American Express Co Earnings Call Nuggets: Revenue Growth Outlook and ICBC Shares
Revenue Growth Outlook
Ryan Nash – Goldman Sachs: When you think about your outlook for revenue growth, it came at about 5% on an FX adjusted basis this quarter, a bit lower when you factor in the FX. So, if you’d assume that the revenue trends remain consistent over the next few quarters, how should we think about OpEx growth for the remainder of the year? I know you are saying less than 3%, but assuming revenues were to stay at the 5% level, do you think we should end up on the lower end of that range?
Daniel T. Henry – EVP and CFO: As we talked about saying having growth of less than 3%, we really haven’t factored in exactly where revenue growth is going to come in. So, I don’t think that’s a factor in terms of our commitment to keep OpEx growth at less than 3%. So, at the (FCA) and we try to give a variety of scenarios in there in terms of what the potential outcomes could be when you vary both revenue growth and operating expense growth and share repurchases, to give you a sense of how each of those items could affect EPS in several different scenarios.
Ryan Nash – Goldman Sachs: Just in terms of the spend volumes, can you give us a sense of how they progressed during the quarter. And at this point, have you seen anything that points to pullback on the part of consumers from higher tax rates?
Daniel T. Henry – EVP and CFO: Our spending levels on an FX adjusted basis have been pretty consistent over two quarters and we didn’t see any historic trends within the quarter. So, whether the change in the tax rate is to having any impact, it is always something that we (indiscernible) within our numbers.
Sanjay Sakhrani – KBW: I was hoping if I could get like some specifics around the gain that you guys had from the sale of the ICB shares as well as kind of the benefit from the reversal of the reserve for cardmember reimbursements? And then secondly, I was just wondering how far we were into the restructuring that you guys have undertaken and at what point during the year will we hit a level of operating expense ex-marketing without that overhead?
Daniel T. Henry – EVP and CFO: As relates to the ICBC shares, we could hedge on that in the past and have effectively locked in the gain. As you have seen over the last several quarters, we are taking that over time and we’ve been doing that is to enable higher levels of investment spending to help generate business momentum. So, it’s a locked in gain we have and it’s our plan to take it over time. With respect to your second question about the reversal of a reserve we put up previously related to cardmember reimbursements, we had come up with an estimate in the fourth quarter. Upon further refinements, we realized that the amount we are going to reimburse is actually lower in our estimate. It’s a relatively small amount, but it did have an effect on the increase in spreads. So I didn’t want people to think that that was a permanent increase, that’s really the only reason I spiked it out, but it’s not really a large number at all as it relates to our income. In terms of restructuring, we announced restructuring in January. The impact of employees leaving American Express is actually going to take place over all of 2013; some have left in March, but others will not leave until later in the year. So, we’re only going to get a portion of the benefit from that action in 2013. We’ll get additional benefit in 2014 as some people would have been here for a portion of 2013. So it’s going to come to us very gradually over 2013 and 2014. I would say, most employees the first employees to leave were probably in the March timeframe, so there is a limited amount of benefit from that in the first quarter. So we really see it come to us over the next seven quarters, I would say. The very good control of operating expense is just our continued focus on operating expense, which we really started last year, which is rolling over into this year as we see the proper control on expense as a way of creating resources so that we can invest in the business. Some of which takes place on marketing and promotion line; other portions of that actually take place on the operating expense line. So, I know even though it was only one question, I hope I got each of the four parts correct.
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