Ladies and gentlemen, thank you for standing by and welcome to the American Express First Quarter 2017 Earnings Call. At this time, all lines are in a listen-only mode. And later, we will conduct a question-and-answer session with instructions being given at that time. [Operator Instructions] And as a reminder, today’s call is being recorded. I would now like to turn the conference over to our host Mr. Toby Willard. Please go ahead sir.

Thanks, Gary. Welcome. We appreciate all of you joining us for today’s call. The discussion contains certain forward-looking statements about the Company’s future financial performance and business prospects, which are based on management’s current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements are set forth within today’s presentation slides and in the Company’s reports on file with the Securities and Exchange Commission. The discussion today also contains certain non-GAAP financial measures. Information relating to comparable GAAP financial measures may be found in the first quarter 2017 earnings release and presentation slides, as well as the earnings materials for prior periods that maybe discussed, all of which are posted on our website at ir.americanexpress.com. We encourage you to review that information in conjunction with today’s discussion. Today’s discussion will begin with Jeff Campbell, Executive Vice President and Chief Financial Officer, who will review some key points related to quarter’s results through the series of presentation slides. Once Jeff completes his remarks, we will move to a Q&A session. With that, let me turn the discussion over to Jeff.

Well. Thanks, Toby, and good afternoon, everyone. We’re off to a solid start to 2017. Our earnings per share for Q1 was $1.34 and we’re encouraged by the momentum we see in our revenue performance. As you know, accelerating revenue growth through capturing opportunities across our diversified business model has been a key priority for us. In addition, we’re seeing the benefits of our cost reduction efforts and continue to return significant amounts of capital to shareholders through our dividend and share buyback programs. In many ways, our Q1 results show the steady progress we’re making on the range of growth and cost initiatives that we have put in place over the last couple of years and that we reviewed at our Investor Day last month. These initiatives have been supported by the spending that we did over the last two years. We expect that these efforts will all come together to help us produce steady results during 2017 and position us well for the longer-term. Going forward we remain focused on delivering improvement in EPS as we progress through 2017 and beyond this, we’re equally focused on our strategies to generate sustainable revenue and earnings growth. While it is still early in the year and we have work to do, our first quarter is a positive start to hear. With that, let me turn to the detailed results, starting with the summary financial performance on Slide 2. Revenue for the first quarter was down 2% reflecting lower discount revenue and net interest income following the Costco portfolio sale in Q2 of last year. When excluding FX and Costco related revenues in the prior year, our adjusted revenue growth accelerated modestly to 7% on a sequential basis. The first quarter also included as expected given the volume growth we’re seeing…

Thanks, Jeff. Before we open up the lines for Q&A, I will ask those in the queue to please limit yourself to just one question. Thank you for your cooperation. And with that, the operator will now open the line for questions. Gary?

Thank you. [Operator Instructions] And our first question comes from Sanjay Sakhrani from KBW. Please go ahead.

Thanks and good results. I guess I’m just making sure that the EPS outperformance in the first quarter relative to what you articulate at the Analyst Day was really a result of revenue outperformance as you mentioned Jeff. And I guess when we think about the difference between the $5.60 versus the $5.80 in your range, is the difference how much you’d spend on investments?

Well. Couple comments Sanjay and thank you for the question. You are correct that relative to our expectations early in large at Investor Day. What surprised us frankly in the month of March was how strong the revenue performance came in. And so that is the main driver of why our EPS for the quarter ended up being a little bit stronger than I would have expected back in that first week of March. On the margins I’d also point out that we had a few tax discrete items, you’re always working on various tax audit settlements and things like that, that are a little bit hard to time, and so those came in and out at a couple pennies as well, although over the course of the year that number is not particularly material. In terms of our guidance for the year, I guess I’d come back to what I said in my earlier remarks. Sanjay we feel really good about the start we’re off to, but, gosh, it’s only one quarter and we have a lot of work to do as we go through the years. Certainly we are encouraged by the revenue performance. And I would say based on the first quarter, I’d certainly think it’s much likelier that we will be at the higher end of the revenue range that I talked about in Investor Day which was for adjusted revenue growth to be at 5% to 6%. But we like a little bit more time pass before we convert that into what that might be for EPS. I would just include by saying we certainly feel very confident in the $5.60 to $5.80 EPS guidance range that we have reconfirmed again today.

Thank you.

Great. Thanks, Sanjay.

Thank you. And now to line of Eric Wasserstrom from Guggenheim Securities. Please go ahead.

