Ladies and gentlemen, thank you for standing by. Welcome to the American Express Q1 2021 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. As a reminder, today’s call is being recorded. I would now like to turn the call over to our host, Head of Investor Relations, Ms. Vivian Zhou. Please go ahead.

Thank you, Alan, and thank you all for joining today’s call. As a reminder, before we begin, today’s discussion contains forward-looking statements about the company’s future business and financial performance. These are based on management’s current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these statements are included in today’s presentation slides, in our reports on file with the SEC. The discussion today also contains non-GAAP financial measures. The comparable GAAP financial measures are included in this quarter’s earnings materials as well as the earnings materials for the prior periods we discussed. All of these are posted on our website at ir.americanexpress.com. We will begin today with Steve Squeri, Chairman and CEO, who will start with some remarks about the company’s progress and results; and then Jeff Campbell, Chief Financial Officer, will provide a more detailed review of our financial performance. After that, we will move to a Q&A session on the results with both Steve and Jeff. With that, let me turn it over to Steve.

Thanks, Vivian. And hello, everyone. We appreciate you joining us for today's call. Early this morning, we reported first quarter revenues of $9.1 billion and earnings per share of $2.74. I'm pleased to say that our overall core business performance was slightly better than our expectations with credit performance continuing to be best-in-class. And we're especially encouraged about the progress we're making toward our aspiration of returning to the original EPS expectations we had for 2020 in 2022. As I discussed in January, we're looking at 2021 as a transition year, where our focus is on investing to rebuild growth momentum by firing up our core business, scaling next-horizon opportunities, while continuing to retain financial flexibility. And while I feel good about our results for the quarter, what I feel really good about is the progress we're making to rebuild momentum. When we talk about firing up the core, we're looking for meaningful progress in four areas: spending volumes coming back to pre-pandemic levels, bringing new customers into the franchise, retaining and deepening relationships with our current customers, and signing up additional merchants. We're making good progress in all these areas. Overall, spending on American Express cards in Q1 continued the sequential improvements we saw through the last two quarters of 2020. US volumes exceeded our expectations in the quarter, and spending in March from US consumer and small and medium-sized enterprise customers was higher than March 2019 levels. Non-US volume lagged a bit due to renewed lockdowns in certain international countries. Excluding travel and entertainment categories, spending on our cards in Q1 was up 11% on an FX-adjusted basis versus 2019 levels. This marked the third straight quarter of positive growth. And although the T&E volumes were significantly lower in the first quarter versus last year, we've seen a steady sequential upward trend in monthly T&E spending, and a noticeable improvement in recent weeks, particularly in the US as the vaccine rollout accelerated. These trends indicate that the pent-up demand for consumer travel we've been talking about is real. And it increases our confidence that domestic consumer travel will continue to recover as the year progresses. In terms of bringing new customers into the franchise, card acquisitions are also gaining momentum, and were up sequentially in the quarter globally. In fact, new accounts acquired on key premium US consumer and small business products were above 2019 levels and exceeded the prior quarters. Initial spending on these new cards is strong. And the average FICO scores of these new US consumer and small business card members are higher than those acquired pre-pandemic. In addition, card acquisitions in some of our largest travel co-brand portfolios have accelerated since the fourth quarter, an important indicator that travel remains an attractive category for consumers over the long term. Another indicator of building momentum in our core business is retaining and increasing engagement with existing card members. We have a good story to tell here as well. Card member attrition on our proprietary products, which also includes our co-brands, continues to be lower than in previous years, and customer satisfaction levels remain higher than pre-COVID-19 levels. The additional value we provided on several of our premium products helped drive card member loyalty and spending in 2020. And as we believed, has been sustained into this year. For example, 95% of US Platinum Card Members who took advantage of the streaming credits, and 88% who used wireless credits offered last year are continuing to spend in these categories months later. We're also seeing good engagement on the new offers we rolled out earlier in the first quarter for Platinum Card Members, which include statement credits with PayPal and other select merchants. The uptake on these offers is in line with the wireless and streaming offers we announced last year. Overall card member engagement with our digital channels and capabilities is at an all-time high in most areas. For example, over 88% of our US card members are making their payments digitally and 87% use our website or app for self-service. The number of Amex offers redeemed in Q1 increased fivefold versus last year's first quarter, topping 5.3 million redemptions. Finally, we continue to see strong adoption of Pay It Plan It, our Buy Now Pay Later feature after we recently expanded the capability to all US consumer cards. Since launching Pay It Plan It, card members have created over 6 million plans totaling over $5 billion of accounts receivable. Another key driver of momentum is expanding merchant coverage. In the first quarter, we continued to make progress growing merchant coverage internationally, while maintaining our coverage levels in the US. When it comes to building momentum, we aren't just focused on the near term, we're also focused on scaling next-horizon opportunities that will drive growth over the longer term. China represents an exciting opportunity in this regard. As you know, developing our card processing network in Mainland China has been a priority for us and we're pleased with our progress. Since getting the green light to start processing payments in China eight months ago, we have reached mobile wallet parity coverage through our partnerships with China's major mobile wallet providers. And to date, we have added over 14 million merchants to the network at the point of sale with more to come. A key enabler of our coverage growth in China is the progress we're making to modernize our network, particularly in adding the capability to process debit transactions globally which is an essential need for customers in China and helps us prepare for potential additional debit applications elsewhere. We remain focused on scaling our China business by acquiring card members through the relationships we've established with 16 issuing partners, and I look forward to sharing more highlights of our progress over the course of the year. In our commercial business, our growth has been and will continue to be driven primarily by small and medium-sized enterprises. A key element of our longer-term growth strategy for the SME franchise is to deepen our relationships with current customers and attract new ones by offering a range of supplier payment and cash flow management solutions, both on and beyond the card, giving business owners more tools to help them manage their businesses. Kabbage is one example of how we plan to bring this strategy to life. We've been focused on integrating Kabbage's digital capabilities into our business. And in Q1, we began the rollout of the Kabbage platform, which includes a business checking account and working capital solutions to our small business customers. In our consumer business, Resy, our online dining platform, helps drive bookings and spending at restaurants, which is a top category for our card members. When the pandemic hit, Resy quickly pivoted its value proposition for restaurant owners to help them expand their offerings and find new ways to attract customers, including enabling takeout, meal kits, family meals, and virtual events. Resy also provided a number of special offers for Amex card members. As a result, over the past year, Resy has seen significant growth in engagement for both consumers and restaurants. In fact, we've seen a number of reservations booked on the platform more than doubled since December and Amex card members who use Resy are some of our highest spending and most profitable customers. Those are just some of the examples of our progress in rebuilding our growth momentum, both in our core business and with next-horizon opportunities. Importantly, as we've increased our investments in both categories, we've also been focused on maintaining our financial strength and flexibility. We resumed share repurchases this quarter and our capital ratios continue to be well above our targets. Before I hand the call over to Jeff, I want to share some thoughts on where I see things heading in the near term. As I sit here a little over a year since the global COVID-19 pandemic started, I'm optimistic that the hopeful signs we're seeing as vaccine distribution accelerates will continue and get stronger as we move through the year. Of course, we're still cautiously keeping our eye on the progression of the virus and its impact on local lockdowns and cross-border travel restrictions in certain areas. But there are clear indicators that the economy is improving, particularly in the US and I believe this will translate into continued steady improvements for American Express. Given all of this, we remain firmly committed to executing on our 2020 investment strategy for building growth momentum for the longer term. As I said last quarter, we're not focused on achieving a particular EPS target this year. Instead, we're focused on achieving our aspiration of returning to the original EPS expectations we had for 2020 in 2022, and for the company to be positioned to execute on our financial growth algorithm going forward. I'm encouraged by the results we've seen thus far in 2021, which makes me even more confident in our roadmap for achieving our 2022 aspiration. I'm particularly proud of our colleagues who have remained nimble and focused through the uncertainties of the past year; their dedication and hard work, along with the flexibility of our business model, the loyalty of our customer base, the strength of our partnerships, and the value of our brand make me feel very good about the future. Jeff will now walk you through our results and we will take questions after that.

