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Alan
Operator
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. If you wish to ask a question, please press 1, then 0 on your touchtone phone. You will hear a message indicating you've been placed in queue. You may remove yourself from the queue at any time by pressing 1, then 0 again. If you're using a speakerphone, Please pick up your handset before pressing any numbers. Should you require assistance during the call, please press star, then zero. 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 Jull. Please go ahead.
Vivian Jull
Head of Investor Relations
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 uncertainty. Factors that could cause actual results to differ materially from these statements are included in today's presentation slides and 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 Squary, 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.
Steve Squary
Chairman and CEO
Thanks, Vivian. And hello, everyone. We appreciate you joining us for today's call. Earlier 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 and 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. U.S. volumes exceeded our expectations in the quarter, and spending in March from U.S. 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 U.S., 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 U.S. 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 U.S. 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 the previous years, and customer satisfaction levels remain higher than pre-COVID 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 U.S. 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 includes statement credits with PayPal and other select merchants. The uptake on these offers are 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 U.S. 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 Planet, our Buy Now, Pay Later feature, after we recently expanded the capability to all U.S. consumer cards. Since launching Pay It Planet, 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 continue to make progress growing merchant coverage internationally while maintaining our coverage levels in the U.S. 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 to 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'll 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 SMA 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. Cabbage is one example of how we plan to bring this strategy to life. We've been focused on integrating Cabbage's digital capabilities into our business, and in Q1, we began the rollout of the Cabbage platform, which includes a business checking account and working capital solutions to our small business customers. In our consumer business, Resi, our online dining platform, helps drive bookings and spending at restaurants, which is a top category for our card members. When a pandemic hit, Resi 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. Resi also provided a number of special offers for our Amex card members. As a result, over the past year, Resi 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 double since December. And Amex card members who use Resi 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 resume 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 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 an 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 U.S., 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 rebuilding 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 and 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 aspirations. 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.
Jeff Campbell
Chief Financial Officer
Well, thank you, Steve, and good morning, everyone. It's good to be here today to talk about our first quarter results. which reflect good progress towards 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 Build 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 Build Business to just Build Business. and renamed what we used to call our overall volumes from build 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 build business volumes down 8 and 9 percent, respectively, and processed volumes down only 1%, all on an FX-adjusted basis. Getting into the details of our build business growth, which you will see several views of on slides 5 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 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 build 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 U.S. 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 U.S., 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 zone 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 U.S. versus other regions. As shown on slide eight, the total volumes from our U.S. consumer and SME customers are recovering faster than other customer types, and we're 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 and 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 9 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 U.S. 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 U.S. 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% percent sequentially and 13% year-over-year, more than spending volumes, as we continue to see the liquidity and strength amongst our customer base leading to higher pay down 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 performances. With card member loans and receivables right 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 stimulants 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 receivables 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 will 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 in 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 U.S. 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 continue 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 in new card acquisitions, I would expect net card fee growth to then re-accelerate. 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 eight 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 2020. 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 that's 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 percent year over year. Relative to the past few quarters, we did experience higher uses 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.
Vivian Jull
Head of Investor Relations
Thank you, 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 up the line for questions. Alan?
Alan
Operator
Thank you. Ladies and gentlemen, if you would like to ask a question, press 1, then 0 on your touchtone phone. You'll hear a message indicating you've been placed in the queue, and you may remove yourself from the queue at any time by repeating the 1, then 0 command. If you're using a speakerphone, please pick up your handset before pressing the numbers. Our first question will come from the line of Don Fandetti with Wells Fargo. Go ahead.
Don Fandetti
Wells Fargo
54% in March versus 19.
Steve Squary
Chairman and CEO
Hey, Don, could you start again?
Don Fandetti
Wells Fargo
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, you know, 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 2020? two aspirational guides.
Jeff Campbell
Chief Financial Officer
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 U.S. 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, he had a clear inflection point this quarter in the U.S., and so we feel good. But, Steve, you may want to add a few.