Thanks very much. Just to follow-up on that on Sanjay’s line of questioning. You’ve in the past articulated in a various scenarios for revenue growth translating into a – to certain levels of earnings growth. And so given that you’re now accelerating towards the high end of your range, which is really quite impressive, given the competitive environment. How do we conceptualize the relationship between revenue growth and operating leverage as it relates to the earnings outlook?

Well. You are right Eric. That we have a pretty simple financial model we like to talk about, which all starts with taking advantage of the range of revenue growth opportunities we have and to the extent we can get good revenue growth, the fixed cost nature of our business allows us to get pretty steady operating expense leverage. And the fact that we’re not overly capital intensive in our business allows us to use our capital strength to add a little bit more to EPS growth. It’s pretty simple model, but it all starts with the revenue growth line. You heard us talk a lot at Investor Day in early March about how focus we are in the objective of getting to a sustainable 6% revenue growth rate and when you look at the business model we have – we can achieve that, we certainly are then confident we can get to EPS growth of more than 10% steadily. What I would say, this is 1 quarter. We feel really good about the quarter end. Certainly in 2017 I’d remained you that when you think about prior year including a big game on a couple portfolio sales as well as happy year of earnings from that partnership that, we no longer have. Our EPS growth if you consider those things in 2017 is of course quite high way, way, way above the more than 10% level and that’s because we are getting an unusual amount of operating expense leverage because of our efforts to take $1 billion out of cost structure. And because as we built into our guidance and as we’re off to a good start on we have pretty good revenue growth in the projections we have for 2017. So what all that translates into 2018 and beyond we’ll have to see, but I think we feel pretty positive about the start we’re off to this year.

Great. Thanks very much.

Thank you.

Thank you. And now to line of Craig Maurer from Autonomous. Please go ahead

Yes. Hi, thanks. Looking to ask a question on a less glamorous subject. Could you comment on where attrition has been running and how that’s trended over the last 12 months? The new account growth is very impressive, and I just was hoping to balance it with the other side of the equation.

Sure thanks for the question. As you have heard us talk about probably in multiple forms, when you look across our geographies and our customer segments, our attrition rates are modest and actually remarkably stable. They just don’t move that much. I think it’s certainly got a lot of attention when we talked about the fact for a few weeks last year in the U.S. consumer premium segment, when you look that Platinum cards you had a very modest uptick in attrition that quickly came back down. But all of these numbers for attrition across all of our businesses are in the low single digits on an annualized basis. So we really haven’t seen any change when I look across the different business and the different geographies Craig, in those numbers and to finish of the Platinum story while we saw that one little blip for few weeks, in fact we ended 2016 with more Platinum Card Members in the U.S than we’ve ever had in more spending on the Platinum Card that we’ve ever had in a year. So we are always focused on providing great value to our customers we very much try to target our value propositions at customers who want to build long-term relationships with the company. That’s what we’re all about. And right now we don’t see any signs of any change in our ability to do that. So thank you for the question.

Thanks Jeff.

Thank you and now at line of Ryan Nash from Goldman Sachs. Please go ahead.

Hi, good evening Jeff. I was wondering if I can ask a question on rewards. They were up 20% year-over-year I believe last quarter you talk about something closer to 13%. Is this really just a ramping up of the cost associated with the updated Platinum Card value proposition? Are you still expect to rewards to grow at that pace? Or given the changes that you made, are you now expecting them to grow faster? Thanks.

So couple things. It’s a good question Ryan. We – if you go back probably a year you heard us first day at our Investor day in 2016 that when you just think acknowledge the reality of the competitive environment mostly in the U.S. consumer segment. We said at the time we expected to our rewards cost to grow a little faster than billings. In fact if you look at most of 2015 and 2016 they really weren’t there were growing roughly in line with billings. But our expectation for some time has been that you would in select cases, see us change some value propositions. In early October of last year, we did make some more significant value proposition changes in both the business and consumer platinum products in the U.S. We’re pleased with the early results on both of those. But that step up is what drove our rewards costs up in Q4 of 2016, I’d say you saw probably the full effect, because you probably in quite get the full effect in Q4. In this quarter and so you will continue to see that ballpark level of year-over-year increase until we’re done lapping those changes as you get to the last quarter of 2017. All that said, I would remind everyone, we feel good, as a general matter, about our value propositions today. And I think the mere fact that we had another really strong quarter of acquiring new Card Members is a demonstration that across the range of geographies and customer segments and products that we have, we think we have very competitive value propositions when you look at both what Doug Buckminster referred to in our Investor Day as the sort of real – a table stakes elements of the product, which are about rewards and pricing as well as the experiential value that we work very hard to uniquely offer given the range of unique strengths we have. So I would expect to see, in some, the rewards cost continue to grow for the next couple of quarters. It is mostly Platinum, although there’s also some really nice growth we’re seeing in a few of our cobrand relationships like Delta that also pushed the number up a little bit. But it’s mostly Platinum, and we should be done lapping it as we get to the end of the year.

