Ladies and gentlemen, thank you for standing by and welcome to the American Express Fourth Quarter 2013 Earnings Call. At this time, all participants are in a listen-only mode and later, we will conduct a question-and-answer session. Instructions will be given at that time. (Operator Instructions) As a reminder, today’s conference is being recorded. I’d now like to turn the conference over to our host Mr. Rick Petrino. Please go ahead.

Thanks and welcome. We appreciate everyone joining us for today’s call. The discussion contains certain forward-looking statements about the company’s future financial performance and business prospects, which are based on management’s current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements are set forth within today’s earnings press release and earnings supplement, which were filed in an 8-K report and in the company’s other reports already on file with the SEC. The discussion today also contains certain non-GAAP financial measures. Information relating to comparable GAAP financial measures may be found in the fourth quarter 2013 earnings release, earnings supplement and presentation slides, as well as the earnings materials for prior periods that may be discussed. All of which are posted on our website at ir.americanexpress.com. We encourage you to review that information in conjunction with today’s discussion. Today’s discussion will begin with Jeff Campbell, Executive Vice President and Chief Financial Officer who will review some key points related to the quarter’s earnings through the series of slides included with the earnings documents distributed. Once Jeff completes his remarks, we will move to a Q&A session. With that, let me turn the discussion over to Jeff.

Well, thanks Rick and good afternoon everyone. I am pleased to be here this afternoon to discuss the solid results across our businesses that we reported today for both the fourth quarter and full year 2013. Our performance in the quarter reflected healthy billed business intense revenue growth, a continuation of credit metrics being at historic lows, disciplined controlled operating expenses and as a result, solid earnings performance. Since this quarter does mark the end of the full year, I will be discussing our full year results, which we are also pleased with, as they help illustrate some important trends. During the quarter, we made several significant announcements in particular around signing new GNS partnerships and reaching separate settlement agreements with our merchants and regulators. In addition, we helped support small business entity for the fourth consecutive year. I will discuss some of these initiatives in more detail later on the call. I would say that there was some complexity to understanding our financial results this quarter. While the merchant settlement is the most significant new item, we also have a number of previously disclosed items that make the year-over-year comparisons more complex, including last year’s fourth quarter items, the sale of our publishing business at the beginning of October and the few other specific items which I will walk you through as I discuss our results. To begin with the summary of our Q4 results, you can see on Slide 2 that FX adjusted billed business growth was 9%. Given our spend centric business model, this was in the primary driver of our FX adjusted revenue growth of 6%. Both of these rates of growth are modestly above our full year growth levels, reflecting the uptick in the economy and our business that we saw as 2013 progressed. This…

(Operator Instructions) First, we’ll go to the line of Mark DeVries with Barclays.

So with the stock having traded up a fair amount recently and also revenue growth still kind of below target, does this increase your interest in all and using excess capital to do acquisitions versus buying back stock here?

Well, I think when you look at the company’s history, we have selectively used acquisitions over the years when we see an opportunity to either enhance our capabilities or build upon an existing strength of the company in an area. And certainly as we think about our long-term strategies, we are always looking for opportunities to do that. All that said, when you think about our policies on using our capital while on average and over time we’ve said we will return about 50% of our capital to shareholders in the form of share repurchase and use the other 50% for other growth initiatives or acquisitions. Acquisitions are the kinds of things that you can’t really predict and you really need to be very thoughtful about when you find the right opportunity. And when we don’t have those opportunities, we’re very committed to returning capital to shareholder and that’s what you saw us do in 2013. And so when you think about the future it’s very hard to predict and I think our commitment is to be thoughtful about anything we do on the acquisition side and be very consistent in returning capital to shareholders when they’re are not opportunities that we think are great opportunities on the acquisition side.

And then just to follow up, I was hoping I can get you to quantify what you meant by meaningful P&L gain from the closing of the JV and comment on whether you included that in your capital plan submission?

So two separate questions. So the size of the gain -- I will tell you, beyond saying it will be a material gain, there are still so many moving pieces as we work through the last part of this, that I am probably not comfortable giving you a number. I would point out that if you think about the math it’s pretty simple. If the partner puts in $700 million to $1 billion, we’ve got 50% ownership and re-contribute our assets, that will define the value, if you will, of what the joint venture will be worth and then what gain will drop out will be a function of what is on our books as we contribute the business travel enterprise to the joint venture. So it will be a material gain. I can’t really give you a range today. As we thought about our CCAR submission what I would say to you is that what we convinced ourselves though and made the point of to the Fed in the submission is that in any circumstance, even though there is still a range of outcomes here, we would see that the transaction will be accretive or positive to our capital ratios. And so while we can’t quantify, it’s all upside and then we built our CCAR submission on an assumption that it would be neutral to positive. But we didn’t -- the way these things work, we want to build a share repurchase plan based on the certainty that it would happen.