Well, thank you, Steve. And good morning, everyone. It's good to be here today and talk about our first quarter results, which reflect good progress toward the aspirations we have for 2022 that Steve just outlined. As I've said since the beginning of the pandemic last year, the key drivers of our financial performance in this environment remain volume and credit trends, along with, this year, the marketing investments we are making to rebuild growth momentum. I'll spend most of my time this morning on these topics. But first, looking at the summary financials on slide three, when you consider year-over-year results, last year's first quarter included two months of pre-pandemic results. And so, as you would expect, first quarter revenues of $9.1 billion were down 13% year-over-year on an FX-adjusted basis. But in contrast, while we don't typically look at monthly results, were you to look at our revenues in just the month of March, you'd see that they were up 7% year-over-year. Our first quarter net income was $2.2 billion and earnings per share was $2.74. Included in these results is a $1.05 billion credit reserve release due to improvements in the macroeconomic outlook and continued strong credit performance. So, now, let's get into the first key driver of our performance, volumes. Beginning with a few comments on some nomenclature changes we have made to our volume reporting. Thinking ahead on how we expect our card processing network in Mainland China to grow in the coming quarters and years, we have renamed what we previously called GNS billed business as processed volumes, because our business model in China is unique and different from what we do with our GNS partners in other regions. We have also changed what we previously referred to as proprietary billed business to just billed business and renamed what we used to call our overall volumes from billed business to network volumes. You will see we've recast prior periods in the disclosures that accompany our earnings release, as well as on appendix, slide 27. So, with these changes in mind, moving on to our volume performance on slide four, we saw continued recovery across all of our volumes in the first quarter with total network and billed business volumes down 8% and 9%, respectively, and processed volumes down only 1%, all on an FX-adjusted basis. Getting into the details of our billed business growth, which you will see several views of on slides five through 10, we've shown first quarter trends on both a year-over-year basis and relative to 2019 in order to provide a clearer picture of how spending is recovering as we begin to lap the onset of the pandemic in March of last year. I'd also note that the trends we've seen in the first two weeks of April are a continuation of the trends we saw exiting the first quarter that I'll focus on this morning. In addition, it remains important to look at spending on travel and entertainment categories separately from spending in other categories, which we will now be calling goods and services spending, given the very different impacts the pandemic has had on these two very different categories. Overall, there are a few key points I'd suggest as the takeaways on volumes from all of these slides. First, there are clear signs of volume momentum that we feel good about. As you can see on slide five, our overall billed business volume growth continued to recover steadily throughout the months of the first quarter, with the reopening of the economy and rollout of the vaccines progressing well in the US and certain other geographies. Spending on goods and services, which represents the vast majority or 86% of our volumes, exceeded our expectations, growing 6% year-over-year and up 11% versus 2019 in the quarter and up 15% in the month of March. Spending on travel and entertainment also showed sequential improvement given the progress on the medical front in the US, further reinforcing our view that consumer and small business travel will recover over time. Second, the growth in goods and services spending has continued to improve steadily in both our consumer and commercial businesses. In consumer, shown on slide six, we continue to see strong online and card-not-present spend growth, which was up 23% year-over-year this quarter, even as the recovery of offline spending accelerated, driving goods and services volumes up 7% year-over-year and 13% versus 2019. In commercial, as you can see on slide seven, SME spending remains the most resilient across our customer types, supported by continued growth in B2B spending, which drove overall commercial spend on goods and services up 5% year-over-year and up 8% versus 2019 in the first quarter. Third, we are seeing a faster pace of spending recovery in the US versus other regions. As shown on slide eight, the total volumes from our US consumer and SME customers are recovering faster than other customer types and were up 1% versus 2019 levels in the month of March, even with the continued drag of T&E spend not yet fully recovering. International consumer and SME spending, on the other hand, is recovering more slowly due to renewed restrictions in key international geographies and the fact that, historically, we tend to have more travel-related spending in our international regions. And large and global corporate card spending, which historically has been primarily travel and entertainment, continued to be down the most during the first quarter, as we expected, since this will be the last customer type to see travel recover. Fourth, T&E spending, though still down significantly, did