130 $ 4,858 4.0 % $ 95,854 $ 1,522 1.6 % 68 Table of Contents SHORT-TERM FUNDING PROGRAMS Short-term borrowings, such as commercial paper, are defined as any debt with an original maturity of twelve months or less, as well as interest-bearing overdrafts with banks. Our short-term funding programs are used primarily to fund working capital needs, such as managing seasonal variations in receivables balances. The amount of short-term borrowings issued in the future will depend on our funding strategy, our needs and market conditions. We had no commercial paper outstanding at any point during 2024. Refer to Note 8 to the “Consolidated Financial Statements” for a further description of these borrowings. LONG-TERM DEBT AND ASSET SECURITIZATION PROGRAMS As of December 31, 2024, we had $49.7 billion in long-term debt outstanding, including unsecured debt and asset-backed securities. Refer to Note 8 to the “Consolidated Financial Statements” for a further description of these borrowings and scheduled maturities of long-term debt obligations. We periodically securitize Card Member loans and receivables arising from our U.S. card business, as the securitization market provides us with cost-effective funding. Securitization of Card Member loans and receivables is accomplished through the transfer of those assets to a trust, which in turn issues securities collateralized by the transferred assets to third-party investors. The proceeds from issuance are distributed to us, through our wholly owned subsidiaries, as consideration for the transferred assets. Refer to Note 5 to the “Consolidated Financial Statements” for a further description of our asset securitizations. TABLE 21: DEBT ISSUANCES (Billions) 2024 American Express Company: Floating Rate Senior Notes (compounded SOFR (a) plus weighted-average spread of 90 basis points) $ 1.1 Fixed-to-Floating Rate Senior Notes (weighted-average coupon of 5.31% during the fixed rate period and compounded SOFR (a) plus weighted-average spread of 106 basis points during the floating rate period) 7.3 Fixed-to-Floating Rate Subordinated Notes (coupon of 5.92% during the fixed rate period and compounded SOFR (a) plus spread of 163 basis points during the floating rate period) 0.5 American Express Credit Account Master Trust: Fixed Rate Class A Certificates (weighted-average coupon of 5.02%) 3.2 Total $ 12.1 (a) Secured overnight financing rate (SOFR). 69 Table of Contents LIQUIDITY MANAGEMENT Our liquidity objective is to maintain access to a diverse set of on- and off-balance sheet liquidity sources. We seek to maintain liquidity sources in amounts sufficient to meet our expected future financial obligations and business requirements for liquidity for a period of at least twelve months under a variety of adverse circumstances. These include, but are not limited to, an event where we are unable to raise new funds under our regular funding programs during a substantial weakening in economic conditions. Our liquidity management strategy includes a number of elements, including, but not limited to: • Maintaining diversified funding sources (refer to “Funding Strategy” above for more details); • Maintaining unencumbered liquid assets and off-balance sheet liquidity sources; • Projecting cash inflows and outflows under a variety of economic and market scenarios; and • Establishing clear objectives for liquidity risk management, including compliance with regulatory requirements. We seek to maintain access to a diverse set of on-balance sheet and off-balance sheet liquidity sources, including cash and other liquid assets, secured borrowing facilities and a committed bank credit facility. Through our U.S. bank subsidiary, AENB, we have also pledged collateral eligible for use at the Federal Reserve’s discount window. The amount and type of liquidity resources we maintain can vary over time, based upon the results of stress scenarios required under the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as additional stress scenarios required under our liquidity risk policy. These stress scenarios possess distinct characteristics, varying by cash flow assumptions, time horizon and qualifying liquidity sources, among other factors. Scenarios under our liquidity risk policy include market-wide, firm-specific and combined liquidity stresses. Additionally, as discussed above, we became a Category III firm in the third quarter of 2024 and thus are subject to the regulatory requirements under LCR and NSFR rules, subject to applicable transition periods. See “Supervision and Regulation — Enhanced Prudential Standards” under “Business” for more information. 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, 2024 and 2023, we had $40.6 billion and $46.6 billion in Cash and cash equivalents, respectively. The year-over-year decline was primarily due to the deployment of cash to fund the growth of our business. Refer to “Cash Flows” below for a discussion of the major drivers impacting cash flows for the year ended December 31, 2024. 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. During 2024, interest income exceeded the interest expense associated with the liquidity portfolio. 70 Table of Contents Securitized Borrowing Capacity As of December 31, 2024, we maintained our committed, revolving, secured borrowing facility, with a maturity date of July 15, 2026, which gives us the right to sell up to $3.0 billion face amount of eligible AAA notes from the American Express Issuance Trust II (the Charge Trust). We also maintained our committed, revolving, secured borrowing facility, with a maturity date of September 15, 2026, which gives us the right to sell up to $3.0 billion face amount of eligible AAA certificates from the American Express Credit Account Master Trust (the Lending Trust). These facilities enhance our contingent funding resources and are also used in the ordinary course of business to fund working capital needs. As of December 31, 2024, no amounts were drawn on the Charge Trust facility or the Lending Trust facility. Committed Bank Credit Facility As of December 31, 2024, we maintained a committed syndicated bank credit facility of $4.0 billion with a maturity date of October 30, 2026. 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, 2024, we were in compliance with the covenants contained in the credit facility and no amounts were drawn on this 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, 2024, AENB had available borrowing capacity of $76.9 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 and can change from time to time. 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 We have certain off-balance sheet obligations that include guarantees, indemnifications and certain Card Member and partner arrangements that may have a material current or future effect on our financial condition, changes in financial condition, results of operations, or liquidity and capital resources. For more information on these obligations, refer to Note 12, Note 15 and Note 23 to the “Consolidated Financial Statements.” 71 Table of Contents CASH FLOWS The following table summarizes our cash flow activity, followed by a discussion of the major drivers impacting operating, investing and financing cash flows for the year ended December 31, 2024 compared to the year ended December 31, 2023: TABLE 22: CASH FLOWS (Billions) 2024 2023 2022 Total cash provided by (used in): Operating activities $ 14.0 $ 18.5 $ 21.1 Investing activities (24.4) (24.4) (33.7) Financing activities 4.4 18.4 24.5 Effect of foreign currency exchange rates on cash and cash equivalents — 0.2 — Net (decrease) increase in cash and cash equivalents $ (6.0) $ 12.7 $ 11.9 Cash Flows from Operating Activities Our cash flows from operating activities primarily include net income adjusted for (i) non-cash items included in net income, such as provisions for credit losses, depreciation and amortization, stock-based compensation, deferred taxes and other non-cash items and (ii) changes in the balances of operating assets and liabilities, which can vary significantly in the normal course of business due to the amount and timing of payments. In 2024, the net cash provided by operating activities was driven by cash generated from net income for the period, partially offset by lower net operating liabilities, primarily driven by lower book overdrafts due to timing differences arising in the ordinary course of business. In 2023, the net cash provided by operating activities was primarily driven by cash generated from net income for the period and higher net operating liabilities, primarily driven by higher book overdrafts due to timing differences arising in the ordinary course of business and higher accounts payable to merchants. Cash Flows from Investing Activities Our cash flows from investing activities primarily include changes in loans and Card Member receivables, as well as changes in our available-for-sale investment securities portfolio. In both 2024 and 2023, the net cash used in investing activities was primarily driven by higher Loans and Card Member receivables outstanding, partially offset by net maturities of 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 both 2024 and 2023, the net cash provided by financing activities was primarily driven by growth in customer deposits and net proceeds from long-term debt, partially offset by share repurchases and dividend payments. 