American Express Company (AXP) Earnings Call Transcript & Summary

Good morning. Welcome, everyone. This is Craig Maurer. I head the payments and fintech team here in Autonomous Research. We're excited this morning to have American Express joining us for Bernstein's 36th Annual Strategic Decisions Conference. Granted we're virtual for the first time, but so far so good. We're excited to have Steve Squeri joining us today. Steve is the Chairman and CEO of American Express and a 34-year veteran of the company. Steve, great to see you happy and healthy. Welcome, and thank you for joining us.

Thank you, Craig. Pleasure to be here, good to see you as well.

I'd just like to run through a few things regarding this presentation. Today's format, obviously, is a fireside chat with Steve, but we will also be taking questions from the audience as we go. We want to make this as interactive as possible. So as a friendly reminder, you can submit questions using the Pigeonhole link available on the left side of your viewing screen. We'll be checking those questions constantly throughout the presentation, and we'll get them in front of Steve as they come in. We're also asking investors to complete the Procensus poll at the end of the session. It's only a few questions, and you'll have immediate access to poll results. The link to the Procensus poll will also be on the left side of your screen. Lastly, if you have any questions or if you have any technical difficulties, please reach out to your sales contact or corporate marketing liaison at Autonomous for Bernstein.

So with that, let's get started. We just wanted to open up with a -- I'll throw you a softball. What is important to know in terms of American -- of how American Express is managing through the current crisis?

Yes. Well, it is a little bit of a softball because we deal with it every day. But when you -- as I try and describe this crisis to people, it's sort of 9/11, the financial crisis added together and multiply that times 5. And then you could throw Hurricane Sandy in for those of you that were in New York City at the time. It's like nothing that we've ever seen. One of the things that we did, and I talked a lot to investors about this, is we always knew that there would be a downturn in the economy. We did not, in any way, shape or form, ever expect a shutdown of the economy. And what we're seeing right now -- and on a global basis. And so what's been really interesting about this is that having had that plan on the shelf, we never thought we'd have to implement a global BCP plan and a sort of a global sort of recession plan at the same time. But we had to plan on the shelf. We were able to jump into action very, very quickly, and there were 4 principles that we had, which were really important for us. Number one, it was -- we wanted to make sure that we took care of our colleagues. And that was really important. We didn't realize how important it was when we set that as a principle early on, but we always wanted to win as a team and take care of our colleagues. And so in this case, we got them out of the buildings as quickly as possible. We also got into a situation where we didn't cut salaries and committed to no layoffs. The second thing -- and when I first took this job and I had an opportunity to sort of meet with Warren Buffett one-on-one, given I was going to take over one of his largest investments, the thing that he always told me is the most important thing about American Express is the brand and the customers that aspire to be associated with the brand. And so taking care of our customers and making sure we protected the brand was very important. And that starts with service. And we were there. And after we were able to pivot from a completely brick-and-mortar operation to a virtual facility, our call volumes didn't go down, lots of people looking for refunds, what have you, but we're answering the call, we're there for our customers when a lot of other people are not answering the phone calls because they weren't able to pivot as much. We also decided to enhance some of the value propositions, as you've seen value -- what we call value injection. And we've had people that have had some struggles financially, and we put in some pandemic relief programs. The third thing, obviously, is financial stability. And we're very focused on capital. We're very focused on liquidity. And the only thing I can say here is you compare this to how we were in the financial crisis. Our liquidity is much, much better than it was. We're probably more liquid than we've ever been. And our capital, as you know, we try and keep our CET1 ratio between 10% or 11%, and we are certainly clear of that. And then I think also it's really a time to think about how you want to think about this business for the future and how you want to structure it as a result of what could be some significant changes. So that's how we've been navigating through this crisis. And I think the other -- the last thing I'll say, and I'll let you move on to the next question is, when you look at something like this, you have to look at it in multiple phases. Right now, we're looking at navigating the crisis. That's the most important thing. It's to navigate the crisis. What you then need to think about -- and when this starts will be open to judgment is, how do you position yourself during the recovery? So what moves do you need to make during the recovery so that when the recovery -- you start to get out of the recovery, and a lot of you have heard me talk about this, you're able to win, take share and continue on our scale, share and relevance mantra that we've introduced a couple of years ago. So that's how we're thinking about it.

