Dear Shareholders,
American Express had an exceptional year in 2022, thanks to the dedication and ingenuity of our talented colleagues. Their unwavering focus to deliver on our vision of providing the world’s best customer experience every day enabled us to continue building long-lasting relationships and deepen engagement with our customers around the world.
We entered the year with strong momentum, enabled by the strategic decisions we made to significantly invest in our colleagues, customers and brand, as well as pandemic recovery tailwinds. To build on that momentum, we introduced a new growth plan in January 2022 with the aspiration to grow revenue and earnings over the long term at levels exceeding the already strong growth rates we had delivered before the pandemic.
In the first year of our growth plan, total revenues net of interest expense grew 25% to reach a company record of $52.9 billion, and we produced EPS of $9.85, both exceeding the guidance we set at the start of the year of 18% to 20% revenue growth and EPS of $9.25 to $9.65 for 2022.
As we entered 2023 with continued momentum across our businesses, American Express is a stronger company today than before the pandemic, and I remain confident that we have the right strategy and the right team in place to pursue our long-term growth aspirations.
In reflecting on our team’s outstanding performance, our success comes down to three important assets: our differentiated business model, our talented colleagues who power that model, and our global premium customer base who are at the center of everything we do.
Our Differentiated Business Model and Framework for Winning
Our business model is unique in the payments industry and provides a number of competitive advantages that, assembled together, are difficult for others to replicate. It is built on our leadership positions in the premium consumer and commercial payments space; our integrated payments platform that connects and builds relationships with both buyers and sellers; our membership model that comprises a broad array of rich benefits; our global position; and our world-renowned brand.
In order to most effectively optimize the advantages of our differentiated business model, when I became Chairman and CEO five years ago, my leadership team and I established what we call our Framework for Winning, a strategic document that focuses the organization on a core set of values and priorities that are most important for us to win in the marketplace. The Framework clearly defines our vision and mission, as well as our most critical business imperatives and how we plan to achieve them. Just as important to setting out what we want to achieve, the Framework also articulates how we want to achieve our goals, including the leadership behaviors we expect and the core values that are the foundation of all that we do.
This Framework has served as our architecture for running the company, and it evolves as we identify ways to build on our momentum and strengthen our culture.
As we mark the end of the fifth year since establishing our Framework, I am proud of the progress we have made across each of our strategic imperatives, leading to the exceptional results we delivered in 2022.
We have strengthened our leadership with premium consumers and in the commercial payments space as a result of decisions we made before and during the pandemic to take care of our customers and invest in growth opportunities. We enhanced our consumer value propositions by building out the lifestyle and experiential aspects of our products to attract a broader range of consumers. We also expanded the payment and cash flow solutions we offer small and medium size enterprises to help them grow their businesses. And we invested in growing and strengthening our global merchant network.
The results we saw in 2022 demonstrate that our investment in these areas is working. We saw strong momentum in bringing in new customers to the franchise across our consumer and commercial businesses, with proprietary new card acquisitions reaching a record 12.5 million, including record acquisitions of our U.S. Consumer Platinum and Gold cards and U.S. Business Platinum card. Our investments to broaden the lifestyle and experiential aspects of our membership model continued to resonate with younger consumers. In particular, Millennial and Gen Z customers, who are our fastest growing customer cohort in terms of both new account acquisitions and card spending, comprised over 60% of our new consumer proprietary accounts globally. Customer retention remained at high levels, and engagement continued to be strong, with overall Card Member spending increasing 25% (FX-adjusted) for the full year. Across our portfolios, credit performance also continued to be strong, with delinquencies and net write-offs remaining below pre-pandemic levels through the year.
We also strengthened our global, integrated network, which underpins our products and services and is a unique differentiator in the payments space. We maintained virtual parity coverage in the United States, while significantly increasing our coverage outside the U.S. We also further modernized our network, which has enabled us to introduce new products, including our first-ever consumer digital checking product, as well as launching capabilities that enable fintechs and partners to more seamlessly work with our network.
The Power of Team Amex
Our success in executing against our strategic priorities has been and will continue to be powered by our more than 77,000 colleagues around the world. They are the heart and soul of our organization, and they work with commitment and passion to deliver on our vision.
That is why we consider the most important part of our Framework for Winning our priority to attract, develop and engage the best colleagues – not just in our own sector but across all industries – who live our Blue Box Values.
Our Blue Box Values define what we stand for and guide how we operate. They reinforce our focus on backing our customers, our respect for each other, our commitments to embracing diversity and standing for equity and inclusion, and most importantly, doing what is right.