Yeah. Thank you.

And next, we will go to the line of Sanjay Sakhrani with KBW.

Yeah. Following-up on that last comment, I guess when we think about your CCAR submission, are you anticipating, just keep a -- targeting a flat capital ratio and basically paying out consistent with what you did in 2013? And then could you have built in a contingency that upon the sale if that were to happen, you would use that excess capital towards capital management activities? And then I guess, secondly, just on the tax rate, could you just tell us how we should think about the level going forward? Thank you.

So on CCAR, I would say, we certainly did not build in a contingency. I don’t think that really fits with the way the CCAR process have evolved to thus far as run by the fed. More broadly, when we think about our CCAR submission, we clearly do a tremendous amount of work internally and have a tremendous amount of discussion and debate amongst the management team and with our Board of Directors. And it is really all aims are trying to balance the views of our regulators, the views of our shareholders and our own views about the strength of our capital structure and our future performance. I think that leads you to what we submitted and I don’t want to get into the details of what we submitted. But I think our history would show that we are pretty committed to consistently being shareholder friendly. We believe that our capital structure is strong and within that set of thoughts, we submitted what we thought was a very balanced submission and we’ll see how it goes. On the tax rate, geographic mix does vary a little bit. If you look over the last few years, our tax rate has consistently been in the low 30s, but it’s varied a little bit between about 30% to 32% on a full annual basis. And we don’t necessarily see anything that we learned this year that suggest we will be outside that historical range. Beyond that, probably is a little hard to predict exactly what will happen in terms of the mix and other items next year.

All right. Great. Thank you.

Next, we’ll go to the line of Ken Bruce with Bank of America Merrill Lynch.

All right. Good evening. Thank you. Could you spend a little time and may be discuss some of the seasonal factors that impact the discount rate. You’ve had several fourth quarters where you have a significant reduction in discount rate. It tends to snap back in the first quarter. Can you just remind us what those seasonal factors are if you can quantify them that would be helpful as well?

Yeah. It is probably tough to specifically quantify, but the basic trend is pretty simple. If you think about the fourth quarter, you have a little spurred upwards in retail spend and a little decline in some of the more business-oriented spend. And that mix shift is quite consistent each year and drives the discount rate down very, very modestly and that’s why you see it pop back up in Q1.

And are there are any other just either pricing or deal related factors that are more first quarter seasonal or fourth quarter seasonal that impact then?

No. No, it’s really just that simple mix shift..

Okay. And maybe just lastly, you had mentioned that you’re going to balance out essentially the gain that may be taken from the sale of the Business Travel. I just want to make sure I understand this right. So basically, you’re going to look to keep your investments at an elevated level in terms of just driving future growth. But you’re possibly going to have some of that fall of the bottom line, is that the way to think about the balancing act that you have got to look out there?

Well, I want to be a little careful because this is a potential joint venture. I think the point I was trying to make in my prepared remarks is we have a long track record of being very thoughtful about how we balance our on average and over time financial targets, with steadily investing in the many growth opportunities that we see. And it is certainly possible that as we get into 2014 and as we execute on the business travel joint venture, you may see an elevated level of investments depending on how all the final economics work out. And we will be as we always are thoughtful about making those investments in things that are going to produce very good returns for our shareholders, and we will be very transparent about what we are doing and why.

And next we’ll go to the line of Craig Maurer with CLSA.

A couple of questions. First, the Target breach. Do you think this is a potential accelerator to EMV adoption, and could you see regulatory involvement pushing that along?

Well, I think it’s early for anyone to know exactly what all of the impacts of the Target breach will be. Although there is obviously already a line of regulators and other oversight authorities who have expressed interest and understanding what’s going on. I think from our perspective, we have a tremendous dedication to the security of everything that goes on between our merchants and our cardmembers. We have the lowest fraud rates in the industry. Our closed loop gives us some real advantages here in helping to manage things. And there are many things we can do with our merchant partners frankly that help lower fraud rates. Moving towards new technologies like EMV is one of those things. But frankly, there are many others and they all have different costs and difference trade-offs. Certainly, it has long been our goal to work ever more closely with our merchant partners to lower rates of fraud. We think that this may spur greater interest in doing that. The exact form it takes, I think, is probably anyone’s guess at this point.