improve steadily across all categories throughout the months of the first quarter. And consumer T&E continued to recover faster than that of SMEs and large corporations, as you can see on slides nine and 10. We expect this trend to continue given the pent-up demand to travel that we see in our consumer base and the positive early signs of domestic travel recovery that we see in the US as the vaccine rollout progresses. So to sum up on spending volumes, we feel good about the steady growth we are seeing in goods and services spending, and we expect it to continue to grow throughout 2021. On T&E spending, the trends we've seen in the first quarter are encouraging and give us more confidence in our current assumption that by Q4, T&E spending will have recovered to around 70% of its Q4 2019 levels, led by recovery in US consumer domestic travel. Turning next to the other key volume driver, receivable and loan balances, on slide 11. Receivable balances were down 4% sequentially and 6% year-over-year in the first quarter, in line with spending volumes. Loan balances, however, were down 5% sequentially and 13% year-over-year, more than spending volumes, as we continued to see the liquidity and strength among our customer base leading to higher paydown rates, which relates to the very strong credit performance I'll talk about in just a moment. Looking forward, I would expect the recovery in loan balances to continue to lag the recovery in spending volumes. So turning next to our second key driver, credit and provision, on slides 12 through 16. As you flip through these slides, there are a few key points I'd like you to take away. We continue to see extremely strong credit performance with card member loans and receivables write-off dollars, excluding GCP, down 53% and 82% year-over-year, respectively, as you can see on slide 12. We attribute this performance to our robust risk management practices, the premium nature of our customer base, as well as the unprecedented level of government stimulus and forbearance programs. Clearly, macroeconomic forecasts have improved over the last 90 days, as you can see on slide 13. However, we still have two very different macroeconomic forecast scenarios, and we continued to put significant weight on the downside scenario in the modeling we did to calculate our first quarter credit reserves. The impact of the improvement in the set of macroeconomic assumptions on our reserve models, coupled with the sequential decline in loan and receivable balances and our strong credit performance, led us to release $1.05 billion of reserves. This reserve release and our extremely low write-offs drove a provision expense benefit of $675 million in the first quarter, as shown on slide 14. That said, the balances enrolled in our financial relief programs are still $2.1 billion higher than they were pre-pandemic, as you can see on slide 15. In the coming quarters, we will see how the card members exiting our financial relief programs perform. That will be an important milestone for us, though I would observe that all of the early exit performance indicators have looked quite strong. There also continues to be some uncertainty in the medical environment and the vaccine rollout, and we'll have to see how that plays out. And so we continue to hold a significant amount of reserves. Slide 16 shows you this and that we ended the first quarter with $4.8 billion of reserves, representing 6.4% of our loan balances and 0.5% of our card member receivable balances, respectively. Moving on to our third key driver, marketing investments to rebuild growth momentum on slide 17. We invested $1 billion in marketing in the first quarter as we continued to ramp up new card acquisitions, while maintaining our value-injection efforts. We acquired 2.1 million new cards in the first quarter, up around 20% sequentially. Importantly, the number of new accounts we acquired on our premium fee-based products was up 35% versus Q4, with acquisition volumes on many of our premium US consumer and small business products exceeding 2019 levels. As Steve mentioned, in 2021, our focus is on rebuilding growth momentum and maximizing our investments to do so. As a result, we continued to expect to spend a little over $4.5 billion in marketing this full year. Our ultimate marketing investment levels will be governed by the universe of attractive investment opportunities and the pace at which we wind down our value-injection efforts, as our customers begin again to experience the full benefits of our existing value propositions. So what do our three key drivers mean for our financial performance this quarter? As I said earlier, year-over-year revenues on slides 18 and 19 are impacted by the prior-year quarter, including two pre-pandemic months. So first quarter revenues were down 13% year-over-year on an FX-adjusted basis, primarily driven by volume declines impacting net discount revenue and net interest income, as well as declines in travel-related revenues and delinquencies impacting other commissions and fees and other revenues. Net card fees, however, grew 10% year-over-year in the first quarter, as you can see on slide 20, demonstrating the impact of the strong continued card member engagement that Steve discussed. Looking forward, I expect the growth rate of net card fees will slow for a few more quarters, driven by our decision last year to pull back on new card acquisitions as we were managing through the peak of uncertainty during the beginning of the pandemic. Given the renewed momentum, we are now beginning to see new card