Helpful. Maybe you can update our audience on how consumer and business spending is shaping up at this point through what's basically the end of May?

Yes. You said I'll be 35 years in September. I've never seen -- I don't think anybody has ever seen anything like this. And we're chugging along really nicely in January and February. March, you're starting to see lots of holes in the boat here. And all of a sudden come mid-April, you've got about a 45% dip in overall billings. And just to put that in perspective, during the financial crisis, the worst quarter that anybody -- that we saw was negative 15%. So this is really truly -- when you say unprecedented, it's unprecedented to see that kind of a drop. And obviously, you saw T&E just completely fall off the map. I mean, that was down about 95%, yet non-T&E down 20%, 25%. That was probably around mid-April, April 14 or so, when I think we've hit the low. We've come back, and I never thought I would say sort of down mid-30s is bouncing back. But down mid-30s right now, we bounced back. You see non-T&E is maybe in the low teens right now from a decline perspective. But T&E is still down sort of 90 percentage at this -- 90% at this point. You've seen an uptick in online spend. I mean, traditionally, about 60% of our spend is either card not present or online. 70% of that spend is that way right now, and that's with some of the travel stuff taken out. And year-over-year, we're seeing an increase in online. I think everybody is probably seeing that as you've seen habits completely change. So that's where we are right now from a spending perspective.

Okay. Maybe we can dig into that T&E discussion a little bit. What we're starting to see in the data that we get from certain partners is that you're starting to see an increase in lodging, but airlines hasn't really caught up. Is this something that you're seeing as well that maybe as states are opening up, consumers want to get out of Dodge and maybe take a driving vacation and maybe that's helping a little bit in that segment?

Yes. I think that when you look at the segment, right, you look at restaurants, you look at lodging and you look at airlines. Airlines and cruise lines are -- and as I said, we're at 90% T&E decline. Airlines and cruise lines are above -- beyond that at this point. So they are beyond that, refunds and everything else. You're seeing restaurants come back a little bit more. Restaurants had been down about 80%. You're seeing that down to about 70% now. You're seeing more restaurants open up. And again, a lot of us have a perspective of New York. But New York is not the rest of the United States and certainly not the world. In the rest of the United States, you're seeing restaurants open. You've seen restaurants open at 25% first and then 50%. And some of them are up to 75%, spreading their tables apart. New York will get to that point at some point. You got a lot of restaurants, obviously, in New York. But we're seeing restaurants come back a lot more. And they had the ability to do some of that take-out and what have you. Lodging is, at this particular point in time, probably more like the T&E industry. I mean so we're seeing that probably 90% down, 85% down at this point. So -- but I think here's what I think will happen. I think you will see exactly what you said. You will see some stay vacations. You will see driving vacations. And you will see the lodging industry, I think, come back. Certainly, and if you talk to Chris Nassetta or you talk to Arne Sorenson from Marriott, they'll tell you it's not going to come back really soon, but it will come back over time. I think when you think about conventions and things like that, we're a long way from those kinds of things. The airline industry is different. And you've heard Ed Bastian say this. You've heard a number of the other CEOs say this from the airline industry. It will probably take 3 years for them to come back to where they were, and they will probably be at reduced capacity of 15% to 20%. But what I do think is going to happen in airline is you will see sort of in market, let's call it, intra-United States, short-term, short trips happen before you see cross-border trips happen. You won't see a lot of Americans going to Europe. You won't see a lot of Americans go to Asia. And business travel, we talk to a lot of CFOs, I talk to a lot of CEOS, they're not going to be rushing to get back to business travel anytime soon. And I think when you think about business travel, I think we're looking at a fundamental shift over time. I mean think about anybody that's on this Webex today, how are you doing business today? I mean the reality is there's a lot of things that you have done in person by getting on a plane and flying somewhere that you're realizing now you can do via video, once you've established that relationship. So I think corporate travel may be changed forever. And that's -- look, that's a big business for us at this particular point in time. But it's a big business in terms of our market share, but when you think about the percent of overall billings and just put that in context for you, our corporate business is about 9% of our billings. Our T&E piece of that is about 5%. And so you could look at a decline of maybe 50% there, 25%, I'm speculating, but we'll see. Our Corporate Card business right now is probably about half of what it was.