Steve Squary
Chairman and CEO
Yeah, no, I think that the assumptions that Jeff just went through are exactly the assumptions we have in our calculus here. But I think when you look at this quarter and you look at the trends here, I mean, we're seeing an increase in bookings, right? So we're seeing our travel bookings are up 50% over this quarter, up 50% over Q4 2020. When you look at, and we look at this really carefully, when you look at February versus March, you know, in March now, you know, we were 50% of 2019 bookings. 2019 bookings, and that was 19%. So we had 31% in February and then went to 50%. So we feel really good about that. When we also start to really dig into the data, we start to look at, you know, sort of cohorts of spending. And we're seeing, you know, people that are younger are getting back, you know, at a much higher level. Their overall T&E spending is probably about 85% to 90%. and, you know, almost 100% back to where they were in 2019 in restaurants. And then when we look at older people, as they get vaccinated, we're seeing sequential growth month on month, you know, as we look at, you know, their growth. And so, you know, if you look at, you know, just people over 45, you're seeing an 11% increase in their overall T&E spending month to month. We that's only going to get better, uh, for us as we move along. And the last, the last thing that, you know, gives us a lot of great hope is, is redemptions is MR redemptions. I mean, you know, when you, when you go back and look at sort of MR redemptions that, that we had our MR point redemptions, you know, in, in the fourth quarter for, for air was like 30%. And that's up to 54%. So we are, um, You know, we're doing some good things here, and our customers are doing some good things, and we'll continue to make sure that we're retaining these customers because they're going to spend. And as, you know, Jeff said, our co-brand cards are doing quite well as well. So, you know, all of that leads to, again, in an environment that, you know, continues to improve, us having a lot of confidence in hitting our 2020 targets. 2020 plan in 2022. Thank you.
Alan
Operator
We'll go next to the line of one moment, please. We'll go next to the line of Craig Moore. Go ahead, please.
Craig Moore
Hi, good morning. Thanks. Hope everybody's well. I wanted to just ask about the guide a little bit for 2021 and 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 first quarter because of how strong credit quality was and the fact that lending did not accelerate that.
Jeff Campbell
Chief Financial Officer
Yeah, 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 a buck. 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 released 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.
Alan
Operator
We'll go next to the line of Mark DeVries with Barclays. Go ahead, please.
Mark DeVries
Barclays
Yeah, thanks. You know, I think that guidance around the corporate teeny spend makes a lot of sense. But, Steve, I'd be interested in getting, you know, your color on recent conversations you're having with your large corporates on, you know, when they think they'll feel comfortable having their employees travel more freely, you know, whether they'll recover to pre-pandemic levels, you know, how much substitution is a virtual occurs. And then finally, you know, just given that, do you see more upside or kind of downside to that 70% recovery level?
Steve Squary
Chairman and CEO
All right. So, you know, when you think about corporate, the first thing people have to do is get back into the offices, right? Because if people are back into the offices, there's nowhere to travel to. And you're starting to see, look, I mean, you know, Jeff and I are in here today with you know, 80 of our closest friends in a building that, you know, has about 5,000 people. And, you know, we've said we're not going to have people, you know, really come back until after Labor Day. You're seeing other companies, you know, sort of gradually get back into it. So I think there's step one. First step is let's get people back into the office and then companies are going to say, okay, how comfortable I am having visitors into the building. And, you know, my anticipation is you know, most companies will start opening, you know, start the process of reopening in the United States now, July through, you know, sort of September and get to some capacity level. I mean, and you guys have your own situations yourselves where you're, most of you are probably sitting at home today. So, you know, I think what's going to happen is it's going to be, it's going to be slow, which is why, you know, we really haven't assumed a lot of corporate T&E coming back and a lot of travel coming back. Having said that, corporate T&E takes many forms. We do have salespeople that are out and on the road and calling on accounts, and there's car rental, and there's gas, and they're still staying at hotels and restaurants. And so I think for a segment of it, and I think when you look at a segment of our, let's call them