72 Table of Contents RISK MANAGEMENT GOVERNANCE Risk management is overseen by our Board of Directors through three Board committees: the Risk Committee, the Audit and Compliance Committee, and the Compensation and Benefits Committee. Each committee consists entirely of independent directors and provides regular reports to the full Board regarding matters reviewed at their committee. The committees meet regularly in private sessions with our Chief Risk Officer, the Chief Compliance Officer, the Chief Audit Executive and other senior management with regard to our risk management processes, risk profile and performance, controls, talent and capabilities. 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 and select other risk policies. 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 and country risk. The ERM policy also guides the monitoring of emerging risks, as appropriate. 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. 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. The Audit and Compliance Committee of our Board of Directors reviews and approves compliance policies, which include our Compliance Risk Tolerance Statement. In addition, the Audit and Compliance Committee reviews the effectiveness of our Corporate-wide Compliance Risk Management Program. More broadly, this committee is responsible for assisting the Board in its oversight responsibilities relating to the integrity of our financial statements and financial reporting process, internal and external auditing, including the qualifications and independence of the independent registered public accounting firm and the performance of our internal audit services function, and the integrity of our systems of internal controls. The Audit and Compliance Committee provides oversight of our Internal Audit Group. The Audit and Compliance Committee reviews and concurs with the appointment, replacement, performance and compensation of our Chief Audit Executive, who reports to the Audit and Compliance Committee, and approves Internal Audit’s annual audit plan, charter, policies, budget and staffing levels, and overall risk assessment methodology. The Audit and Compliance Committee also receives regular updates on the audit plan’s status and results, including significant reports issued by Internal Audit and the status of our corrective actions. The Compensation and Benefits Committee of our Board of Directors works with the Chief Risk Officer to ensure our overall compensation programs, as well as those covering our risk-taking employees, appropriately balance risk with business incentives and that business performance is achieved without taking imprudent or excessive risk. Our Chief Risk Officer is actively involved in setting risk goals for the Company. Our Chief Risk Officer also reviews the risk profiles of each business unit and, in conjunction with the Chief Audit Executive, provides input into performance evaluation through the Risk Performance Program. The Chief Risk Officer meets with the Compensation and Benefits Committee and attests whether performance goals and results have been achieved without taking imprudent risks. The Compensation and Benefits Committee uses a risk-balanced incentive compensation framework to decide on our bonus pools and the compensation of senior executives. 73 Table of Contents There are several internal management committees, including the Enterprise Risk Management Committee (ERMC), chaired by our Chief Risk Officer. The ERMC is the highest-level management committee to oversee all firm-wide risks and is responsible for risk governance, risk oversight and risk appetite. It maintains the enterprise-wide risk appetite framework and monitors compliance with limits and escalations defined in it. The ERMC oversees implementation of risk policies Company-wide. The ERMC reviews key risk exposures, trends and concentrations, significant compliance matters, and provides guidance on the steps to monitor, control and report major risks. In addition, the Asset Liability Committee, chaired by our Chief Financial Officer, is responsible for managing our capital, funding and liquidity, investment, market risk and asset/liability activities in accordance with our policies and in compliance with applicable regulatory requirements. As defined in the ERM policy, we follow the “three lines of defense” approach to risk management. The first line of defense comprises functions and management committees directly initiating risk taking. The Chief Executive Officer, business unit presidents and the Chief Financial Officer are part of the first line of defense. The second line comprises independent functions overseeing risk-taking activities of the first line. The Chief Risk Officer, the Chief Compliance Officer, the Chief Operational Risk Officer and certain control groups, both at the enterprise level and within regulated entities, are part of the second line of defense. The global risk oversight team oversees the policies, strategies, frameworks, models, processes and capabilities deployed by the first line teams and provides challenges and independent assessments on how the first line of defense is managing risks. Our Internal Audit Group constitutes the third line of defense and provides independent assessments and effective challenge of the first and second lines of defense. CREDIT RISK MANAGEMENT PROCESS We define credit risk as loss due to default or changes in the credit quality of a customer, obligor or security. Our credit risks are divided into two broad categories: individual and institutional. Each has distinct risk management profiles, capabilities, strategies, and tools. Business units that create individual or institutional credit risk exposures of significant importance are supported by dedicated risk management teams, each led by a Chief Credit Officer. Individual Credit Risk Individual credit risk arises from consumer and small business charge cards, credit cards, and term loans. These portfolios consist of millions of customers across multiple geographies, industries and levels of net worth. We benefit from the high-quality profile of our customers, which is driven by our brand, premium customer servicing, product features and risk management capabilities, which span underwriting, customer management and collections. The risk in these portfolios is generally correlated to broad economic trends, such as unemployment rates and gross domestic product (GDP) growth. The business unit leaders and their Chief Credit Officers take the lead in managing the credit risk process. These Chief Credit Officers are guided by the Individual Credit Risk Committee (ICRC), which is responsible for implementation and enforcement of the Individual Credit Risk Management Policy. The ICRC ensures compliance with ERMC guidelines and procedures and escalates to the ERMC as appropriate. Credit risk management is supported by sophisticated proprietary scoring and decision-making models that use up-to-date information on prospects and customers, such as spending and payment history and data feeds from credit bureaus. We have developed data-driven economic decision logic for customer interactions to better serve our customers. Institutional Credit Risk Institutional credit risk arises principally within our CS, ICS and GMNS businesses, as well as investment and liquidity management activities. Unlike individual credit risk, institutional credit risk is characterized by a lower loss frequency but higher severity. It is affected both by general economic conditions and by client-specific events. The absence of large losses in any given year or over several years is not necessarily representative of the level of risk of institutional portfolios, given the infrequency of loss events in such portfolios. 74 Table of Contents Similar to individual credit risk, business units taking institutional credit risks are supported by Chief Credit Officers. These officers are guided by the Institutional Risk Management Committee (IRMC), which is responsible for implementation and enforcement of the Institutional Credit Risk Management Policy and for providing guidance to the credit officers of each business unit with substantial institutional credit risk exposures. The committee, along with the business unit Chief Credit Officers, makes investment decisions in core risk capabilities, ensures proper implementation of the underwriting standards and contractual rights for risk mitigation, monitors risk exposures, and determines risk mitigation actions. The IRMC formally reviews large institutional risk exposures to ensure compliance with ERMC guidelines and procedures and escalates them to the ERMC as appropriate. At the same time, the IRMC provides guidance to the business unit risk management teams to optimize risk-adjusted returns on capital. A centralized risk rating unit provides risk assessment of our institutional obligors. OPERATIONAL RISK MANAGEMENT PROCESS We consider operational risk to be the risk of loss due to, among other things, inadequate or failed processes, people or information systems, or impacts from the external environment, including failures to comply with laws and regulations as well as impacts from relationships with third parties. Operational risk is inherent in all business activities and can impact an organization through direct or indirect financial loss, brand damage, customer dissatisfaction, or legal and regulatory penalties. To appropriately measure and manage operational risk, we have implemented a comprehensive operational risk framework that is defined in the Operational Risk Management Policy approved by the ERMC. The Operational Risk Management Committee (ORMC), chaired by the Chief Operational Risk Officer, coordinates with all control groups on effective risk assessments and controls. It also oversees the preventive, responsive and mitigation efforts by control management teams in the business units and staff groups. We use the operational risk framework to identify, measure, monitor and report inherent and emerging operational risks. 