acquisitions. I would expect net card fee growth to then reaccelerate. Moving on to net interest income on slide 21, you see that net interest income declined 22% year-over-year on an FX-adjusted basis. While the primary driver of this is the decline in loan volumes, net interest yield on our card member loans also decreased 60 basis points due to the higher paydown rates from revolving card members on our credit card products. Looking forward, I expect the recovery in net interest income to lag the recovery in loan volumes. Volumes are also the primary driver of the discount revenue trends you see on slide 22. As expected, though, the contraction in discount revenue continued to be a bit larger than the decline in billed business. The average discount rate declined 8 basis points year-over-year, driven by the greater declines we saw in T&E spending where we, on average, earn higher discount rates. The year-over-year erosion in the first quarter is a bit less than in Q4 due to the recovery in T&E spending throughout the quarter that I spoke about earlier. Looking forward, we still expect that if T&E spending recovers to around 70% of 2019 levels by Q4, as I mentioned previously, you'd probably see overall revenue growth of around 9% to 10% for full year 2021. And if T&E recovers more slowly or quickly, you could see full year revenue growth but somewhat lower or higher than that 9% or 10%. Moving on to expenses, we are continuing to break out on slide 23 our variable customer engagement expenses, which move naturally in line with spend volumes and benefits usage, and marketing and OpEx, which are driven by management decisions. Variable customer engagement expenses in total were down 10% year-over-year. Relative to the past few quarters, we did experience higher usage of travel-related benefits and rewards, which we see as a clear sign of the pent-up demand we've been talking about. Looking forward, a good way to think about these variable customer engagement expenses is that I'd expect them to be about 40% of our total revenues for the next few quarters. Moving on to operating expenses, you can see that they were down 10% year-over-year in the first quarter, primarily driven by a few sizable gains in our Amex Ventures equity investment portfolio, partially offset by some higher deferred and other compensation expenses. In 2021, we still expect our operating expenses to be around $11.5 billion, below 2019 levels, as we continue to keep tight control over our operating expenses, while also investing to rebuild growth momentum. Turning next to capital and liquidity. On slide 23, our capital and liquidity positions remain tremendously strong. Our CET1 ratio increased to 14.8% in the first quarter, our highest level since we began reporting this ratio. And our cash and investment balance ended the quarter at $61.5 billion, far above our target levels, driven by the shrinkage in our balance sheet over the past year. We resumed share repurchases in the first quarter, repurchasing 3.3 million shares. And we remain committed to our dividend distribution and to our long-term CET1 target ratio of 10% to 11%. In Q2, we plan to repurchase shares up to the maximum amount permitted under the Fed-authorized capacity of around $900 million. Looking forward, our capital distributions will be a function of the Fed's guidelines, our capital generation, and the growth in our balance sheet. So let's close by talking about what the signs of momentum we saw in Q1 might mean for the future. In January, I laid out two scenarios of potential outcomes for 2021 that were primarily based on what happened with credit reserves. Our original scenario one, or low scenario, assumed a much worse medical and economic environment this year, and that we would not release any credit reserves in the year. Now, three months into the year, the macro outlook has improved, and credit performance has remained very strong. So we've already released $1.05 billion of reserves. This still leaves us, however, with a lot of credit reserves we've built due to economic uncertainty. So our updated scenario one on slide 25 assumes that this uncertainty persists, that the medical and economic environment does not improve further and that we, therefore, do not release any additional credit reserves this year. Such an economic outcome would likely put some pressure on our current assumption of a 70% T&E recovery by Q4 and likely drive a somewhat weaker revenue recovery. The combination of these things could lead to an EPS outcome as low as around $6 per share. Our updated scenario two, in contrast, assumes that we continue to see strong credit performance and a steady improvement in the economic outlook, leading to less uncertainty and having no need to maintain our current level of credit reserves. This sort of economic outcome would also likely drive a somewhat stronger revenue recovery in line with the 9% to 10% revenue growth assumption I spoke about earlier. In this scenario, our 2021 EPS could be as high as $7.50. More importantly, in either scenario, as I said earlier, our marketing investment levels will be governed by the universe of attractive investment opportunities that we see, not by a focus on any specific EPS outcome for 2021. What we are focused on is managing the company to rebuild growth momentum and achieving our aspiration of being back to the original EPS expectations that we had for 2020 and 2022, and for the company to be positioned to execute on its financial growth algorithm beyond 2022. And with that, I'll turn the call back over to Vivian.