industrial corporate T&E corporate customers, they have people that are going to plants and visiting you know, making customer calls and so forth. I think that eventually what will happen is, you know, investment banks and consultants are going to want to go out and meet with their clients again. You know, there's been a lot of deals that have been done, a lot of relationships that have been built, but, you know, there's nothing like in person. I just think, you know, it'll take a bit of time. And, you know, look, there's also that substitution. There's a substitution of WebEx and Zoom and and what have you, which is why we've been talking 2023 before it gets back to 2019 levels. And I think with that assumption, we feel good about hitting that 2020 aspiration in 2022. So when you think about what goes into our assumption for 2022, you've got a slower return of international, you've got a much lower return of corporate, and yet we're saying we'll be at 2020 levels. And so You know, is there upside from a consumer perspective on travel? I think that all depends on the rollout of the vaccine, governments opening up their borders and things like that. I think, you know, from a domestic travel perspective, pent up, there's pent up demand, you know. You know, in talking to Ed Bastian and talking to Chris Nassetta, they're seeing a lot of bookings out front. I just went through some of our travel data. So, you know, as we go through this, you know, I think what's going to be the key thing to watch for is how much does international travel come back from a consumer? And, you know, we're assuming that sort of now in the second half of 2022, okay? Not really this year. And I think the other thing you're seeing, Mark, is you're seeing a divergence. I mean, you see what's going on in India right now. You know, there's a lot of countries that are having different results in different situations as it relates to the vaccine. But one thing is inarguable. The more vaccine rollout, the more people feel confident. The more people feel confident, the more they'll get out and spend. And that's why I think when you look at, you know, sort of the towards the end of this second quarter into third quarter in the summer, You're going to see people hitting the roads. You're going to see people hitting the skies, especially in the U.S.
Alan
Operator
We'll go next to the line of Betsy Grosick with Morgan Stanley. Go ahead, please.
Betsy Grosick
Morgan Stanley
Hi, good morning.
Alan
Operator
Hi, Betsy. Morning.
Betsy Grosick
Morgan Stanley
So 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 that age, bracket, income, geography, that kind of thing, and give us a sense of what's resonating. Is it more the cashback, 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 program
Steve Squary
Chairman and CEO
group of new accounts that you're acquiring and what that means for future spend trajectory and growth rates versus maybe what you were acquiring pre-pandemic if there's any you know compare contrast there you can show that'd be great thanks okay well let me give you a couple it's a probably a half hour meeting there but um let me uh let me go through what so look 2.1 million new cards you know normally uh you know 2019 you source average about 2.5 million new cards when you look at the consumer cards, 60% of the cards we acquired were millennial or Gen Z. We saw in the pandemic, you saw more cashback cards being acquired. There was a 35% jump in premium cards that we saw in this particular quarter. And acquisition of platinum and gold cards was well above pre-pandemic levels. So We feel good about that. And just to give you some sort of contrast on that, when you look at our fee-based products, it's still a little bit lower. I mean, we're acquiring about 60%. You know, it was about 70% in 2019, but sequential increases have helped. We're seeing co-brand cards come back. I mean, you know, we talked about, you know, 90% more Delta cards acquired in this quarter than in the previous quarter. And we're seeing a higher-level customer. I mentioned that in my remarks. The FICO is a lot higher. And we're seeing good spending. So, you know, we feel good about both our small business and consumer. You know, we don't really talk about geographic distribution and things like that. But, you know, our intent, you know, is not only to acquire cards, but we also, when we talk about it, we acquire build business. And, you know, we're on track. to do from a build business acquired perspective where we were in 2019. So we feel good about that.
Jeff Campbell
Chief Financial Officer
You know, the only thing I'd add just to make it clear, Betsy, is that 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 sitting on airplanes. And so that's what leaves us overall a little bit below the level of pre-pandemic new card acquisitions, but we're quite confident that will come back. And once you look beyond that sector, we think we're at great levels today.
Alan
Operator
We will go next to the line of Mihir Bhatia with Bank of America. Go ahead.