Thank you and now to the line of Jamie Friedman from Susquehanna Financial. Please go ahead.

Hi, thanks, Jeff. I just want to ask you it’s on slide 16 of the appendix. If you don’t have it in front of you, I don’t want to disorient you. But the question is the spending per Card Member did decline to $3,297 this quarter. And I was just wondering if you could just give us some context. In fairness, when you look at it, it does look seasonal. But any context that you can give – if you don’t have that in front of you, that’s fine. But is that $3,297, is that a good or bad number? Should that be going up or down? The context of that will be helpful. Thanks, Jeff.

I’ll admit I’m paging through, James, to be exact with the numbers. But I guess, I’d make a few comments. First off, remember, when you look at average spend year-over-year, the sale of the Costco cobrand has caused some dislocations attempt to on a year-over-year basis actually go in the other direction. Because the average spend per card was a little lower. When you look sequentially in – Toby just handed me this.

Yes, so if you look – now I don’t have the page in front of me. So you see that when you look year-over-year at the 7% increase. When you go sequentially by quarter, you are correct that in Q4, most of us, and I put myself in this camp, tend to spend a little bit more in Q4 given the holiday season than you do in other times of the year. So I don’t particularly see anything in the sequential change that should be particularly meaningful. I think the more significant thing is to look at the year-over-year change where you’re taking the seasonality out. You do see it up a little bit, although, as I said, that is aided somewhat by the shift in the mix of cards because of the sale of the Costco cobrand portfolio.

Got it. Thanks for the help.

Thank you Jamie

Thank you and now to line of Don Fandetti from Citigroup. Please go ahead.

Yes Jeff I wanted to just shift gears to cobrands, briefly. I think you have the Hilton deal that might be coming up. Can you talk about when that renews and size it and also how you view sort of an airline hotel deal versus the retail deal?

Well I think Don as I’m sure you expect me to say, we really value all of our cobrand partners, and I would put Hilton in that category. And you didn’t ask, but it’s probably on your mind. I would put SPG in that category, and we work really hard everyday to create value for our card members, for our partners and for our shareholders. Beyond that, I can’t comment on specific contract terms for what might be the ultimate outcome of Marriott as they think about what to do with the 2 cobrands that are now offered to both Marriott Rewards and SPG Card Members or what Hilton might choose to do as it thinks about its current 2 cobrand partners. What I would say is that to the distinction you made, we do think that there are certain types of cobrand partners who are interested in building value, and business together. Cobrand partners who are focused on some of the travel and entertainment oriented strings that we have I would remind you that we run a big consumer travel agency and we have a joint venture to run a big business travel agency and we have a long, long, long, long way to see of being very strong in attracting a customer base that is very travel oriented. And so we do think that allows us to bring some unique strengths to travel oriented cobrand, that’s quite frankly, probably are at there in certain retail cobrands or often a retailer as we talked about on and off over the last couple of years. And often, the retailer is really after, in many ways, a payment vehicle that will allow their customers to do some level of borrowing. And while, as you know, one of our strategic initiatives is trying to capture more of our own customer borrowing behaviours as a general matter, we remain a Spend-Centric oriented company and we’re less likely to be real focused on a real competitive on products where the economics are really driven 100% by lending. So we’ll have to see where things like Marriott and Hilton goal going forward, but we’re focused everyday and providing value to those partners.

Thanks, Jeff.

Thank you. And now to line of Bob Napoli from William Blair. Please go ahead.

Thank you. Good afternoon. So Jeff 7% growth – revenue growth in the quarter and March was the strongest and you had the leap year FX. So I guess that would suggest that there’s a possibility that you could have some accelerating – an acceleration in revenue growth. And I know you’re reiterating 5% to 6% and really to 1 quarter. But looking at the trend it seems like you might be able to go above the high end of that range. And then partly affecting that it’s kind of I mean I’ve covered this company a long time the international business seems to have more momentum than I’ve – I can remember. The spend growth accelerating each of the last three quarters. Is that helping to drive that acceleration or why is international? I mean you’re still just scratching the surface of the potential. Why is international? Is it just more investment there? So sorry, it’s kind of two questions but related.