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

Thank you. Our first question will come from the line of Don Fandetti with Wells Fargo. Go ahead.

Technical difficulty... 4% in March versus '19…

Hey, Don. Don, could you start again? We missed the beginning.

Sure, no problem. So Jeff, if you look at your T&E down about 54% versus '19 in March and April sounds like it gained a lot of momentum, it looks like down 30% for Q4 would be pretty conservative. How are you thinking about that? And also, what are your T&E assumptions as you sort of look at your '22 aspirational guide?

Well, maybe I'll start, and then, Steve, you might want to add a few comments. So let me work backwards. So in 2022, we're really assuming, Don, that consumer travel and entertainment spending is mostly back to where it was pre-pandemic. Small business lagging that a bit and then large and global corporation travel still being well below its 2019 levels. The other comment I would make about 2022 is domestic travel in the US and around the globe will be the fuel that gets us to that level. We would still expect cross-border travel to be a little weaker next year than it was in 2019, just given the likely lingering number of cross-border restrictions that you've seen. As of how we feel about our Q4 assumption, look, we had a clear inflection point this quarter in the US, and so we feel good. Steve, you may want to add a few?

Those assumptions Jeff just went through are exactly the assumptions we have in our calculus here. When you look at this quarter and the trends that we're seeing, we're seeing an increase in bookings. Our travel bookings are up 50% over the quarter compared to Q4 2020. When you look at February versus March, in March we were at 50% of 2019 bookings, whereas we were at 19% in February, so that's a meaningful increase. We're seeing, when we dig into the data and look at cohorts, younger customers are getting back at a much higher level. Their overall T&E spending is probably about 85% to 90% and almost 100% back to where they were in 2019 in restaurants. Among older customers, as they get vaccinated, we're seeing sequential month-on-month growth in their spending. For people over 45, you're seeing an 11% increase in overall T&E spending month-to-month. That's only going to get better as we move along. The last thing that gives us a lot of hope is redemptions, particularly Membership Rewards redemptions. In the fourth quarter for air redemptions, it was about 30%, and it's up to 54% now. So our customers are doing more travel-related redemptions. Our co-brand cards are doing quite well as well. All of that leads to, in an environment that continues to improve, us having a lot of confidence in hitting our 2020 plan in 2022.

Got it. Thank you.

We'll go next to the line of Craig Maurer with Autonomous Research. Go ahead, please.