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 issues and 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. 75 Table of Contents Information Technology We define information technology risk as the risk that events or circumstances could compromise the processing, stability, capacity, performance, or resilience of information technology and cause financial, reputational, and/or regulatory impacts. We manage information technology risk through our policies, procedures, governance structure, and control framework to preserve the confidentiality, integrity, and availability of systems and processes across our Company. See “ The uninterrupted operation of our information systems is critical to our success and a significant disruption could have a material adverse effect on our business and results of operations ” under “Risk Factors” for additional information. Privacy 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, 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. Data Management and Governance We define data management and governance risk as the risk of financial, reputational, and/or regulatory impacts due to inadequate data governance and/or data management practices adversely impacting the accuracy, completeness, timeliness, comprehensiveness or usability of data throughout its lifecycle. Our Enterprise Data Governance Policy establishes the framework for defining in-scope critical data and the requirements for managing such data effectively throughout its lifecycle as a critical corporate asset. This policy is approved by the ERMC. Chaired by the Chief Data Officer, our Enterprise Data Committee, a sub-committee of the ERMC, provides governance and oversight for our enterprise-wide data governance and management activities. Third Party Risk We define third party risk as the risk that relationships with third parties (including their significant subcontractors) create unexpected outcomes and deviations from expectations or stated obligations. The Third Party Management Policy is approved by the Risk Committee of our Board and the ERMC. It sets forth the procurement, risk management, and contracting framework for managing third-party relationships commensurate with their risk and complexity. Our Third Party Lifecycle Management program sets guidelines for identifying, measuring, monitoring, and reporting the risk associated with third parties through the life cycle of the relationships, which includes planning, due diligence and third-party selection, contracting, ongoing monitoring and termination. Conduct Risk We define conduct risk as the risk that colleagues, intentionally or unintentionally, fail to fulfill their responsibilities to American Express, our customers, colleagues or stakeholders in a manner consistent with our Code of Conduct, policies and values as well as applicable laws and regulations. Conduct issues also have the potential to increase several other risk types, including reputational risk, which may undermine the integrity and trust upon which our brand is built. The Conduct Risk Management Policy is approved by the ERMC. It establishes the governance framework for conduct risk across the Company. The policy requires annual risk assessments, implementation of detective and preventive controls, colleague training and timely escalations of conduct issues. It also provides guidance on consequence management for any substantiated cases of misconduct. The Conduct Risk Committee oversees conduct risk related topics and escalates such matters to the ERMC, as appropriate. 76 Table of Contents COMPLIANCE RISK MANAGEMENT PROCESS We define compliance risk as the risk of legal or reputational harm, fines, monetary penalties and payment of damages or other forms of sanction as a result of non-compliance with applicable laws and/or regulations, internal policies and procedures and related practices, or ethical standards. We view our ability to effectively mitigate compliance risk as an important aspect of our business model. Our Global Compliance and Ethics organization is responsible for establishing and maintaining our corporate-wide Compliance Risk Management Program. Pursuant to this program, we seek to manage and mitigate compliance risk by assessing, controlling, monitoring, measuring and reporting the legal and regulatory risks to which we are exposed. The Compliance Risk Management Committee (CRMC), chaired by the Chief Compliance Officer, is responsible for identifying, evaluating, managing, and escalating compliance risks. The CRMC has a dual reporting relationship to both the Risk Committee (through the ERMC) and the Audit and Compliance Committee. Additionally, we have a comprehensive Anti-Money Laundering program that monitors and reports suspicious activity to the appropriate government authorities. The program includes an independent risk assessment of the rules used by the Anti-Money Laundering team. REPUTATIONAL RISK MANAGEMENT PROCESS We define reputational risk as the risk that negative stakeholder reaction to our products, services, client and partner relationships, business activities and policies, management and workplace culture, or our response to unexpected events, could cause sustained critical media coverage, a decline in revenue or investment, talent attrition, litigation, or government or regulatory scrutiny. We view protecting our reputation for excellent customer service, trust, security and high integrity as core to our vision of providing the world’s best customer experience and fundamental to our long-term success. Our business leaders are responsible for considering the reputational risk implications of business activities and strategies and ensuring the relevant subject matter experts are engaged as needed. The ERMC is responsible for ensuring reputational risk considerations are included in the scope of appropriate subordinate risk policies and committees and properly reflected in all decisions escalated to the ERMC. MARKET RISK MANAGEMENT PROCESS We define market risk as the risk to earnings or asset and liability values resulting from movements in market prices. Our market risk exposures include (i) interest rate risk due to changes in the relationship between the interest rates on our assets (such as loans, receivables and investment securities) and the interest rates on our liabilities (such as debt and deposits) and (ii) foreign exchange risk related to transactions, funding, investments and earnings in currencies other than the U.S. dollar. Our risk policies establish the framework that guides and governs market risk management, including quantitative limits and escalation triggers. These policies are approved by the ERMC, Asset Liability Committee or Market Risk Management Committee. Market risk is managed by the Market Risk Management Committee. The Market Risk Oversight Officer provides an independent risk assessment and oversight over the policies and exposure management for market risk and Asset Liability Management activities. Interest Rate Risk We analyze a variety of interest rate scenarios to inform us of the potential impacts from interest rate changes on earnings and the value of assets, liabilities and the economic value of equity. Our interest rate exposure can vary over time as a result of, among other things, the proportion of our total funding provided by variable and fixed-rate debt and deposits compared to our Card Member loans and receivables. Interest rate swaps are used from time to time to effectively convert debt issuances to variable-rate from fixed-rate, or vice versa. Refer to Note 13 to the “Consolidated Financial Statements” for further discussion of our derivative financial instruments. 77 Table of Contents 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 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. TABLE 23: SENSITIVITY ANALYSIS OF INTEREST RATE CHANGES ON ANNUAL NET INTEREST INCOME AS OF DECEMBER 31, 2024 (Millions) Instantaneous Parallel Rate Shocks (a) +200bps +100bps -100bps -200bps $ (560) $ (224) $ 225 $ 457 (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 Foreign exchange exposures arise in four principal ways: (1) Card Member spending in currencies that are not the billing currency, (2) cross-currency transactions and balances from our funding activities, (3) cross-currency investing activities, such as in the equity of foreign subsidiaries, and (4) revenues generated and expenses incurred in foreign currencies, which impact earnings. These foreign exchange risks are managed primarily by entering into foreign exchange spot transactions or hedged with foreign exchange forward contracts when the hedge costs are economically justified and in notional amounts designed to offset pretax impacts from currency movements in the period in which they occur. As of December 31, 2024, foreign currency derivative instruments with total notional amounts of approximately $43 billion were outstanding. With respect to Card Member spending and cross-currency transactions, including related foreign exchange forward contracts outstanding, the impact of a hypothetical 10 percent strengthening of the U.S. dollar would have been immaterial to projected earnings as of December 31, 2024. With respect to translation exposure of foreign subsidiary equity balances, including related foreign exchange forward contracts outstanding, a hypothetical 10 percent strengthening of the U.S. dollar would result in an immaterial reduction in other comprehensive income and equity as of December 31, 2024. With respect to anticipated earnings denominated in foreign currencies for the next twelve months, the adverse impact on pretax income of a hypothetical 10 percent strengthening of the U.S. dollar, net of hedges, would be approximately $136 million as of December 31, 2024. 