Yes. I mean when we think about our own modeling, I mean, we don't have long-haul cross-border coming back to 2019 levels basically for the entire period of the model. I mean -- and so it seems like there's a long ways for the industry to go before you're getting long-haul travel coming back.

Yes. I think that's right, but I think that's probably -- that will come back quicker for consumers than it will for business. I think what you're going to have -- look, at some point in time, we're going to have a lot more statistics about this disease. There will be a vaccine of some sort. Whether it's more like the flu vaccine or whether it's more like a measles vaccine, we don't know yet. And you will have therapeutics. And once people get that sort of cocoon of safety, they will travel again. And remember, this is a disease that impacts people sort of my age and above a lot more than it impacts sort of 0 to 50. So it's a -- you will have different people that will approach this in very different ways, and we'll see how it all plays out. But consumers have very short memories. That has been my experience. They have very short memories, and consumers ultimately want to spend their money. Corporations, though, start to develop different muscles. And I think what you will see here is there will be some different muscles, which, for us, and that could be a concern for investors, this is not a big revenue driver for us, nor is it a big profit driver for us as it doesn't have the same margins as the rest of the business. And again, when you look at it, this has not been a high growth area. Having said that, we're looking to look to leverage those relationships that we have with corporations to get more of the B2B spend.

Got it. Okay. So dovetailing into overall health of the consumer, how are you feeling right now considering unemployment levels are staggering? Don't know how temporary those levels are. Any concerning signals within the Amex portfolio that you see now that we should be aware of?

No. I think, look, I think time will really tell. I mean, look, you've got unemployment right now at levels that we haven't seen in this country. And again, go back to the great financial crisis, it took 6 quarters for us to get to where we got to in 8 weeks, and we've surpassed that right now with almost 40 million people unemployed. This unemployment right now is primarily a service industry, small business phenomenon. You think about hotels, airlines, restaurants, small retailers and so forth. That's where you're seeing it. When I look at -- when I look at our portfolio, we have -- again, I'll compare this back to the financial crisis, but 33% less low FICO, about half of -- half less low tenure. We've put -- look, we've enrolled people in our pandemic relief program that you wouldn't have thought you would have ever enrolled those people in. But when you look at that percentage -- and I'll talk about pandemic relief for a second because I'm sure it's on people's minds. When we -- when this thing started, we came up with what we call our CPR program, which is customer pandemic relief. And that was either a 30-day programming, get reenrolled or then move to one of our shorter-term hardship programs, which is 12 months or sort of longer term, 36 to 60. And remember, in April, when we came out, we talked about $8.5 billion and 845,000 accounts that were enrolled in pandemic relief. And I think that may have raised -- could have raised some eyebrows at the time. And that was made up of people that were just struggling at the moment, waiting either for government assistance, waiting for whatever they were waiting for. Since that point in time, as of mid-May, we've got about 500,000 accounts now in pandemic, in that short-term pandemic relief. We've had a trickle that have come in. We'll probably shut that down over the next couple of weeks or so. And we've got about $5 billion in there. Out of the people that have left that pandemic relief program, 2/3 of those 345,000 accounts are now current and are paying their bills. And the other 1/3, some have gone delinquent, the others have either enrolled in our 12-month program or one of our longer-term programs. And so when I look at those that are outside of that particular program, our roll rates are as good as they've ever been. So I think we had a lot of the people that were in stress in there. You saw a lot more -- half of the balances that we had were small business versus consumer, which makes a lot of sense given small businesses completely shut down. So I think time will tell. There'll probably be another shock and maybe even a shock after that. But we feel with the book of business that we have and with the programs that we have for our customers, we'll be able to navigate this quite elegantly.