Secondly, thinking about the cardmember services expense line, it’s been in the press that the American Airlines lounge relationship has left American Express. I was wondering if we’re going to see any type of either adjustment lower for that, the end of that relationship or a ratchet-up in spending to account for replacing that service whether that’s through Centurion Lounge construction or other things?

Well, I think we probably start by thinking about this from the customer or cardmembers’ perspective. And we have a long track record of doing lots of things that make all of our products valuable propositions for the customer. In the specific case of the Platinum Card, that is a card really targeted to people who travel a lot. There is a wide range of benefits that people get from the Platinum Card, including I would point out, even post once the American Airlines announcement goes into effect, which I believe is March, we will have access to three different sets of lounges - Delta as well as two others, Priority Pass and Airspace. We have a variety of credits that we offer to customers on cost of global entry and other airline fees. You are correct that we are experimenting with building our own lounges and they’ve met quite a rousing reception thus far, in the two that we’ve opened in Las Vegas and Dallas. And we’ve announced plans already to open a couple others at LaGuardia in New York and in San Francisco. So, we see and we also feel that we remain very competitive, because if you think about it with the consolidation in the airline industry, and I would remind you as someone who was the CFO of American Airlines 12 years ago, there were a lot more airlines when I was the CFO there. As the airlines have consolidated, you’re really left today with sort of no card is going to give you access to any broader set of lounges than what our Platinum Card does, and that’s sort of what airline consolidation has done. So we feel very good about the customer proposition and we think we have a long track record of being innovative about how we continually evolve that proposition. So it is a great value to customers and that is, that will drive all of, I think ultimately, yes, that will fall into our P&L and have an impact on the cardmember services line. But I think, frankly, the best way to think about that is, I would not expect this to have any material impact one way or the other as we continually find ways to provide value to our customers.

Thank you.

Next we’ll go through line of James Friedman with SIG.

Hi. Thanks. I want to ask about an update on the Wells and U.S. Bank partnership. Jeff, how should we think about sizing that say in the year ahead in terms of cards-in-force?

Well, so we are very excited about both the Wells Fargo and U.S. Bank relationships, and we see it as a really great commentary and the many things we can bring to our partners in this kinds of relationships. Now it is a long and complex thing for large institutions to launch new products. The first thing, I do want to point out as well. Wells has begun to launch a few small test markets. These deals will actually take several years to fully rollout and reach some level of maturity. We’re clearly very excited about the longer term potential of both of these partnerships and we think for both of those institutions we can really help them achieve any of the business goals they have and further their penetration particularly amongst their own customer basis and help them grow their card businesses to be more commensurate, frankly, with the broader size of those two institutions. But this will play out over a longer time period and so, I probably don’t want to size it beyond those general comments.

Okay. And then, if I could a follow-up on, with regard to Serve and Bluebird, if you could talk in general terms about what we should expect with the revenue mix between fee and transaction revenue overtime, how does the company think about the revenue generation from those products?

Well, clearly, on the prepaid products you have both a range of fee revenue. Although, I would point out to you that we have worked very hard going back to some ways my comments about the Platinum Card. We have worked very hard to start with the customer proposition and I think you would find that we have two of the lowest fee products in the market with the widest range of functionality and features for the consumer and that’s exactly where we want to be on the continuum here. When you think about the economics, you have a range of both revenues from fees, as well as, of course the point-of-sale or discount revenue. And you also have to think about it in the broader context of the family of products in the many different customer segments that American Express targets reaches. So we look at all those things as we look at the economic model for Serve and for Bluebird and we are still in early stages, I would point out to you, we just re-launched the Serve product for example a few months ago. But we’re encouraged by the early signs and we think this is a market that over the years will grow to be a very significant market.

Thank you so much.

Next we will go to the line of Bill Carcache with Nomura Securities.

Thank you. For my first question I was hoping to revisit the points that were raised regarding the closing of the JV. So just to put balance around the potential magnitude of gain, if hypothetically there was a zero book value to the assets on AmEx’s book spend, since this is a 50-50 JV and the partners contribution is valued at somewhere between $700 million to $1 billion, and presumably AmEx’s contribution would be valued at the same level. So at zero book value then the maximum theoretical gain would be between $700 million to $1 billion? And then, I guess, if we looked at that in terms of let’s say the book value was not zero, but if the book value was $500 million, then would that suggest the maximum gain is $200 million to $500 million, am I thinking about that the right way?