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. 78 Table of Contents FUNDING & LIQUIDITY RISK MANAGEMENT PROCESS We define funding and liquidity risk as our inability to meet our ongoing financial and business obligations at a reasonable cost as they become due. Our Board-approved Liquidity Risk Policy establishes the framework that guides and governs liquidity risk management. 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 under a variety of adverse circumstances. These include, but are not limited to, an event where we are unable to raise new funds under our regular funding programs during a substantial weakening in economic conditions. 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. Funding and liquidity risk is managed at an aggregate consolidated level as well as at certain subsidiaries in order to ensure that sufficient and accessible liquidity resources are maintained. 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 a Category III firm under U.S. federal bank regulatory agencies’ rules, we are subject to heightened capital, liquidity and prudential requirements, including more stringent liquidity risk management requirements. See “Supervision and Regulation – Capital and Liquidity Regulation” under “Business” for more information. MODEL RISK MANAGEMENT PROCESS We define model risk as the risk of adverse consequences, such as financial loss, poor business and strategic decision making, damage to our reputation or customer harm, from decisions based on incorrect or misused model outputs and outcomes. The Enterprise-Wide Model Risk Policy establishes the comprehensive framework for governing model risk. This policy is approved by the ERMC. The comprehensive risk management and governance framework includes procedures for model development, independent model validation, model risk reporting and change management capabilities that seek to minimize erroneous model methodology, outputs, and misuse. We also assess model performance and model- related issues on an ongoing basis and seek to address deficiencies in a timely manner. In addition, we utilize artificial intelligence and machine learning (AI/ML) models, including Generative AI tools, for a variety of business use cases. We perform extensive reviews and testing to reduce the risk that these AI/ML techniques result in adverse consequences. STRATEGIC AND BUSINESS RISK MANAGEMENT PROCESS We define strategic and business risk as the risk related to our inability to achieve our business objectives due to poor strategic decisions, including decisions related to the launch or modification of products, mergers, acquisitions, and divestitures, poor implementation of strategic decisions or declining demand for our products and services. Strategic decisions are reviewed and approved by business leaders and various committees and must be aligned with company policies. We seek to manage strategic and business risks through risk controls embedded in these processes as well as overall risk management oversight over business goals. Launch of key new products as well as existing product performance is reviewed periodically by committees and business leaders to inform business decisions as appropriate. Mergers, acquisitions and divestitures can only be approved following Executive Committee due diligence, a comprehensive risk assessment by operational, market, credit and oversight leaders provided to the Chief Risk Officer and approval by either the Chief Risk Officer or appropriate risk committees. All new and material changes to products and services are reviewed and approved by the New Products Committee and appropriate credit or risk committees. 79 Table of Contents COUNTRY RISK MANAGEMENT PROCESS We define country risk as the risk that economic, social, and/or political conditions and events in a country present. They might adversely impact us, primarily as a result of greater credit losses, increased operational or market risk or the inability to repatriate capital. We manage country risk as part of the normal course of business. 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. EMERGING RISKS We also identify, monitor and report on emerging risks through our risk governance framework. Emerging risks arise due to changes in the external environment or internal initiatives and may manifest across multiple risk types. For example, climate-related risk is currently identified as an emerging risk and may manifest as credit risk, operational risk, market risk, liquidity risk or other risk types. Emerging risks are monitored and reported periodically to members of management, as well as to the ERMC and the Risk Committee of our Board of Directors. 80 Table of Contents CRITICAL ACCOUNTING ESTIMATES Refer to Note 1 to the “Consolidated Financial Statements” for a summary of our significant accounting policies. Certain of our accounting policies requiring significant management assumptions and judgments are as follows: RESERVES FOR CARD MEMBER CREDIT LOSSES 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 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. These quantitative and qualitative components entail a significant amount of judgment. The primary areas of judgment used in measuring the quantitative components of our reserves relate to the determination of the appropriate R&S Period, the modeling of the probability of and exposure at default, and the methodology to incorporate current and future economic conditions. We use these models and assumptions, combined with historical loss experience, to determine the reserve rates that are applied to the outstanding loan or receivable balances to produce our reserves for expected credit losses for the R&S Period. The qualitative component is intended to capture expected losses that may not have been fully captured in the quantitative component. Through an established governance structure, we consider certain external and internal factors, including emerging portfolio characteristics and trends, which consequentially may increase or decrease the reserves for Card Member credit losses. The R&S Period, which is approximately three years, represents the maximum time-period beyond the balance sheet date over which we can reasonably estimate expected credit losses, using all available portfolio information, current economic conditions and forecasts of future economic conditions. Card Member loan products do not have a contractual term and balances can revolve if minimum required payments are made, causing some balances to remain outstanding beyond the R&S Period. To determine expected credit losses beyond the R&S Period, we immediately revert to long-term average loss rates. Card Member receivable products are contractually required to be paid in full; therefore, we have assumed the balances will be either paid or written-off no later than 180 days past due. Within the R&S Period, our models use past loss experience and current and future economic conditions to estimate the probability of default, exposure at default and expected recoveries to estimate net losses at default. A significant area of judgment relates to how we apply future Card Member payments to the reporting period balances when determining the exposure at default. The nature of revolving loan products inherently includes a relationship between future payments and spend behavior, which creates complexity in the application of how future payments are either partially or entirely attributable to the existing balance at the end of the reporting period. Using historical customer behavior and other factors, we have assumed that future payments are first allocated to interest and fees associated with the reporting period balance and future spend. We then allocate a portion of the payment to the estimated higher minimum payment amount due because of any future spend. Any remaining portion of the future payment is then allocated to the remaining reporting period balance. CECL requires that the R&S Period include an assumption about current and future economic conditions. We incorporate multiple macroeconomic scenarios provided to us by an independent third party. The estimated credit losses calculated from each macroeconomic scenario are reviewed each period and weighted to reflect management’s judgment about uncertainty surrounding these scenarios. These macroeconomic scenarios contain certain variables, including unemployment rates and real GDP, that are significant to our models. 