Yes. Coming back to your comment on SMBs, just to -- I want to get your perspective on SMB. I mean, the health of SMBs is on everybody's mind. And at the same time, what's your thought on stimulus? Is stimulus enough to bridge SMBs to reopening? Amex is, I think, the size of -- well you're bigger than the next 5 players combined in SMB.

Yes. So it's an interesting question that we think about all the time. But I think you got to -- let's put this in context. When a lot of people think about SMBs, they traditionally think about restaurants and small retailers, okay? And when you look at our SMB portfolio -- now these are the people that have our Small Business Card, not people that accept the card. We've got over 3 million accounts in the United States. 3% are restaurants. 3% are restaurants for us. 10% are in the construction industry, which means electricians, plumbers, HVAC, things like that. You've got about 14% in service, legal professionals, finance and what have you. And then we've got health care and dentists, doctors and so forth, about 14 -- about 17%. So our SMB portfolio is very distributed. It's not the same as our merchant footprint may look like. And so I think that, look, you will have SMBs that just cannot keep their doors closed for 3 months. And so I think it really is going to be a function of -- it's going to be a function of how long that they have to stay shut for and then how much money and how does the government funding go? I was telling my team yesterday, a buddy of mine who's a defense lawyer in Queens, and his business has dried up by 75%. People aren't out committing to spending crimes apparently, and courts are closed. So this is the -- this is his story. But reality is he applied for a PPP loan, and that loan has allowed him to be able to pay his staff and keep him going. But he will be reopen for business, and he will get on through this. Restaurants are a little bit different, right? Because it's hard to pay your staff when you're not open. And maybe it encouraged some restaurants to be open for takeout and things like that. So I think the government stimulus will help, but I also believe that there are just some that will go out of business as, look, as SMBs do. SMBs go out of business in good times. I think the other thing that's important to remember here for the majority of SMBs, there was nothing wrong with them. This was a -- this was done to them, not anything they did to themselves. So we will see. But again, as I look at our book of business, we are bigger. I'll also point out that we, probably though, while we have almost 50% of their spending, we only have about 3% or less of their overall lending, whether that be mortgages or term loans or credit card loans. So we're less exposed from a lending perspective, more exposed from a spending perspective. And the last statistic I'll give you is that when we look at our spending, consumer, corporate and SMB, SMB has held up the best. SMB has held up the best. Held up the best, meaning it's down the least, okay? It's that's -- it's not growing, but it never reached corporate of almost 60% down or even the consumer of 45% down.

We need to find those silver linings.

Yes.

So a question from the audience that is well-timed with the conversation. Do you think loan loss reserves peak in first quarter, second quarter? Or will the third quarter potentially see a larger reserve build as well? Will charge-offs remain below loan loss reserves basically?

Yes. So look, I think that -- and I think Jamie said this yesterday when he was talking at a conference. I think CECL requires us to look at economic forecasts and to make our predictions on reserves and loss rates based on what the economic forecasts are to look at the life of the loan. Our anticipation is you will have another big reserve in the second quarter. And then we'll see where we go from there. And a big reserve, remember, our reserve was $1.7 billion or so last quarter, and so I'd probably see us being around the same amount of money.

Okay. Shifting gears. Can you talk about how you've seen spending habits change? And how much do you think is long-term sticky versus near-term out of necessity?