Well. Thanks for the question Bob. Certainly we are encouraged as I said by the momentum we see across our billings growth, our loan growth and our revenue growth. It is early in the year right and I guess I make just a few balancing comment. Yes, March given stronger than we expected in certainly revenue growth even stronger than we expected. We do a little bit of rounding I will point out to simplify in the slide if you go calculate the precise number, you will see that our Q4 revenue growth rate on an adjusted basis was about 6.4% and in Q1 was 6.6%. So it does around 6% to 7%, but you have to put it into a little perspective. Leap day certainly hurt us in Q1. I will say outside the U.S. and particularly in our business segment Easter going to April probably helped us a little bit and then yes, we feel really good about the momentum we had built over international. So you will see some modest win, so as you get later end of the year first regulatory reasons they talk is going to impact the network business. I’ll have a bigger billings impact in revenue or profit impact. We’d some small revenue impact. So we’re driving management team on getting to is much revenue growth as we can get to. We are really pleased with the start we’re off to. As I did say earlier it does certainly maybe we should be at the higher end of that 5% to 6% range when I talked about yesterday for the year per adjusted revenue growth. I just think we’d like to see a little bit more time pass and a little bit more performance before we move beyond that number. So thank you for the comments.

Thank you.

Thank you. And now to line of David Ho from Deutsche Bank. Please go ahead.

I appreciate the comments on March. Just curious there’s been a lot of debate on the disconnect between the rising consumer confidence in the U.S. and not translating to overall kind of consumer spend they obviously you’re seeing in certain areas. Your T&E billings for the U.S. are still down year-over-year, but certainly trends are looking better. How much you think upside do you believe based on your new rewards propositions in some of these service-oriented categories travel and entertainment, would you capture kind of in the next cycle if it were to play out. Obviously it’s not really in your numbers and your guidance so far.

Yes. Well, there’s probably a couple questions there David. The first thing I’d say is that through March 31 as we look at our result it’s hard for us to see anything that suggestive of a material uptick in consumer confidence or consumer or commercial spending. Well, we have been gaining momentum as we look at the many different areas gaining momentum. We can see a change that we have made and how we’re running the business and what value propositions we’re offering, et cetera, that seems to be what is driving the change as opposed to us getting the benefit of just in generally stronger economic environment. So certainly we are as hopeful as anyone that there in fact is stronger economic growth to come in the future. I just can’t say I’d see any evidence of it right now in our results. And so your comment on T&E certainly one aspect of the changes we’ve announced in the U.S. to our platinum products is to position them both for the consumer and small business segment as being the go to products for the premium travel oriented card member. And we do think that positions us even better than we already are for positions us to be in a good spot to benefit from any increase in consumer spending or commercial spending in those areas. As I say that I would remind you that I think we still consider in going to that latest round of changes as a very, very strong player in the T&E segment. And I think that is the Company’s heritage it remains a tremendous strength of the company. Certainly we have brought in our offerings tremendously over the last couple of decades, but that T&E strength we do think continues and the latest moves we made are just the latest step in ensuring that we don’t lose that positioning. So we’ll have to see. I certainly hope that we see an uptick in spending I just can’t say we’ve seen it. Yes, so thank you David for the question.

Think you.

Thank you. [Operator Instructions] And now to line of Rick Shane from JP Morgan. Please go ahead.

Thanks for taking my question Jeff. Just curious I mean it’s been observed to strengthen the international business you talked about the decline. You’ve pointed to some anomalies related to the tax rate. I am curious if one of the things that we’re seeing here is the greater contribution from your international businesses on the tax rate and given potential tax reform something everybody should be thinking about.

What – you are correct if you just think about the U.S. with the co-brand portfolio sales and really steady nice growth in international. You are correct that we’re generating a little bit more of our earnings outside the U.S. and that does have a positive impact on our tax run rate. And that’s actually why even for the year before any of the discrete items that came in this quarter we gave slightly lower guidance for the tax run rate than what you’ve seen in the prior year results. Tax reform – we’ll have to see, as you’ve heard us say in other forms due to the nature of our business we have a pretty darn high effective tax rate and if you dig through the details of our financial statements, you will realize we pretty much pay that full tax rate in cash to the U.S. So we are a very, very significant tax payer. So any lowering of corporate rates in the U.S. we are likely to be a significant winner on because we’re not a particular beneficiary of any of the very and many things that help other organizations back to pay lower rates. So we’ll have to see, certainly we’re not running the company counting on any changes in the tax area, but it would be a great thing if it were to happen.

Hey, Jeff and just a follow up on that, given that you talk about the tax rate coming back up a little bit through the remainder of the year not to read too much into the first quarter tax rate. Does that suggest that you think that the business mix is going to shift a little bit? Is there an implication there that we should be considering.