Mihir Bhatia
Bank of America
Good morning, and thank you for taking my question. I wanted to dig a little bit more on the 70% by year-end T&E assumption. It sounds like there's a mixed shift between volumes there, too, between domestic and international weighted more towards domestic, which I think we all understand. But maybe is there a difference in revenue or profitability between that travel in terms of what you make? So I guess 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 mixed shift. And then any update on April billing plans? Thank you.
Steve Squary
Chairman and CEO
Yeah, no. So when we report the volume, it's the volume. And there's no different. Obviously, if people are booking first class international tickets to Hong Kong, they cost a lot more than first class tickets to Indianapolis. But the reality is we're giving you volume numbers. So it just means you need a lot more of those tickets to Indianapolis than you do So, no, there isn't. There isn't a difference for us. We're not giving you sort of, you know, when we talk about volumes, we're not giving you a number of trips booked here. What we're doing is we're giving you actual volumes. So we may have actually more trips. In fact, you know, when we look at, you know, we look at this, you know, we look at receipt of charges and, you know, transactions basically. So we may have more transactions booked.
Jeff Campbell
Chief Financial Officer
in air and you may have lower dollar but that doesn't that doesn't mean anything to our margins the only thing i'd admit here is when you look at our other revenue and other fee and commission lines there is some uh some some dollars in there that do come from cross-border travel and as we think about the 2022 aspiration We don't actually expect that to be fully back to 2019 levels in 2022. We don't need it to be to hit our 2022 aspirations. I'd actually put that in the category of things Steve talked about earlier, that even beyond 22, there's still probably a couple of remaining tailwinds as the last of cross-border travel and corporate travel begin to come back to 2019 levels post-2022.
Alan
Operator
We'll go next to the line of Ming Zhao with Deutsche Bank.
Ming Zhao
Deutsche Bank
Go ahead, please. Hey, thanks for taking my question. I wanted to touch on the recent expansion of Pay a Planet to all U.S. consumer cards. Have you seen any sort of usage acceleration since you expanded that? And then can you actually explain for us how big the opportunity set can be and if it applies to that 2022 aspiration that you mentioned? Thank you.
Steve Squary
Chairman and CEO
Yeah, no. So, you know, it's really too early to to to sort of to tell on you know, just how much we've got it because we really just did it. But it's not really in the, you know, it's not in our calculus to help us make our 2022 number. It's totally upside for us. But, you know, again, just to put it in perspective, you're talking about 6 million plans from inception. You're talking about 5 billion of overall ARs. And it's a convenience feature that we have. I'd like to say it was our answer to buy now, pay later, except we had it before a lot of the buy now, pay laters. We just had it on particular cards, and now we've put it on all the cards. So it really is all about meeting overall card members' cash flow needs. And they'll do this versus potentially you know, revolve on charge or, you know, just a normal lending transaction. It gives them more certainty. So it's in the overall numbers that we have and the overall spending that we have. But I wouldn't say in any way, shape or form it's a big driver of 2022.
Alan
Operator
We'll go next to the line of Bill Karkachi with Wolf Research. One moment. Your line is open, sir. Go ahead.
Bill Karkachi
Wolf Research
Thank you. Good morning, Steve and Jeff. Good morning, Bill. So 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 risk that that could lead to more permanent changes? For example, how concerned are you guys about the risk that the value proposition associated with 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 old, you know, sort of the older pre-pandemic offerings that you guys had?