Yes. So look, I mean, I don't know about you, but I'll go to the grocery store once in a while, gloves, mask, the whole thing. But we're doing a lot more online. I mean, whether it's Instacart or whoever it may be to deliver. So we're doing a lot more -- we didn't do any grocery shopping online prior to this. We're doing grocery shopping online. And I can see that continuing from a staples -- getting staples and things like that. Still a little bit hard to pick out vegetables online, not really that great. So -- but anyway, that's a separate story. But the reality is that I think you will see -- you've seen a -- we were moving to online shop. I mean, obviously, online shopping was moving at a rapid, rapid pace. I think that's a fundamental shift. People will continue to live their lives online, I think. You've seen malls, from a clothing perspective, malls being challenged. I think supermarkets have done really well during this time. Places like Target, Walmart and other places have done well. But they've done well from a combination of online and off-line. And so I think we've seen an increase in our online spending. It's a higher percentage overall of our spending. And it's the only category online, non-T&E that's growing for us right now. So I think you will see that shift. Now I think like anything else, people do like the socialization. People do like going out and getting around people, and I'll use my vegetable shopping sort of analogy. But I think that the reality is, is that we will see a fundamental shift. It will be more online -- more online spending. And we think we're very well positioned for that, though.

Yes. Maybe before we get to the overall acceptance question, maybe you can keep the topic online. And how is Amex's acceptance online versus competing networks?

Yes. Well, look, in the United States, it is -- it's parity. I mean much like you've had virtual parity in the U.S. from a brick-and-mortar perspective, it is parity from an online perspective as well. And I would say our acceptance online internationally is probably even -- is much better than our acceptance off-line in the physical world. So this is a -- this shift will play more to our strength and move away from what a lot of people perceived as a weakness, which is our off-line coverage in international, which I've always said has been an opportunity for us because international has been one of the fastest-growing areas that we've had in our business with coverage that is not where we want it to be, which is why we've invested so much in coverage. But what we have done internationally is we partner with all the online aggregators, the Adyens of the world and so forth and, obviously, big partnerships here in the United States with PayPal and Stripe and Square and what have you. So our online coverage -- and we don't look at it in the United States that way because we're at parity coverage anyway. You might -- as I said, you may find a small mom-and-pop that hasn't accepted the card in the physical world, but we went into finding that out and getting them to accept pretty quickly. But from an online perspective, most people want to accept every single form of payment. And so from an online perspective, I think our coverage is much, much better than it is off-line. And I think that will be a big benefit for us with the changing behaviors.

To what degree have you been able to see the SMBs that you -- that are Amex customers been able to shift to an omnichannel footprint?

Yes. It's hard to say. I mean, obviously, look, lawyers, barbers, auto shops, they can't shift to an omnichannel footprint, right? What you have is some of the small retailers who've been powered by people like Shopify and others and Stripe and what have you, have been able to do that. But our SMB base is so diverse. And just remember the statistics I gave you: 17%, health care and professional services; 14%, finance; 10%, construction. These don't really lend themselves to online. So that's almost -- that's over 50% of our SMB footprint.

Okay. Make sense. Sticking to acceptance, OptBlue, super successful in the U.S. to get you to your target goal of virtual parity. How is that proceeding outside the U.S. in terms of growing acceptance?

Yes. So we're rolling out OptBlue in -- it's live in Canada, Mexico and South America and working just as well as it did in the United States. In Europe and in Australia, you do have some regulatory issues, or certainly in Europe you have regulatory issues with 3-party versus 4-party systems. So in Europe, we're using aggregators. We're using our OnePoint program and our ESA program to do that. So we can't actually implement OptBlue as it was here, but we have our own sales channels. We do work with the same partners, just a slightly different value proposition. And so that has led us to increase our coverage internationally. But OptBlue was a boon in the United States for us. It really worked out well. We expect the same impacts in the rest of the Americas.

Okay. I have a very pointed question from the audience, so take it as you will. Is corporate business 9% of Amex's current billings? It was 18% pre-COVID.