Hi, good morning. I hope everybody is well. I wanted to just ask about the guide a little bit for 2021. Versus your original scenarios that you laid out with fourth quarter earnings, how much higher was the reserve release than you had envisioned? I'm trying to understand how much pull forward of reserve release benefit might have happened in the first quarter because of how strong credit quality was and the fact that lending did not accelerate?

So I think, Craig, the first comment I would make is, remember, we're not trying to provide guidance this year. We tried to give people a couple of low and high scenarios back in January to help people think about the year, and we updated them this quarter. What we are incredibly focused on is that 2022 aspiration, which we are really growing in confidence about. All that said, if I take you back to January, the then $5 low scenario assumed that the world would be so tough this year that you would not end up releasing any credit reserves. So we just released $1.05 billion of reserves. That's about $1. That takes you from $5 to $6. So your $6 assumes, once again, the world from here is suddenly going to get really tough, and you're not going to release any more reserves. At the high end, yes, we had assumed you release some modest level of reserves, which is why the high end only went up from $7 to $7.50. So that's how we thought about it. I just want to close though, by again emphasizing we're not focused on any particular EPS outcome this year. We're incredibly focused on what we're trying to achieve for 2022.

We'll go next to the line of Mark DeVries with Barclays. Go ahead, please.

Thanks. You know, I think that guidance around the corporate T&E spend makes a lot of sense. But Steve, I'd be interested in getting your color on recent conversations you're having with your large corporates on when they think they'll feel comfortable having their employees travel more freely? Whether they'll recover to pre-pandemic levels? How much substitution of virtual occurs? And then finally, just given that, do you see more upside or downside to that 70% recovery level?

When you think about corporate, the first thing people have to do is get back into the offices, because if people aren’t back into the offices, there's nowhere to travel to. You're starting to see companies gradually get back into the office. For us, we said we're not going to have people really come back until after Labor Day; others will phase people back sooner. I think the first step is getting people back into the office and then companies will decide how comfortable they are having visitors in the building. My anticipation is most companies will start reopening in the United States in the July through September timeframe and get to some capacity level. It will be slow, which is why we really haven't assumed a lot of corporate T&E coming back quickly. That said, corporate T&E takes many forms. We do have salespeople on the road calling on accounts, car rental, gas, hotels, and restaurants. Some segments, like industrial corporate customers that have people visiting plants, will recover sooner. Investment banks and consultants likely will want to meet clients in person again; there's nothing like in-person interaction for relationships and deals. This is why we talk about getting back to 2019 levels by 2023 for some types of corporate travel. For consumers, pent-up demand and vaccine rollout will drive domestic recovery. International travel will be more dependent on governments opening borders, so that'll likely lag into 2022. There is divergence across countries due to varying vaccine progress, but the more vaccines roll out, the more confidence people have, and the more they'll get out and spend. Toward the end of Q2 into Q3 this summer, you're likely to see more people traveling in the US.

We'll go next to the line of Betsy Graseck with Morgan Stanley. Go ahead, please.

Hi, good morning. My question is on the 2.1 million accounts acquired in the quarter. Maybe you could give us some color on the type of customer: age bracket, income, geography, that kind of thing? And give us a sense of what's resonating—is it more the cash back, the T&E, the specific enhancements that you're making on some of the programs, spend more get more kind of points, bonus points. And a little bit on how you're thinking about this group of new accounts that you're acquiring and what that means for future spend trajectory and growth rates versus what you were acquiring pre-pandemic. If there's any compare-contrast you can share that would be great. Thanks.

2.1 million new cards — in 2019 we averaged about 2.5 million new cards. When you look at the consumer cards, 60% of the cards we acquired were Millennial or Gen Z. During the pandemic, you saw more cash back cards being acquired. There was a 35% jump in premium card acquisitions in this particular quarter. Acquisition of Platinum and Gold cards was well above pre-pandemic levels. For our fee-based products, acquisition was a bit lower than in 2019 — around 60% versus about 70% in 2019 — but sequential increases have helped. We're seeing co-brand cards come back; for example, we saw about 90% more Delta cards acquired this quarter than in the previous quarter. We're seeing higher-quality customers: average FICO scores are higher and initial spending is strong. So we feel good about both our small business and consumer acquisition activity. We don't provide detailed geographic distribution, but our intent is not only to acquire cards, but also to acquire billed business. We're on track from a billed business acquired perspective to where we were in 2019.

The sequential growth in the travel co-brands has been tremendous. They're still below where they were pre-pandemic because you still don't have anywhere near as many people staying at hotels or flying. That's what leaves us overall a little bit below the level of pre-pandemic new card acquisitions. But once you look beyond that sector, we think we're at great levels today.