81 Table of Contents Macroeconomic Sensitivity To demonstrate the sensitivity of estimated credit losses to the macroeconomic scenarios, we compared our modeled estimates under a baseline scenario to that under a pessimistic downside scenario. As of December 31, 2024, for every 10 percentage points change in weighting from the baseline scenario to the pessimistic downside scenario, the estimated credit losses increased by approximately $230 million. The modeled estimates under these scenarios were influenced by the duration, severity and timing of changes in economic variables within each scenario and these macroeconomic scenarios, under different conditions or using different assumptions, could result in significantly different estimated credit losses. It is difficult to estimate how potential changes in specific factors might affect the estimated credit losses, and current results may not be indicative of the potential future impact of macroeconomic forecast changes. In addition, this sensitivity analysis relates only to the modeled credit loss estimates under two scenarios without considering management’s judgment on the relative weighting for those and other scenarios, including the weight that has been placed on the downside scenario at the balance sheet date, or any potential changes in other adjustments to the quantitative reserve component or the impact of management judgment for the qualitative reserve component, which may have a positive or negative effect on the results. Thus, the results of this sensitivity analysis are hypothetical and are not intended to estimate or reflect our expectations of any changes in the overall reserves for credit losses due to changes in the macroeconomic environment. Refer to Note 3 to the “Consolidated Financial Statements” for further information on the range of macroeconomic scenario key variables used, in conjunction with other inputs described above, to calculate reserves for Card Member credit losses. The process of estimating these reserves requires a high degree of judgment. To the extent our expected credit loss models are not indicative of future performance, actual losses could differ significantly from our judgments and expectations, resulting in either higher or lower future provisions for credit losses in any period. 82 Table of Contents LIABILITY FOR MEMBERSHIP REWARDS The Membership Rewards program is our largest card-based rewards program. Card Members can earn points for purchases charged on their enrolled card products. A significant portion of our cards, by their terms, allow Card Members to earn bonus points for purchases at merchants in particular industry categories. Membership Rewards points are redeemable for a broad variety of rewards, including, but not limited to, travel, shopping, gift cards, and statement credits. Points typically do not expire, and there is no limit on the number of points a Card Member may earn. Membership Rewards expense is driven by charge volume on enrolled cards, customer participation in the program and contractual arrangements with redemption partners. We record a Membership Rewards liability that represents our best estimate of the cost of points earned that are expected to be redeemed by Card Members in the future. The Membership Rewards liability is impacted over time by enrollment levels, attrition, the volume of points earned and redeemed, and the associated redemption costs. We estimate the Membership Rewards liability by determining the URR and the weighted average cost (WAC) per point, which are applied to the points of current enrollees. Refer to Note 9 to the “Consolidated Financial Statements” for additional information. The URR assumption is used to estimate the number of points earned by current enrollees that will ultimately be redeemed in future periods. We use statistical and actuarial models to estimate the URR of points earned to date by current Card Members based on redemption trends, card product type, enrollment tenure, card spend levels and credit attributes. The WAC per point assumption is used to estimate future redemption costs and is primarily based on redemption choices made by Card Members, reward offerings by partners, and Membership Rewards program changes. 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 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. Actual redemptions and associated redemption costs could differ significantly from our estimates, resulting in either higher or lower Membership Rewards expense. Changes in the Membership Rewards URR and WAC per point have the effect of either increasing or decreasing the liability through the current period Membership Rewards expense by an amount estimated to cover the cost of all points previously earned but not yet redeemed by current enrollees as of the end of the reporting period. As of December 31, 2024, an increase in the estimated URR of current enrollees of 25 basis points would increase the Membership Rewards liability and corresponding rewards expense by approximately $197 million. Similarly, an increase in the WAC per point of 1 basis point would increase the Membership Rewards liability and corresponding rewards expense by approximately $220 million. GOODWILL RECOVERABILITY Goodwill represents the excess of acquisition cost of an acquired business over the fair value of assets acquired and liabilities assumed. Goodwill is not amortized but is tested for impairment at the reporting unit level annually or when events or circumstances arise, such as adverse changes in the business environment, that would more likely than not reduce the fair value of the reporting unit below its carrying value. Our methodology for conducting this goodwill impairment testing contains both a qualitative and quantitative assessment. We have the option to initially perform an assessment of qualitative factors in order to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The qualitative factors may include, but are not limited to, economic conditions, industry and market considerations, cost factors, overall financial performance of the reporting unit and other company and reporting unit-specific events. If we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we then perform the impairment evaluation using a more detailed quantitative assessment. We could also directly perform this quantitative assessment for any reporting unit, bypassing the qualitative assessment. 83 Table of Contents Our methodology for conducting the quantitative goodwill impairment testing is fundamentally based on the measurement of fair value for our reporting units, which inherently entails the use of significant management judgment. For valuation, we use a combination of the income approach (discounted cash flows) and market approach (market multiples) in estimating the fair value of our reporting units. When preparing discounted cash flow models under the income approach, we estimate future cash flows using the reporting unit’s internal multi-year forecast, and a terminal value calculated using a growth rate that we believe is appropriate in light of current and expected future economic conditions. To discount these cash flows we use our expected cost of equity, determined using a capital asset pricing model. When using the market method under the market approach, we apply comparable publicly traded companies’ multiples (e.g., earnings, revenues) to our reporting units’ operating results. The judgment in estimating forecasted cash flows, discount rates and market comparables is significant, and imprecision could materially affect the fair value of our reporting units. We could be exposed to an increased risk of goodwill impairment if future operating results or macroeconomic conditions differ significantly from management’s current assumptions. INCOME TAXES We are subject to the income tax laws of the United States, its states and municipalities and those of the foreign jurisdictions in which we operate. These tax laws are complex, and the manner in which they apply to the taxpayer’s facts is sometimes open to interpretation. In establishing a provision for income tax expense, we must make judgments about the application of inherently complex tax laws. Unrecognized Tax Benefits We establish a liability for unrecognized tax benefits, which are the differences between a tax position taken or expected to be taken in a tax return and the benefit recognized in the financial statements. In establishing a liability for an unrecognized tax benefit, assumptions may be made in determining whether, and the extent to which, a tax position should be sustained. A tax position is recognized only when it is more likely than not to be sustained upon examination by the relevant taxing authority, based on its technical merits. The amount of tax benefit recognized is the largest benefit that we believe is more likely than not to be realized on ultimate settlement. As new information becomes available, we evaluate our tax positions and adjust our unrecognized tax benefits, as appropriate . Tax benefits ultimately realized can differ from amounts previously recognized due to uncertainties, with any such differences generally impacting the provision for income tax. Deferred Tax Asset Realization Deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities using the enacted tax rates expected to be in effect for the years in which the differences are expected to reverse. Since deferred taxes measure the future tax effects of items recognized in the Consolidated Financial Statements, certain estimates and assumptions are required to determine whether it is more likely than not that all or some portion of the benefit of a deferred tax asset will not be realized. In making this assessment, we analyze and estimate the impact of future taxable income, reversing temporary differences and available tax planning strategies. These assessments are performed quarterly, taking into account any new information. Changes in facts or circumstances can lead to changes in the ultimate realization of deferred tax assets due to uncertainties. 