Steve Squary
Chairman and CEO
Yeah, so a couple points. So, look, you know, our strategy for the last three years has been to refresh our products on an ongoing basis, ongoing basis anywhere from from sort of three to four years. And so we'll talk more as we refresh those products, and we'll give you a little bit more color on that. I take the opposite view on sort of the travel value propositions. I think they're actually going to be even stronger at this point. I think that people are going to want to have the safety and security of our lounges. We're opening up more lounges. We're not backing away from these lounges. In fact, we've opened up numerous lounges during the pandemic, and they've turned into a little bit more of an oasis for people where they know with our brand, our security, and our reputation, we're going to take as good care of people in our lounges as possible. And I think the other thing that was a lot of questions we got at this time last year was, what's the future of your travel co-brand cards? And you know, when we look at, you know, the month of March and we look at, you know, sort of Delta and we look at Hilton, you know, as just two examples, they're at 2019 spending levels, you know, overall. And, you know, because people have been accumulating points and people want status. And as I've said numerous times on these calls, status is probably even going to be more important going forward. So what we will continue to do is we're not going to walk away from our travel value propositions if If anything, I've been more encouraged that, you know, we did the right things. And we'll continue to add, though. I mean, I think if you look at our history over the last three years or so, three and a half years, we've kept our core value proposition and continue to add. And during the pandemic, you know, I talked about the results we had with wireless and the results we had, you know, with – With streaming, we got customers who were not using our card for those things. By putting some value in, we're now four months after the value, and they're still spending. And we're doing the same thing right now. We got a PayPal credit for our Platinum card holders, and we're picking up more card members that, you know, didn't use PayPal. And as I've talked about PayPal, and I've talked about, you know, some of the other, you know, FinTech Square and Stripe and so forth, they've actually... not only helped us get more coverage, but have helped us in ways to deliver more value to our card members. So we feel good about our value propositions. We feel good about the travel value propositions that are in our products, but we will continue to expand and evolve our value propositions as we have over time. We're not walking away from that strategy.
Alan
Operator
We'll go next to Ryan Nash with Goldman Sachs.
Ryan Nash
Go ahead, Lee. Hey, good morning, guys. Hey, Ryan. So, Steve, maybe as a follow-up on that, so, you know, you injected significant value prop enhancements into the business like streaming and wireless, as you just referenced, and I believe some of those will evolve over the next few quarters. So can you maybe just talk about how you envision repurposing those marketing dollars? I think, Jeff, you talked about spending a little over – four and a half this year. Could we see that come down beyond this, beyond this year? Or do you expect to see these enhancements shifted towards customer acquisition? And maybe we could see customer acquisitions above that, you know, those two and a half million per quarter that you talked about in, uh, in 2019.
Steve Squary
Chairman and CEO
Yeah. So, so a couple of points we spent, I think it was like a billion dollars this quarter. Some of that was, you know, in, in value injection, uh, not the wireless and streaming those, those have ended. This is different types of value injection. But the majority of that was, you know, customer acquisition and customer engagement. When we look, you know, at the rest of the year, I think we said we're going to spend $4.5 billion, but we'll spend, you know, up to the attractive opportunities that are there. If there are not attractive opportunities, we will not spend it. If there are attractive opportunities, we will spend more if they're there, because we're focused on building that momentum. Having said that, given that you have sort of probably a six-month value injection window and you've got customer acquisition and customer retention, more than likely you will see that overall dollar bucket come down next year as we go into 2022 when you're not doing that value injection.
Jeff Campbell
Chief Financial Officer
The only thing I'd add, Ryan, is We've talked about the fact that as you go through this year, to Steve's point, you need to see the value injection spending come down. And we were pleased this quarter because actually it was down sequentially, and we still continue to see tremendous customer attrition and retention rates, partly because the travel-oriented value parts over value propositions are becoming more valuable to people again.
Alan
Operator
We'll go next to the line of Jamie Friedman with Susquehanna Research.
Jamie Friedman
Susquehanna Research
Go ahead, please. This is a very thoughtful IR deck, so thank you for that and for the updated commentary. I just wanted to ask, in slides 7, 8, and 9, you demonstrate the outperformance of SME. You don't have to go to the slides. I'm just anchoring it. But in terms of the outperformance of SME, Steve and Jeff, could you remind us what it is about that relative to large and corporate that is different, that makes it more sustainable? Thank you.