To back our colleagues, we continued to invest in them in 2022, building on the wide range of learning and development opportunities and enhancing our competitive benefits in key areas, including holistic health and wellness, total compensation, and flexibility. As a result, 90% of our colleagues said in a recent survey that the benefits and programs offered by American Express support their well-being, and 92% would recommend our company as a great place to work. Additionally, 89% of colleagues said they have a feeling of belonging at American Express, an increase from the prior year.
We were pleased to achieve our results in a year in which we all transitioned to our new way of working. In planning our return to our offices after the pandemic, we wanted to retain the best of what we learned working virtually while also recapturing the benefits of working together in person. To that end, last year we launched Amex Flex, our new working model that gives colleagues the ability to work fully virtual, fully in an office, or a hybrid schedule. As we mark the first anniversary of Amex Flex, I am pleased that while the way we work has evolved, our culture has endured. A majority of our colleagues have selected a hybrid schedule, which means they have chosen to come into an office on certain days and work virtually on the others, while other colleagues have chosen to be mostly or entirely virtual.
Our flexible approach is a key differentiator for us, and our continuous efforts to create an inclusive culture that embraces diversity has continued to earn us accolades. In 2022, American Express ranked No. 8 on the 100 Best Companies to Work For list in the U.S. by Great Place to Work and Fortune magazine and ranked similarly high on several other workplace lists outside the U.S. The company also ranked No. 13 on Fortune’s list of the World’s Most Admired Companies.
To remain competitive, we will continue to listen and evolve our approach to deliver the best experience for our colleagues so that they can deliver the best experience for our customers.
Backing Our Customers
Our customers are at the center of everything we do, and they represent one of our most critical competitive advantages in the fast-growing payments space. We are leaders in the most attractive customer segments in the industry, including premium consumers, small and medium-sized businesses, and the largest corporations around the world.
Our focus on these segments has enabled American Express to create a virtuous cycle of growth that starts with our premium customers. The high levels of engagement that we drive with our customers enables us to attract a growing network of merchants and partners, who add more value to our membership model, which in turn enables us to attract more premium customers, creating more scale. This scale enables us to generate more investment capacity and operating efficiencies to continue building our membership model, making it difficult for our competitors to catch up.
What’s truly special about our business is the relationship that our customers have with our brand. Many of our customers don’t see themselves as simply having or using American Express® cards. They feel they are with American Express. Our customers have a strong emotional connection to our brand and the products and services we offer. They are proud of their association with us. I often have people tell me how long they’ve been a member when I first meet them. As we have continuously evolved our membership model by adding more offerings, benefits, experiences and digital solutions to meet the changing needs and expectations of our customers, the power of our brand endures and remains relevant across generations.
I’m proud that our colleagues’ continued commitment to customer-focused product innovation and delivering a great customer experience that once again earned our team top accolades. In 2022, customers rated American Express No. 1 in customer satisfaction in the J.D. Power U.S. Credit Card Satisfaction Study among national credit card issuers, landing the top spot for the 12th time in the 16 years since the survey began. Customers also rated us No. 1 in the J.D. Power U.S. Small Business Credit Card Satisfaction Study for the second year in a row.
Remaining Focused
We see many opportunities ahead for our business, and we intend to capture these opportunities and build on our momentum by continuing to invest at high levels in several key areas, including further innovating our consumer and small business products; growing merchant acceptance with a particular focus outside the U.S.; introducing new digital capabilities that deliver seamless customer experiences in their channels of choice; and expanding into adjacent areas that reinforce our core membership model, including new lifestyle and financial services for consumers and SMEs.
Looking ahead, we are focused on building on our momentum to achieve our long-term growth aspirations and remaining disciplined and nimble to meet our customers’ evolving needs.
While there are uncertainties in the macroeconomic environment, we have the right strategy and team in place to navigate changes in the operating environment should they occur. Our company has shown resiliency in the face of disruption throughout the years, including more recent events like the September 11 terrorist attacks, the Great Financial Crisis, and the COVID-19 pandemic. Each time, we have emerged a stronger, more focused company, and that is because of our commitment to backing our colleagues and our customers.
Having just completed my fifth year as Chairman and CEO, I have never felt more inspired and proud to lead American Express and the incredibly talented colleagues who make our company so special. We have numerous opportunities ahead to continue deepening and strengthening our relationships with our customers. I am confident that by staying true to our vision, focusing on our strategic imperatives, and living our Blue Box Values, American Express will continue to succeed well into the future.
Sincerely,
Stephen J. Squeri
Chairman and Chief Executive Officer
American Express Co.
Read the original letter here.