84 Table of Contents OTHER MATTERS 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. Allocated service costs — Represents salaries and benefits associated with our technology and customer servicing groups, allocated based on activities directly attributable to our reportable operating segments, as well as overhead expenses, which are allocated to our reportable operating segments based on their relative levels of revenue and Card Member loans and receivables. Asset securitizations — Asset securitization involves the transfer and sale of loans or receivables to a special-purpose entity created for the securitization activity, typically a trust. The trust, in turn, issues securities, commonly referred to as asset-backed securities that are secured by the transferred loans and receivables. The trust uses the proceeds from the sale of such securities to pay the purchase price for the transferred loans or receivables. The securitized loans and receivables of our Lending Trust and Charge Trust (collectively, the Trusts) are reported as assets and the securities issued by the Trusts are reported as liabilities on our Consolidated Balance Sheets. Billed business (Card Member spending) — Represents transaction volumes (including cash advances) on payment products issued by American Express. Capital ratios — Represents the minimum standards established by regulatory agencies as a measure to determine whether the regulated entity has sufficient capital to absorb on- and off-balance sheet losses beyond current loss accrual estimates. Refer to “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. Card Member loans — Represents balances on our credit card products and revolve-eligible balances on our charge card products. Card Member receivables — Represents balances on our charge card products that need to be paid in full on or before the Card Member’s payment due date. Cards-in-force — Represents the number of cards that are issued and outstanding by American Express (proprietary cards-in-force) and cards issued and outstanding under network partnership agreements with banks and other institutions, except for retail cobrand cards issued by network partners that had no out-of-store spending activity during the prior twelve months. Basic cards-in-force excludes supplemental cards issued on consumer accounts. Cards-in-force is useful in understanding the size of our Card Member base. Charge cards — Represents cards that generally carry no pre-set spending limits and are primarily designed as a method of payment and not as a means of financing purchases. Each transaction on a charge card with no pre-set spending limit is authorized based on its likely economics reflecting a Card Member’s most recent credit information and spend patterns. Charge Card Members must pay the full amount of balances billed each month, with the exception of balances that can be revolved under lending features offered on certain charge cards, such as Pay Over Time and Plan It ® , that allow Card Members to pay for eligible purchases with interest over time. Cobrand cards — Represents cards issued under cobrand agreements with selected commercial partners. Pursuant to the cobrand agreements, we make payments to our cobrand partners, which can be significant, based primarily on the amount of Card Member spending and corresponding rewards earned on such spending and, under certain arrangements, on the number of accounts acquired and retained. The partner is then liable for providing rewards to the Card Member under the cobrand partner’s own loyalty program. 85 Table of Contents Credit cards — Represents cards that have a range of revolving payment terms, structured payment features (e.g., Plan It, Expanded Buying Power), grace periods, and rate and fee structures. Discount revenue — Primarily represents the amount we earn and retain from the merchant payable for facilitating transactions between Card Members and merchants on payment products issued by American Express. Goods & Services (G&S) spend — Includes spend in merchant categories other than T&E-related merchant categories, which includes B2B spending by small and mid-sized enterprise customers in our CS and ICS segments. Interest expense — Includes interest incurred primarily to fund Card Member loans and receivables, general corporate purposes and liquidity needs. Interest expense is divided principally into two categories: (i) deposits, which primarily relates to interest expense on deposits taken from customers and institutions, and (ii) debt, which primarily relates to interest expense on our long-term financing and short-term borrowings, (e.g., commercial paper, federal funds purchased, bank overdrafts and other short-term borrowings), as well as the realized impact of derivatives hedging interest rate risk on our long-term debt. Interest income — Includes (i) interest on loans, (ii) interest and dividends on investment securities and (iii) interest income on deposits with banks and other. Interest on loans — Assessed using the average daily balance method for Card Member loans. Unless the loan is classified as non-accrual, interest is recognized based upon the principal amount outstanding in accordance with the terms of the applicable account agreement until the outstanding balance is paid or written off. Interest and dividends on investment securities — Primarily relates to our performing fixed-income securities. Interest income is recognized using the effective interest method, which adjusts the yield for security premiums and discounts, fees and other payments, so a constant rate of return is recognized on the outstanding balance of the related investment security throughout its term. Amounts are recognized until securities are in default or when it is likely that future interest payments will not be made as scheduled. Interest income on deposits with banks and other — Primarily relates to the placement of cash in excess of near-term funding requirements in interest-bearing time deposits, overnight sweep accounts, and other interest-bearing demand and call accounts. Loyalty coalitions — Programs that enable consumers to earn rewards points and use them to save on purchases from a variety of participating merchants through multi-category rewards platforms. Merchants in these programs generally fund the consumer offers and are responsible to us for the cost of rewards points; we earn revenue from operating the loyalty platform and by providing marketing support. Net card fees — Represents the card membership fees earned during the period recognized as revenue over the covered card membership period (typically one year), net of the provision for projected refunds for Card Membership cancellation and deferred acquisition costs. Net interest yield on average Card Member loans — A non-GAAP measure that is computed by dividing adjusted net interest income by average Card Member loans, computed on an annualized basis. Reserves and net write-offs related to uncollectible interest are recorded through provision for credit losses and are thus not included in the net interest yield calculation. Net write-off rate — principal only — Represents the amount of proprietary consumer or small business Card Member loans or receivables written off, consisting of principal (resulting from authorized transactions), less recoveries, as a percentage of the average loan or receivable balance during the period. Net write-off rate — principal, interest and fees — Includes, in the calculation of the net write-off rate, amounts for interest and fees in addition to principal for Card Member loans, and fees in addition to principal for Card Member receivables. Network volumes — Represents the total of billed business and processed volumes. Operating expenses — Represents salaries and employee benefits, professional services, data processing and equipment, and other expenses. Other loan s — Represents balances on non-card payment and financing products that are not associated with a Card Member agreement, and instead are governed by a separate borrowing relationship. Other loans consist primarily of consumer installment loans and lines of credit offered to small business customers. 86 Table of Contents Processed revenue — Represents revenues related to network partnership agreements, comprising royalties, fees and amounts earned for facilitating transactions on cards issued by network partners. Processed revenue also includes fees earned on alternative payment solutions facilitated by American Express. Processed volumes — Represents transaction volumes (including cash advances) on cards issued under network partnership agreements with banks and other institutions, including joint ventures, as well as alternative payment solutions facilitated by American Express. Proprietary new cards acquired — Represents the number of new cards issued by American Express during the referenced period, net of replacement cards. Proprietary new cards acquired is useful as a measure of the effectiveness of our customer acquisition strategy. Reserve build (release) — Represents the portion of the provisions for credit losses for the period related to increasing or decreasing reserves for credit losses as a result of, among other things, changes in volumes, macroeconomic outlook, portfolio composition and credit quality of portfolios. Reserve build represents the amount by which the provision for credit losses exceeds net write-offs, while reserve release represents the amount by which net write-offs exceed the provision for credit losses. T&E spend — Represents spend on travel and entertainment, which primarily includes airline, cruise, lodging and dining merchant categories. 