Steve Squary
Chairman and CEO
Yeah, so you probably heard us shuffling the pages to get to 7, 8, and 9. But, yeah, so there's a huge difference. I mean, you know, so our corporate card is predominantly, it's like 60% travel and entertainment, whereas our SME card is, is, you know, like 80% goods and services. They use the card to run their business. And, you know, as we've talked about travel coming back, it comes back in layers. It comes back with consumer, then it's SME, and then it's large and corporate. So it is a very different business, which is why we went and acquired Cabbage to have a digital front for these SMEs where They can not only get their card spending done, but also get working capital loans, have a transaction banking account, have merchant financing loan, have short-term loans and things like that. Because small businesses, small and mid-sized businesses use this card to really help to run their businesses, which is a fundamental difference between how corporations use the card, which is to support businesses. T&E. Obviously, there's B2B opportunities with large corporates, but that's why small business has come back. Why our small businesses have done, I think, even better than what you might have thought is the dispersion that we have across the small business arena. I've said this many times. When people think about small businesses, they tend to think about the small retail shop or they tend to think about the small restaurant. The reality is a lot of them didn't do so well during this time. We don't have a tremendous amount of our small business base there. It is a very diverse base, and when you think about professional services, you think about, you know, cooling and plumbing and electric and all those things, you know, our base is very wide, and that has helped us because some small business segments during this time have just been through the roof. Others have been hit really hard, and others have, you know, businesses have maintained as they were before the pandemic.
Alan
Operator
We'll go now to the line of Bob Napoli with William Blair. Go ahead. Thank you.
Bob Napoli
William Blair
Good morning, Steve. Hey, Bob. Question on China, I guess, and in debit as, you know, broader thoughts on debit. So what should we see out of China? You've changed your reporting somewhat because you're expecting see some significant numbers, I guess, out of China. But you also talked about building a debit capability broader than China. And I just wondered what your long-term thoughts were on that.
Steve Squary
Chairman and CEO
Yeah. So I think we changed that to provide, I think, the appropriate level of transparency for you guys, because obviously, as we've said this all along, GNS volumes are not uh, you know, worth the same to us as GNS, as, as proprietary volumes and, and China volumes are, uh, you know, part of that, that mix. And so, uh, that's why we, we change it to process volumes because yes, you're right over time, we do expect that volume to be very significant. And we wanted to make sure we were providing the right level of insight so that you guys could make, um, the right, the right assumptions. And, um, there will be, uh, you know, uh, In China, it'll be, you know, charge credit and it'll be debit cards. And so as we build that capability, we will evaluate, you know, where else, you know, if you build that capability for your network, it gives you the capability to do it in other markets. And so we'll evaluate over time where that makes sense for us to roll that out. So nothing really to announce here, but I think it's important that you understand, you know, the capabilities that we're building as well. And we're building these capabilities from a global perspective so that we have it. But to also point out, we do have GNS partners in local markets today that have debit products, have American Express debit products. They just tend to get used more locally within country as opposed to around the world. And it's important, at some point, we will have a lot of traveling Chinese card members. And it's important that they're able to use all of the products that our partners issued to them all around the world, and debit being one of them.
Alan
Operator
We'll go next to the line of Rick Shane with J.P. Morgan. Go ahead, please.
Rick Shane
J.P. Morgan
Hey, guys. Thanks so much for taking my question. I know you guys have been on here a while. One of the consequences of the CARD Act was that it shifted the competitive landscape from offering lower rates to higher rewards. And we think at the peak of the GFC recovery, that was particularly challenging for AXP because it had the impact of basically causing industry offers to converge to your core value propositions. One of the responses we saw from you is that you moved them to your front foot in terms of targeting millennials for card acquisition. I'm curious as we sort of enter this new period of expansion and all of your competitors are talking about growth, what are the lessons you learned last cycle in either tactically or strategically how will you respond?