Yeah. You’re thinking about it exactly the right way. The two things I’d remind you about are, these kinds of quite complex transactions do not come without a tremendous amount of effort and cost by both internal and external resources. And then, I’d also remind you that our Business Travel business is a highly global business, which produces a very complex structure and will produce a very complex tax outcome, which is part of what we are still working through. But with those two editions, yes, it really is as simple as what you just took us through.

Great. Thank you. And then for my follow-up question, if I may, it has two parts, the first part on revenues, the second part on expenses. So on the revenue part, I was hoping that you could touch on the 4.5 times multiplier effect that AmEx has historically enjoyed relative to GDP and billings growth, relative to that relationship, is that something you still believe in? In other words, I guess I’m just wondering if there’s any reason to believe that that’s 4.5 times multiplier effect will continue to hold? And then finally on the expense portion of that, it was good to hear you guys reaffirmed your commitment to keeping operating expense growth below 3%, I guess, separate from that, I was wondering your expense ratio I believe was at 70% this quarter, should we still expect that ratio to continue to work its way down towards the more normal 2007 levels that you guys have talked about of 67%?

Yeah. So, on the 4.5, the interesting thing is if you look actually at the data we have this year, we don’t have GDP data, of course, for Q4. The 4.5 historical relationships still seems like a pretty good metric when you look at the most recent quarters and just to make sure everyone on the call is clear that’s applying that 4.5 ratio to year-over-year real GDP. I had to train myself a little bit since I joined American Express six months ago, much of the media talks about sequential rates of GDP growth, but what we’re talking is the year-over-year number. And I would say, we’re not saying -- we are not necessarily actually trying to make any commentary on correlation but we are saying when you just look at the math that historical relationship has existed. To go to the operating expense ratio, you’re right, I think it’s for the full year of 2013, we ended at 70%, I believe we were at 71% last year, if you exclude the restructuring and other charges. The point I would make is we are very committed to the operating expense goals that we have laid out very publicly for over a year now and that is keeping our operating expense growth in 2014 to less than 3% as we did in 2013. Beyond that, I would say we want to be a little cautious about driving to other expense ratios because what we are always trying to do is meet our bottom line on average over time targets, particularly around EPS, while still being really thoughtful about how we can most productively and with the highest returns invest in growth opportunities for our shareholders. And those growth opportunities come in different forms. Sometimes it takes just traditional advertising and promotional spend, other times it means hiring sales people who runs our operation expense. And you get different impacts depending on which ratio you want to manage. And so, and I would say our real commitment is to working towards continuing to meet our on-average and over time bottom line targets and for 2014 meeting that operating expense target.

Next we’ll go to the line of Chris Donat with Sandler O’Neill. Chris Donat - Sandler O’Neill: Thanks for taking my call or my question. I wanted to just explore one other point on the JV, and I respect the complexity here. But trying to understand the cost basis, is it safe to think about this as parts of the cost basis have really been in place for decades, and so it would come in a pretty low book value, but other parts like newer technology are much more modern? Is that sort of wide parameters for thinking about it?

I’ll tell you the complexity of this is great, because you are correct. There are some parts of this business that are quite old. I would also tell you they’re very, very intertwined. We have, for most of our long history in the travel business, run it in a pretty integrated fashion with other parts of our company that we’ll retain. I’d remind you that over the years we have done a number of acquisitions, which adds complexity. It is a highly global business. So, maybe this goes a little bit to the point I made in response to the earlier question about, there are deal costs, there are transaction costs. And part of them go to just sorting through how do we really cleanly create a separate entity and how do we make sure that we understand all of the financial and legal and tax implications. And I’ll stop there because I don’t want to sound overly apologetic. But for all of those reasons it’s just difficult to give you a better estimate at this point. Chris Donat - Sandler O’Neill: Understood. Just to kind of appreciate what all is involved here. And then to shift gears on to the settlement announced on December 19, I was a little surprised that the word “surcharge” appeared as frequently as it did in the summary of the terms and is the right way to look at this as sort of an abundance of legal caution for an outcome in the United States that has more [surcharging or is this] saying that we are going to be in a world where surcharging is more common? I am just trying to put this in the right context.