We will go next to the line of Mihir Bhatia with Bank of America. Go ahead.

Good morning and thank you for taking the question. I wanted to dig a little bit more on the 70% by year-end T&E assumption. It sounds like there's a mix shift between domestic and international, weighted more toward domestic, which I think we all understand. Is there a difference in revenue or profitability between that travel in terms of what you make? So what I'm trying to ask is as T&E comes back, is the contribution to revenue maybe going to lag a little bit compared to the contribution to volume just from that mix shift? And then any update on April billing trends? Thank you.

When we report volumes, we're reporting actual dollars of transactions. There isn't a structural difference in margins based purely on domestic versus international travel, though obviously an international long-haul ticket may have a much higher dollar value than a domestic ticket. Our volume numbers reflect that. You may see more transactions with lower dollar amounts in domestic travel, but that doesn't directly translate into a margin difference. Jeff, anything to add on other revenue lines?

The only thing I'd add is when you look at our other revenue and other fee and commission lines, some of that in dollars does come from cross-border travel. As we think about the 2022 aspiration, we don't expect cross-border travel to be fully back to 2019 levels in 2022. We don't need it to be to hit our 2022 aspirations. I'd put cross-border and corporate travel as remaining tailwinds that likely continue beyond 2022 as they come back to 2019 levels.

We'll go next to the line of Meng Jiao with Deutsche Bank. Go ahead, please.

Thanks for taking my question. I wanted to touch on the recent expansion of Pay It Plan It to all US consumer products. Have you seen any usage acceleration since you expanded that? And can you frame for us how big the opportunity set could be, and if it could apply to that 2022 aspiration you mentioned? Thank you.

It's probably too early to tell in detail since we only recently expanded it to all US consumer products. It's not a core assumption in our 2022 plan; it's upside. Since inception we've had card members create over 6 million plans totaling over $5 billion of accounts receivable. It's a convenience feature to meet card members' cash flow needs, and it's been popular. It existed for some of our cards before, and now it's broader. It may affect behavior and usage, but it's not a primary driver of our 2022 assumptions.

We'll go next to the line of Bill Carcache with Wolfe Research. Your line is open, sir. Go ahead.

Thank you. Good morning, Steve and Jeff. You guys have done a very effective job of adjusting your pre-pandemic value propositions, but can you offer any thoughts on the work you've done more recently around potential post-pandemic changes and consumer preferences that may be longer lasting and the risks that that could lead to more permanent changes? For example, how concerned are you guys about the risk that the value proposition associated with the airline lounges may not be as great post-COVID and how confident are you that you'll be able to identify sustainable cost-effective alternatives to maintain the overall value proposition across your different products to the extent that we can't just go back to the older pre-pandemic offerings that you guys had?

A couple of points. Our strategy for the last three years has been to refresh our products on an ongoing basis, typically on a three- to four-year cadence. We'll provide more detail as we refresh products. I actually take the opposite view on travel value propositions: I think they'll be stronger. People will value the safety and security of our lounges. We've opened up numerous lounges during the pandemic and they've become an oasis where our brand and service reassure customers. We are not backing away from lounges; we're continuing to open more. Status is likely to be even more important going forward, and we've seen that reflected in behavior. Regarding travel co-brand cards, in the month of March, examples like Delta and Hilton are at 2019 spending levels overall as customers have been accumulating points and seeking status. During the pandemic, we added value propositions like wireless and streaming credits, which drove customers to spend in those categories and they are sustaining that behavior months later. We're also adding offers like PayPal credits for Platinum members to expand value. We will continue to evolve and expand our value propositions; we're not walking away from them.

We'll go next to Ryan Nash with Goldman Sachs. Go ahead, please.

Good morning. Steve, maybe as a follow-up on that: you injected significant value prop enhancements into the business like streaming and wireless, and I believe some of those will evolve over the next few quarters. Can you talk about how you envision repurposing those marketing dollars? Jeff, you talked about spending a little over $4.5 billion this year. Could we see that come down beyond this year or do you expect to see these enhancements shifted toward customer acquisition and maybe see customer acquisitions above those 2.5 million per quarter you mentioned in 2019?

We spent about $1 billion in the quarter, and much of that was customer acquisition and engagement; the wireless and streaming offers had already ended. For the rest of the year, we plan to spend about $4.5 billion, but actual spend will be governed by attractive investment opportunities. If attractive opportunities exist, we will spend; if not, we won't. Given typical value-injection windows and customer acquisition dynamics, you'd likely see that marketing dollar bucket come down next year as value-injection programs wind down in 2022.

As Steve said, you need to see value injection spending come down over time. We were pleased this quarter because value-injection spending was down sequentially while customer retention and engagement remained strong, which supports the idea that these programs have been effective.