No. I'll take it exactly as it was said. It was 9%. It was 9% pre-COVID. Okay. So it was 9% pre-COVID. And that 9%, 60% was T&E and 40% was non-T&E. The non-T&E piece actually is holding to growing because you still have to run the business. The T&E piece is the piece that's coming down. The margins on that business is not the same as the margins on any of our other businesses, and there's no lending associated with that. So I'm not overly concerned about what happens there because I also think there will be an opportunity given that this market may not be as fruitful as it once was. You may see others exit the market as they did a number of years ago as well. I mean there's not a lot of players that play in the global corporate card market, which is why we have over 60%.

So maybe that's a good dovetail into my next question, which is how has competition changed since the pandemic started? Have you seen significant shifts in strategy or a decline in investment or increase in investment?

Well, I think that -- the one thing I will say is, I think -- and look, I know all of these guys that run all these networks and run all these issuers. I think as an industry, what we've tried to do is support people. And I think you can go from the Citibanks to the JPMorgans to what Visa and Mastercard have tried to do and what everybody's really tried to do, and Dan over at PayPal, I think the industry has really felt a response -- a sense of responsibility and has really tried to step up to help people through the crisis. Because you have people in crisis right now that have not been here before, whether they're small businesses. These are not people that are -- these are high FICO people. These are not people that are used to being in that situation. So I think as an industry, I think we've done a good -- I think we've done a good job. I think like everybody else, you're not seeing a lot of -- when was the last time you saw a direct mail piece from anybody? You're not seeing a lot of direct mail being dropped. You're not seeing a lot of aggressive acquisition. You're not seeing a lot of banner ads and things like that. I think everybody has really dialed back their acquisition to be a lot more reactive or just to keep the channels open. And people have modified their value propositions. I mean, we've added accelerators on supermarkets, and people have added credits and so forth. But I would say right now, I think, from a market perspective, people are looking at protecting their customers, helping their customers. And it's a little bit less about sort of trying to get you to use my card. Or there's not a lot of switching going on at this particular point in time. So I say -- I would say competition has -- has sort of stabilized at the moment, because you can't compete if you're not making offers to people. And there's not a lot of offers being made. Having said that, I think what's really important during this time is how do you look at your value propositions and how will they play out over this pandemic? What changes do you need to make to continue to win the hearts and minds of your customers? What changes do you need to make in the medium to long term? How do you need to expand the range of value propositions? And these are things that we are contemplating right now. You've seen some short-term things that we did as it related to credits for wireless and credits for streaming, credits for shipping for small business, credits for supermarkets, things like that. But longer term, what do we do with our value propositions? And remember, our value propositions are about experiences. They're about experiences, they're about service and they're about access. And you don't always have to define experiences and access to be concerts or sporting events or what have you. There can be other sorts of more personalized experiences and access to things that people will want to take advantage of. And so we're going to work and we're continuing to work now in how do you morph those value propositions so that you have a range of value propositions when you start investing back in the business from an acquisition perspective that you're able then to look to take share and gain even more scale and relevance.

Do you see Amex's brand messaging changing at all for the long term because of this?

No. I think, again, this -- I'll go back to what Warren said. I mean this is what sets Amex apart. We're there to support our customers. I mean we're known for service security and integrity, over 170 years. And it's crises like this that bring out the best not only in our people, but in our customers' sort of affirmation of the brand. And one of the things I think that is on people's minds is, look, you've got a high -- you might have some high-priced cards. Does the value still hold up? The reality is, and we watch this all the time, our voluntary attrition on our premium products is exactly at the same levels as it was pre-pandemic. And again, that speaks to sort of the affiliation, the connection people have, the things that we're doing in the crisis now to support our customers and the things that they know we will do to support them. So I think we're right on brand. And if you think about our last sort of marketing campaign that we just launched probably a little over 2 years ago, we have your back. And we don't want people to live life without the American Express card, we don't want people to do business without the American Express card, because we are there to have your back.

Okay. When we met with you in October, there was no telling how prescient this comment was that you made, but you had made a comment that the one regret you had over the last, call it, decade was that American Express did not invest more or continue spending during the great financial crisis. So tell us a little bit about how Amex is approaching that now.