Steve Squary
Chairman and CEO
Well, you know, I have a different version of the Card Act than you do. I think our competitors got into this more after the financial crisis when they really looked at this and said this was a very attractive business. The reality is the CART Act had a lot less impact on us because, remember, 80% of our revenues are not from interest. And, you know, the fact that interest rates, especially on prior balances, were now controlled, you know, really had less impact on us than it did on our competitors. Our competitors wound up just growing their overall business. And one of the first things they did is hire a lot of people from American Express to do that. But, you know, look, I think that, you know, the lessons that we've learned over time, and look, I've always said this, we welcome competition. The lessons that we learned over time is you need to continue to focus in on what your customer needs are and how your customer is changing and evolving. And this is why, you know, when I took over, one of the first things I said is we're going to go to a strategy of refreshing our products that on a real ongoing basis. You cannot have your green card sit out there for 30 years and think it's still as relevant 30 years ago as it is today. Millennials was really not as much a card act. Millennials was us opening our eyes to the fact that our value proposition had a much broader appeal. And I think that we really started to communicate that. And, you know, look, and I've said this publicly before, you know, I think your company there did a great job of really highlighting premium cards. I'm talking about JP Morgan and Gordon and his team did a fantastic job of highlighting premium cards to millennials. And, you know, and our value proposition played played remarkably well there. And as I just said, 60% of our cards that we just acquired are millennials. I think we had to expand our aperture and we did that. We expanded that aperture and we realized that the value proposition that we had could have a wider audience and could have a wider target. And we've done that and we will continue to do that. You will continue to see that from a multicultural perspective. You will continue to see that from millennials. You'll continue to see that, you know, you know, with women as well. So I think what we learned is that since then is that there is a broader market for our products than we initially thought. Number one, number two, You always have to keep innovating, and you have to innovate on a regular cycle basis. You can't stand on your laurels. And I would say that we learn more from some of our trials and tribulations with Costco than we did from the Card Act.
Alan
Operator
Our final question will come from Sanjay Sakrani with KBW. Go ahead, please.
Sanjay Sakrani
KBW
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 waiting towards the negative or higher, waiting towards the negative scenario in your reserve calculation. I'm just curious sort of how realistic that is, given sort of where we are and we're looking at delinquency rates here and the building momentum. Maybe you could just talk about that. And then just one quick one on the expenses. You mentioned the venture gains increase. helping expenses this quarter? I mean, should we just view it as a one-time gain, or how should we think about that? Was that spent? Thanks.
Jeff Campbell
Chief Financial Officer
So on credit, Sanjay, you're correct. For the purposes of our accounting credit reserve, we did significantly weight a downside scenario. And I think that's in keeping with a little bit of a regulatory view where you have the Federal Reserve saying to all banks, you know, we're still a little Why don't we see a little bit more time pass before we free everyone to go back to returning to your appropriate capital levels? So we thought it was appropriate to be that conservative. But to be clear, the reserve that we have on the books implies that some steady recovery that we're in the midst of now just stops and things get worse. So if it doesn't, then you would expect to see more reserves. The only other comment I'd make is it's April 23rd. You know, you're already at the point of the year where you really can't, for the most part, see write-offs go up significantly this year. Even if bad stuff happens, the actual write-offs would go into next year. On OpEx, yes, we did have a $377 million gain on the really great portfolio we have of fintech investments. We have about 50 different companies we have holdings in. We do partnerships with those companies. It's really all about those partnerships. But market's been pretty frothy. lately, so there was a big gain on a couple of those companies this quarter. There's also some offsets, you know, when the equity markets are frothy, our deferred comp balances are a bit of an offset or a hedge almost to the equity investments. I would really think of it, Sanjay, mostly as a one-time sort of thing. This year, the reality is we're not focused on any particular EPS outcome. What we're focused on is to the extent we have good investment opportunities, you will see us use the financial strength we have right now to pursue those opportunities because we are laser-focused and increasingly confident of the aspiration we have for 2022.
Vivian Jull
Head of Investor Relations
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.
Alan
Operator
And thank you. Ladies and gentlemen, the webcast replay will be available on our investor relation website at ir.americanexpress.com shortly after the call. You can also access a digital replay of the call at 866-207-1041 or 402-970-0847. Access code 3411494 after 12 p.m. Eastern Time today at April 23 through midnight, April 30. That will conclude our conference call for today. Thank you for your participation. You may now disconnect.
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