We'll go next to the line of Jamie Friedman with Susquehanna Research. Go ahead, please.

This is a very thoughtful IR deck so thank you for that and for the updated commentary. I just want to ask in slides seven, eight, nine, you demonstrate the outperformance of SME. Could you remind us what it is about SME relative to large and corporate that is different that makes it more sustainable?

There is a huge difference. Our corporate card is predominantly about travel and entertainment — roughly 60% T&E — whereas our SME cards are about goods and services: they use the card to run their business. SME cards are used for day-to-day operations, like professional services, maintenance, and other services that continued during the pandemic. That makes SME spend more resilient. That's why we acquired Kabbage: to provide digital banking, working capital, and cash flow tools to help SMEs run their businesses and deepen relationships. Some small business segments were hit hard, like restaurants, and some did extremely well, but our SME base is broad and diverse, which helped overall resilience.

We'll go now to the line of Bob Napoli with William Blair. Go ahead.

Thank you. Good morning, Steve and Jeff. Question on China and on debit, and broader thoughts on debit. What should we expect out of China? You've changed your reporting somewhat because it's your expectation to see significant numbers out of China, but you've also talked about building a debit capability broader than China. I wondered what your long-term thoughts were on that?

We changed the reporting to provide appropriate transparency because the China business model is different and will be significant for us over time. That's why we renamed those volumes processed volumes. In China, we'll have charge, credit, and debit transactions. Building the capability to process debit globally is important for customers in China and will also give us potential options to deploy debit capabilities in other markets over time. Today, some of our GNS partners issue debit locally; it's typically used within the country. As Chinese card members travel more globally, it's important they can use their products worldwide, including debit. We will evaluate where it makes sense to roll out broader debit capabilities beyond China as we develop our network.

We'll go next to the line of Rick Shane with JPMorgan. Go ahead, please.

Thanks so much for taking my question. One of the consequences of the Card Act was that it shifted the competitive landscape from offering lower rates to higher rewards. We think at the peak of the recovery after the Global Financial Crisis, that was challenging for AXP because it caused industry offers to converge toward your core value propositions. One of the responses we saw from you is that you moved onto your front foot in terms of targeting millennials for card acquisition. I'm curious as we enter this new period of expansion and all of your competitors are talking about growth, what are the lessons you learned the last cycle in either tactically or strategically and how will you respond?

I have a different view of the Card Act's impact. The Card Act affected the industry, but it had less impact on us because about 80% of our revenues are not interest income. Our strategy has been to expand our aperture and refresh products regularly. We realized our value proposition has broader appeal beyond traditional customers, which led us to target millennials, women, and multicultural audiences. We expanded the product suite and continually innovate. Competition is welcome; the lesson is to keep focusing on customer needs, evolve the value proposition, and refresh products on an ongoing basis. We also learned from the Costco experience and other strategic moves: continue strengthening partnerships and innovate to maintain differentiation.

Our final question will come from Sanjay Sakhrani with KBW. Go ahead, please.

Thank you. Good morning. Most of my questions have been asked, but just a quick one on credit. Jeff, I think you mentioned you're still weighting toward the downside scenario in your reserve calculation. I'm curious how realistic that is given where we are and where delinquency rates are and the building momentum? And one quick one on expenses: you mentioned that venture gains helped expenses this quarter. Should we view that as a one-time gain or how should we think about that?

On credit, you're correct. For the purposes of our accounting credit reserve, we did place significant weight on a downside scenario. That aligns a bit with a regulatory perspective where the Federal Reserve has urged caution before banks return to pre-pandemic capital distributions. The reserve on the books implies that the steady recovery we're in could stop and conditions could worsen; if that doesn't happen, you'd expect to see more reserve releases. Also, given the timing, you generally can't see write-offs spike materially this year without them flowing into next year. On operating expenses, yes, we had a $377 million gain in the quarter from our Amex Ventures equity investment portfolio. We have about 50 Fintech and other investments; the market's been strong so there was a big gain on a couple of those holdings. There are offsets, such as higher deferred compensation balances when markets are frothy. Think of the gains as mostly one-time this year. We remain focused on pursuing good investment opportunities and using our financial strength to support growth while being disciplined.

With that, we will bring the call to an end. Thank you again for joining today's call and for your continued interest in American Express. The IR team will be available for any follow-up questions. Alan, back to you.

And thank you. The webcast replay will be available on our investor relations website at ir.americanexpress.com shortly after the call. You can also access the digital replay of the conference call at 866-207-1041 or 402-970-0847, access code 3411494 after 12 PM Eastern Time today, April 23rd through midnight, April 30th. That will conclude our conference call for today. Thank you for your participation. You may now disconnect.