87 Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. The forward-looking statements, which address our current expectations regarding business and financial performance, among other matters, contain words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” “estimate,” “potential,” “continue” and similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements, include, but are not limited to, the following: • our ability to grow earnings per share in the future, which will depend in part on revenue growth, credit performance and the effective tax rate remaining consistent with current expectations and our ability to continue investing at high levels in areas that can drive sustainable growth (including our brand, value propositions, coverage, marketing, technology and talent), 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, higher rates of unemployment, changes in interest rates, effects of inflation, tariffs, supply chain issues, energy costs and fiscal and monetary policies; geopolitical instability, hostilities and tensions, such as 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 acquisitions, cobrand and other partner agreements, portfolio sales and joint ventures; and the impact of regulation and litigation, which may be heightened due to the uncertain regulatory environment and could affect the profitability of our business activities, limit our ability to pursue business opportunities, require changes to business practices or alter our relationships with Card Members, partners and merchants; • our ability to grow revenues net of interest expense and the sustainability of our future growth, which could be impacted by, among other things, the factors identified above and in the subsequent paragraphs, as well as the following: spending volumes and the spending environment not being consistent with expectations, including a decline in spending by U.S. small and mid-sized enterprise Card Members or slowdowns in U.S. consumer or international spending volumes; an inability to address competitive pressures, attract and retain customers, invest in and enhance our Membership Model of premium products, differentiated services and partnerships, successfully refresh our card products, grow spending and lending with customers across age cohorts, including Millennial and Gen Z customers, and implement strategies and business initiatives, including within the premium consumer space, commercial payments and the global network; the effects of regulatory initiatives, including pricing and network regulation; merchant coverage growing less than expected or the reduction of merchant acceptance or the perception of coverage; increased surcharging, steering, suppression or differential acceptance of our products; merchant discount rates changing from our expectations; and changes in foreign currency exchange rates; • net card fees not performing consistently with expectations, which could be impacted by, among other things, a decrease in the ability and desire of Card Members to pay card fees, such as due to a deterioration in macroeconomic conditions; higher Card Member attrition rates; the pace of Card Member acquisition activity and demand for our fee-based products; and our inability to address competitive pressures, develop attractive premium value propositions and implement our strategy of refreshing card products and realize our anticipated growth from those refreshes, enhancing and delivering benefits and services and continuing to innovate with respect to our products; • net interest income, the effects of changes in interest rates and the growth of loans and Card Member receivables outstanding and revolving balances, 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 effectiveness of our strategies to enhance Card Member value propositions, capture a greater share of Card Members’ spending and borrowings and attract new, and retain existing, customers; our ability to effectively manage underwriting risk; changes in benchmark interest rates, including where such changes affect our assets or liabilities differently than expected; changes in capital and credit market conditions and the availability and cost of capital; credit actions, including line size and other adjustments to credit availability; the yield on Card Member loans not remaining consistent with current expectations; and our deposit levels or the interest rates we offer on deposits changing from current expectations; loss or impacts to cobrand relationships; and governmental actions to cap interest rates; 88 Table of Contents • future credit performance, the level of future delinquency, reserve and write-off rates and the amount and timing of future reserve builds and releases, which will depend in part on macroeconomic factors such as unemployment rates, GDP and the volume of bankruptcies; the ability and willingness of Card Members to pay amounts owed to us; changes in loans and receivables outstanding, such as from the implementation of our strategy to capture spending and borrowings, or from changes in consumer behavior that affect loan and receivable balances (e.g., paydown and revolve rates); changes in the levels of customer acquisitions and the credit profiles of new customers acquired; the enrollment in, and effectiveness of, financial relief programs and the performance of accounts as they exit from such programs; the impact of the usage of debt settlement companies; and collections capabilities and recoveries of previously written-off loans and receivables; • the actual amount to be spent on Card Member rewards and services and business development, and the relationship of these variable customer engagement costs to revenues, which could be impacted by continued changes in macroeconomic conditions and Card Member behavior as it relates to their spending patterns (including the level of spend in bonus categories), the redemption of rewards and offers (including travel redemptions) and usage of travel-related benefits; the costs related to reward point redemptions; further enhancements to our rewards programs and product benefits, including to make them attractive to Card Members and prospective customers, potentially in a manner that is not cost-effective; new and renegotiated contractual obligations with business partners, which may be affected by business partners with greater scale and leverage; our ability to identify and negotiate partner-funded value for Card Members; and the pace and cost of the expansion of our global lounge collection; • the actual amount we spend on marketing in the future and the effectiveness and efficiency of our marketing spend, which will be based in part on continued changes in the macroeconomic and competitive environment and business performance, including the levels of demand for our products; management’s decisions regarding the timing of spending on marketing and the effectiveness of management’s investment optimization process, management’s identification and assessment of attractive investment opportunities; management’s ability to develop premium value propositions and drive customer demand, including continued customer spend growth and retention; the receptivity of Card Members and prospective customers to advertising and customer acquisition initiatives; and our ability to realize marketing efficiencies and balance expense control and investments in the business; • our ability to control operating expenses, including relative to revenue growth, and the actual amount we spend on operating expenses in the future, which could be impacted by, among other things, salary and benefit expenses to attract and retain talent; our ability to realize operational efficiencies, including through increased scale and automation and continued adoption of artificial intelligence technologies; management’s decisions regarding spending in such areas as technology, business and product development, sales force, premium servicing and digital capabilities; our ability to innovate efficient channels of customer interactions and the willingness of Card Members to self-service and address issues through digital channels; restructuring activity; fraud costs; inflation; supply chain issues; expenses related to control management and compliance and consulting, legal and other professional services fees, including as a result of litigation or internal and regulatory reviews; regulatory assessments; the level of M&A activity and related expenses; information security 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 (or the expiration of provisions of tax laws or regulations), the implementation of the OECD’s global minimum tax guidelines by jurisdictions, our geographic mix of income, unfavorable tax audits, assessments and tax litigation outcomes; • changes affecting our plans regarding the return of capital to shareholders, including increasing the level of the dividend, which will depend on factors such as our capital levels and regulatory capital ratios; the results of our 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 from the U.S. federal bank regulatory agencies’ Basel III rulemaking; our results of operations and financial condition; our credit ratings and rating agency considerations; required company approvals; 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 and competitor settlements and mergers that may materially impact the prices charged to merchants that accept American Express cards; surcharging, steering and suppression by merchants and merchant acceptance; the desirability of our premium card products; competition for new and existing cobrand relationships; competition from new and non-traditional competitors, and