It’s really just a math, Rick, if you take the size of the settlements that drove the discrete items in Q1. In a single quarter they were an up to drag your tax rate out of our 33% to 34% range. If you take – if we don’t have other settlements, which I generally don’t build them into my forward-looking comments because they’re harder to forecast. Over the course of a full year, they are quite enough to pull you out of your range. They certainly would – what I would expect will pull us to the lower end of that range, but not necessarily –there’s no differential assumption I’m making about mix.

Great, thank you.

Thanks, Rick.

Thank you. And out of line of Arren Cyganovich from D.A. Davidson. Please go ahead.

Thanks. I was surprised at the strength of the net interest yield. You mentioned that there are some seasonal benefit in the first quarter, just curious is, if you think that current mix shift that you’re getting also is the benefit will continue in maybe just your thoughts on the future trajectory of that net interest yield for the card loan business.

Well, you’re correct, Arren. There is a seasonal element. But as I mentioned earlier, there’s really quite a number of other factors that have helped us steadily drive the net interest yield up including some pricing actions we’ve taken, including the fact that with the funding mix we have right now personal – the personal savings rates we have on our deposits haven’t really moved. So in fact, the Fed interest rates increases so far have been in a positive for the company. Including the mix of customers moving to one where there’s a little bit more revolve, which of course helps the yield. And then we also and this is a benefit that will a bit over time. You’re helped a little bit right now, because we had in our efforts to win back cobrand card members over the last year or two. We had a number of people who were on introductory or promotional offers you were flipping into paying regular rates now. And that’s helping with the rate up a little bit right now. So a lot of factors there. The seasonality base a little bit and the one time impact from winning back some of the cobrand card members will save it bit over time. But all the other things, we think will hold and we think this continues more broadly to be an area, where there is a long, long runway for steady growth in net interest income, right. And where we’ve been growing our loans by having over 50% of the increase come from existing customers or those are people we know we understand the risk profile is further cementing the broad customer relationship we have with them. So we feel really good about what we’re doing here.

Thank you.

Okay, we’ll take one more question, thanks.

All right. And that comes from the line of Jason Harbes from Wells Fargo. Please go ahead.

Hey guys, thank you for squeezing me on here. So most of my questions were asked and answered already. But I did just want to follow up on a comment you made Jeff about some of the initiatives you’re taking to attract millennials on a platform. Perhaps you can elaborate a little bit on what you’re doing within the context of a reason New York Times article on a topic.

Well. Jason I appreciate the question. I think first off, it’s important to maybe that’ll set a little bit of the facts. So if you look at last year in our global consumer business – get to B2B in a minute, but in our global consumer business over 55% new customers brought in [indiscernible] And in fact that number was up about 16% at versus the prior year. If you look at the rolling of applications and new card members who are coming to mobile channels as you would expect. Almost half of those new applicants and card are millennials. If you look at the things we do as a company in the digital sphere, we talk a lot about how the unique nature of our closed loop network allows us to be particularly adept at working with company in the social media, digital and payments field. We really feel like we have been at the forefront of how you bring those three worlds of digital, social media and payments together. In the partnerships, we’ve done with Airbnb with Twitter with Facebook – with Facebook to have an annex spot. When you look at our pay with points program, which is broader than anyone else’s in the industry, it is disproportionately used by our millennial customers. So we feel really good about our track record of attracting millennials to the franchise. We feel really good about the range of things we do using our unique assets to appeal to millennials. The last thing I’d say though, whether you’re a millennial or a baby boomer or in any cohort. We are however about building long-term customer relationships. And we build products, we build value propositions, we build service experiences that are trying to attract and retain people who are about long-term relationship, not necessarily people who are looking for the latest great thing and they’re going to swap out of it six months. So, look you can never do enough in this area, so we’re focused every day I’m trying to do better. But I think our track record with millennial strong. And I think our ability to leverage our unique assets is strong. So I appreciate the question, but we feel pretty good about what we’re doing so.

All right. Great. Gary, thanks very much that wraps it up for us.

All right, thank you. And ladies and gentlemen that does conclude our conference for today. Today’s call will be available for replay after 8:00 PM Eastern Time today through midnight April 26, 2017, and the access AT&T replay system at any time by dialing 1-800-475-6701, and entering the access code of 421089. International participants may dial 320-365-3844 and again 800-475-6701 for domestic and the access code of 421089. And that does conclude our conference for today. Thank you for your participation and for using AT&T executive teleconference service. You may now disconnect.