Yes. I mean that's a -- yes, I didn't think I'd have to play that back sort of 4 months later. But reality is, is that that's exactly what we've done. I mean so if -- we put together this winning through -- what we called winning through the cycle playbook. We put this together in July, presented it to the Board, and we had all these phases that we were going to go through. And we're able to quickly implement that in -- through March into April. And we identified $3 billion of cost to take out of our plan. So $3 billion of cost to take out of our plan, not out of what was last year, but what our plan was. And it wasn't run rate, and you've heard us talk about run rate. You've heard me talk about run rates for years, right? It wasn't run rate. It was $3 billion out of the plan between April and the end of the year. And then we took over $1 billion of that and invested that back into the business in value injection, in programs for our customers, and look, even in our CARE programs. And so that's exactly what we've done. So we've done that playbook to a T. The other thing that we did is we didn't lay anybody off. And that's not to say we're never going to lay anybody off. But it is to say, we're not going to lay anybody off this year due to COVID-19. And we decided that, that wasn't the right thing to do because, as I've also said, and I said this in October as well, the go-to move that I always had was, okay, we'll reduce labor by 10% to 15%. In this environment, a couple of reasons you don't do that: Number one, I think just from a values perspective, from -- if you think about it, people look at the world sort of coming apart. It just didn't seem like the right thing to do. Number two, it is completely destabilizing. Think about trying to go through layoffs. And we have companies doing it now, going through layoffs with nobody in the office and everybody waiting for that phone call to come. I need my employees focused on serving our customers, and that's what they're doing, and they're doing it to perfection. And the third thing is I don't know what it's going to look like when it's over or when it does get over and what the size of the company should look like or what the focus should look like. Give you another great example. We have salespeople. Salespeople aren't doing a lot right now. But we've been able to pivot our salespeople into credit and collections, okay? Now when you think about it, credit and collections is a little bit like said. It's like selling. Because what you're doing is, it's not about just collecting the money. It's understanding what somebody's issue is and offering them solutions. And that's what our salespeople do on a daily basis. They understand customers' needs. They understand what people's objectives are and what their objections may be. And then we go and pick out programs. And so we've been able to pivot hundreds and hundreds of our salespeople on a global basis to step in and do credit collections for us. And I would say it's much more about credit consultation right now than it actually is about -- about collections. It's getting people on programs and understanding where people are, which is why we were so successful, I believe, with our CPR program.

Okay. Question from the audience that dovetails nicely on this is, American Express is well capitalized -- as well capitalized as it has been during any previous crisis and has a history of widening the moat during crises. Where are the biggest opportunities right now for Amex to do that again?

Well, look, I think the opportunities for us, it's probably not in corporate anymore, right, which is probably one of the biggest moat that we had. And it's not in corporate just because it's not a pool that's going to grow too much from a T&E perspective. I think coming through this crisis, small business will be our shining star. I believe that's where you're going to see us continue to invest. And I think that's where the affinity and the respect and -- that we're gaining from a lot of small businesses and how we're working with them today will pay off for us. And I think it goes back, I think from a consumer perspective, go back to the 4 priorities, right? You look at the 4 priorities that we had: number one, premium consumer, I don't really see that changing much. And I think we have to -- we'll look at that range of value propositions. Craig, as we talked about, Costco really got us to focus in on the rest of our portfolio and got us really to think about how we define value across lots of our segments. I think this sort of -- this situation we're in now will have us put a wider range of value within our value propositions. You will see our value propositions expand beyond T&E. And I think -- so that will be an expansion of the moat. I think from an SMB perspective, you will see a wider range of services that we'll enter into because, again, we're going to have the right to be able to do that given how we supported these SMBs. And our third point has always been digital and that continued doubling down on digital, and that's where we're seeing probably a lot of our growth. So I think when all is said and done, people that have been with us for a long time, or people that have just been with us recently, are going to stay with us a lot longer because of how we wrapped our arms around them.