with respect to new products, services and technologies, such as the emergence or increase in popularity of alternative payment mechanisms; and the success of marketing, promotion and rewards programs; 89 Table of Contents • our ability to expand our leadership in the premium consumer space, including with Millennial and Gen-Z consumers, which will be impacted in part by competition, brand perceptions (including perceptions related to merchant coverage) and reputation, and our ability to develop and market new benefits and value propositions that appeal to Card Members and new customers, grow spending with new and younger age cohort Card Members, offer attractive services and rewards programs and build greater customer loyalty, which will depend in part on identifying and funding investment opportunities, addressing changing customer behaviors, new product innovation and development, Card Member acquisition efforts and enrollment processes, including through digital channels, continuing to realize the benefits from strategic partnerships, successfully implementing our dining strategy and evolving our infrastructure to support new products, services and benefits; • our ability to build on our leadership in commercial payments, which will depend in part on competition; the willingness and ability of companies to use credit and charge cards for procurement and other business expenditures as well as use our other products and services for financing needs; perceived or actual difficulties and costs related to setting up B2B payment platforms; our ability to offer attractive value propositions and new products to current and potential customers; our ability to enhance and expand our payment, lending and cash flow management solutions, increase customer engagement, and build out a multi-product digital ecosystem to integrate our broad product set, which is dependent on our continued investment in capabilities, features, functionalities, platforms and technologies; and the success of our initiatives to support businesses, such as Small Business Saturday and other Shop Small campaigns; • our ability to expand merchant coverage globally and our success, as well as the success of third-party merchant acquirers, aggregators and processors, in signing merchants to accept American Express, which will depend on, among other factors, the value propositions offered to merchants and merchant acquirers for card acceptance, the awareness and willingness of Card Members to use American Express cards at merchants, scaling marketing and expanding programs to increase card usage, identifying and growing acceptance in low- and new-to-plastic industries and businesses as they form, working with commercial buyers and suppliers to establish B2B acceptance, executing on our plans to increase coverage in priority international cities, destinations, countries and industry verticals, and continued network investments, including in capabilities that allow for greater digital integration and modernization of our authorization platform; • our ability to successfully invest in, benefit from and expand the use of technological developments, digital payments, servicing and travel solutions and other technological capabilities, which will depend in part on our success in evolving our products and processes for the digital environment, developing new features in the Amex ® app and enhancing our digital channels, effectively utilizing data and data platforms, building partnerships and executing programs with other companies, effectively utilizing artificial intelligence and machine learning and increasing automation, including to address servicing and other business and customer needs, and supporting the use of our products as a means of payment through online and mobile channels, all of which will be impacted by investment levels, customer and colleague receptiveness and ability to adopt new technologies, new product innovation and development and the platforms and infrastructure to support new products, services, benefits and partner integrations; • our ability to grow internationally, which could be impacted by regulation and business practices, such as those capping interchange or other fees, mandating network access or data localization, favoring local competitors or prohibiting or limiting foreign ownership of certain businesses; our inability to successfully replicate aspects of our business model internationally and tailor products and services to make them attractive to local customers; competitors with more scale, local experience and established relationships with relevant customers, regulators and industry participants; the success of us and our network partners in acquiring Card Members and/or merchants; and political or economic instability or regional hostilities; • our ability to successfully implement our dining strategy and grow our dining platform, which will depend in part on our ability to grow the number of diners, restaurants and other bookable venues using the platform and transactions on the platform; expand and innovate in the tools and capabilities offered through the platform, including integrating the Tock and Rooam acquisitions and benefiting from their added capabilities, users and/or bookable venues; successfully compete with other dining platforms and means of booking venues; and effectively utilize our dining platform to provide value to Card Members and merchants and sell our products and services; • 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 or outages, which could compromise the confidentiality, integrity, privacy and/or security of data, disrupt our operations, reduce the use and acceptance of American Express cards and lead to regulatory scrutiny, litigation, remediation and response costs, and reputational harm; • changes in capital and credit market conditions, which may significantly affect our ability to meet our liquidity needs and expectations regarding capital ratios; our access to capital and funding costs; the valuation of our assets; and our credit ratings or those of our subsidiaries; 90 Table of Contents • our funding plan being implemented in a manner inconsistent with current expectations, which will depend on various factors such as future business growth, the impact of global economic, political and other events on market capacity, demand for securities we offer, regulatory changes, our ability to securitize and sell loans and receivables and the performance of loans and receivables previously sold in securitization transactions; • our ability to achieve our climate-related goals, which depend in part on the amount and efficacy of our investments in emissions reduction projects, the ability of our partners to set and achieve sustainability targets, the success of our supply chain and sustainability initiatives, and colleague programs; customer preferences and behaviors; the cost and availability of renewable energy, carbon removal and carbon offset projects and energy attribute certificates; changes in our real estate, technology and colleague strategies or an inability to execute those strategies; and brand perceptions and reputation; • legal and regulatory developments, which could affect the profitability of our business activities; limit our ability to pursue business opportunities or conduct business in certain jurisdictions; require changes to business practices or governance, or alter our relationships with Card Members, partners, merchants and other third parties, including affecting our network operations and practices governing merchant acceptance, as well as our ability to continue certain cobrand relationships in the EU; impact card fees and rewards programs; exert further pressure on merchant discount rates and our network business, as well as result in an increase in surcharging, steering or other differential acceptance practices; alter the competitive landscape; subject us to heightened regulatory scrutiny and result in increased costs related to regulatory oversight and compliance, litigation-related settlements, judgments or expenses, restitution to Card Members or the imposition of fines or monetary penalties; materially affect capital or liquidity requirements, results of operations or ability to pay dividends; or result in harm to the American Express brand; • changes in the financial condition and creditworthiness of our business partners, such as bankruptcies, restructurings or consolidations, including of cobrand partners, merchants that represent a significant portion of our business, network partners or financial institutions that we rely on for routine funding and liquidity, which could materially affect our financial condition or results of operations; and • factors beyond our control such as global economic and business conditions, consumer and business spending generally, unemployment rates, geopolitical conditions, including resulting from recent political developments or further escalations or widening of ongoing military conflicts and regional hostilities, adverse developments affecting third parties, including other financial institutions, merchants or vendors, as well as severe weather conditions and natural disasters (e.g., hurricanes and wildfires), power loss, disruptions in telecommunications, 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, foreign exchange rates 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. 91 Table of Contents ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Refer to “Risk Management” under “MD&A” for quantitative and qualitative disclosures about market risk.