Well, I certainly would quickly say we do not expect the outcome you had at the end of your statement there. So, let me step back for a minute. So I’ll make a few points. And I might almost start with, look we are out there every single day working to build relationships with our merchant partners. And we are really all about helping them grow their businesses, we’re not about being in litigation with them. And so part of what we are trying to do here is find a way to put this litigation behind us and begin to work more productively with all of our merchant partners. What we get out of the agreement is a clear commitment that our card members will be treated fairly relative to other credit and charge card customers of any other institution. That is very important to us. We think there is tremendous value there. We also believe and we are long on public record about this that surcharging is a very consumer and customer unfriendly practice. I’d remind you that surcharging is outlawed in a number of states in the U.S. And I’d also remind you that there are many countries all around the globe of course where we do business, which have all many different regulatory regimes. And In those where surcharging has been allowed, it has not become a rampant practice, we think because merchants recognize that it is just not a customer-friendly practice. So when all is said and done, we thought this settlement was a good think for our shareholders, was a good thing for our merchant partners and allow us to get back to running the business and building relationships. Chris Donat - Sandler O’Neill: Got it. Thank you.

Next we will go to the line of Don Fandetti with Citi.

Jeff, you would mentioned in your commentary about China benefiting your G&S business? I was just curious if that’s just normal growth or if you are gaining market share that would seem like that could be a good opportunity to sign up other banks? I was wondering if you could talk a little bit about that and just confirm that the economics are generally the same from region to region at G&S.

Yeah. Well, I do think it is important to be very clear about what I said about China. So, our China growth in billings has been tremendous and has been a significant, though not the only part of why you see particularly high growth rates when we breakout billed business for you either by segment, it’s in the GNS segment or by region where you see it in the JAPA region, and we’re very pleased by that billings growth. But I would remind you that in China as you would really see for all foreign payments players, today we earn very little revenue on the domestic spend within China and then we do much better on what we would call the outbound spend and that’s just due to the regulatory environment in China. So longer term, we think it’s really important that we establish as larger presence as we can in China and we have a number of different business things that we’re doing in China. One of which is reflected in the great growth in billed business that you see, I just want to be a little cautious in saying that that billed business does not today generate particularly material amounts of revenue or earnings.

I understand that, I was just curious, if on your cross-border out of China, if you feel like there’s room to sign up for other banks to grow that business and are the economics similar to what you’d see in another region even though knowing it’s a small contribution to revenue?

Well, we are continually exploring different opportunities in China. I certainly don’t want to get into exactly who we are talking to and what our strategies are in China. Let me just say that we see it as a very exciting long-term market. We think our brand carries into China very well. I think the billing growth that you are seeing demonstrates that and we think that it is creating a number of interesting opportunities for us, but I really don’t want to comment beyond that.

Okay. Thanks.

We probably have time for about one more question, operator.

Okay. And that will come from the line of Bob Napoli with William Blair.

Thank you and good afternoon. The spending growth accelerated nicely in the U.S. in the fourth quarter. It had a small acceleration, but important and I was wondering if you could give a little more color on that if the online spending growth, which I think is about 20% of your spend if that there was an outsized acceleration in online spend. And then just related to that, I mean, you seem to think that the economy was helpful, how does -- what is American Express’s view on how the economy going into 2014?

Well, so let me -- maybe answer those in reverse. Certainly in terms of the economy, we don’t profess to have any greater insights, our business is not necessary a leading indicator. So, I would tell you, we build our internal plans around a consensus economists forecast of what GDP in the U.S. and many other markets around the globe is going to be. And I think we are pretty transparent about our sensitivity to what economic growth actually ends up to be, and so we hope that it turns out to be frankly as strong as sum of the consensus economists are saying. When you look at Q4, certainly like all payment forms, we see tremendously high growth rates in online spend. We’re not going to provide today any specific numbers about Q4, I would just make the obvious point that like other players, the growth rates in online spend are quite high. It still remains a more modest piece of the total. I think the most important thing though for us as we think about trends and what we saw over the course of 2013 does come back to the point I made earlier that we are pleased by the fact that when you look at the back half of the year, you saw an acceleration across billings and across revenues versus what you saw in the first half. So, we think that’s a good trend as we head into 2014, whatever the economic environment may be.

Great. Thank you.

Great. So I’d like to thank you all for your time and Operator, I think we’re done. Thanks for your interest in American Express.

Thank you. And ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.