Got it. And maybe you can add to that. Regarding technology, we've seen American Express be able to do a lot of interesting things with partnerships. You were the first to integrate with Uber by a pretty wide margin. The recent integration with PayPal in terms of [indiscernible]. Talk to us about how you can leverage that. It seems that having one contact point for partners on network issuer and also, to some degree, acquirer helps in that regard.

Yes. It helps a lot. I mean, whether it's the Payplanet feature that we have, I think you'll see more integration with some of our partners there. I mean look, if you talk to Apple, what they'll tell you is that it's a lot easier to get out -- roll Apple Pay out on a global basis with us because you have that single point of contact that you use in the United States, you use it in the U.K., so forth and so on. And so I think you'll see more API integration from us which takes advantage of sort of that end-to-end experience. And so I think pay over time, you'll see integrated more. I think the Uber integration is a great example of that and PayPal as well, with not only Venmo, but membership rewards. And so I think as you look at more contactless payments, being able to embed either pay over time features or to embed recurring features will help us. And that single point is a huge advantage for us.

Got it. Okay. Another question from the audience. How much of the decline in loan growth since February is attributable to lower spending volume versus deleveraging from revolving borrowers versus Amex just also pulling back on credit?

Yes. Look, I think that we're different than everybody else. And so just to reinforce the model, right? We charge more fees for cards than anybody else does, and that's why we have such high fee revenue, which we're trying to drive spend and we're trying to drive lend. And so when you look at our AR, it's transactors and its revolvers. Transactors are coming down a lot faster. I mean, you could see it, because if you have a 45% decline in billings in April and now you're down 35%, all that transactor volume does come down. So a lot of it -- look, it's not to say that we're not declining from a lend -- from a -- what you'd call a traditional lend to revolve perspective, but a lot of it's being driven by transaction. More being driven by transaction than lending or more than us tightening up on some of the stuff. But what I -- again, you also have a situation where we are not aggressively acquiring cards, right, as well. But to transact -- in a spend-centric model, the transactor volume will drive the AR down. On the flip side, what will happen with our base is when we come out of this, you will see the AR increase a lot quicker than you'll see others increase their AR. So what I don't want to hear from, why are you increasing your AR so quickly? It's because it is spent.

Yes. We only have a few more minutes. So 2 last questions. ESG is becoming a big component for investors. So maybe talk to us about how American Express is viewing things a little differently today from an environmental, societal and government point of view?

Yes. Look, I think over our 170-year history, we've been focused on colleagues, communities and so forth. So this is not anything new for us. I think from a sustainability perspective, we went carbon neutral in 2018, 100% renewable energy. We'll have all -- we'll eliminate all single-use plastic from our facilities by 2025. When I think about sort of communities and our philanthropic endeavors, we've been very big -- look, one of the things that American Express has done a great job of is putting leadership in the payments industry. Anybody you cover at some point worked in American Express. And we want to give that back. And so over the last 10 years or so, we've invested probably $100 million and have brought about 125,000 leaders of nonprofits through our Leadership Academy. And so we're committed to that as well. Look, from a human rights campaign perspective, we're -- we've been on that list, corporate entity list for the last 10 years, gender equity pay. And I think look at COVID-19, our efforts with Marriott, our efforts with Hilton in terms of rooms for first responders, Feeding America, World Central Kitchen, reimagining food, we're investing in that as well. So look, the community is really important and giving back to the community. I wouldn't say our values have changed in any way here because we've always felt the community was important. I think, obviously, from a, as I talked about earlier on from a carbon footprint and plastics and things like that, it's probably not something that we focused on 15 or 20 years ago, but we've always focused on giving back to the community and being there for the community.

Okay. So to wrap this all up, as you think through and beyond the pandemic, how do you expect your priorities to shift, especially as they relate to cutting costs or increasing levels of investment?

Yes. So look, we've cut -- as I said, we've cut $3 billion out of the plan for this year. We'll look at what our structure is, probably for the end of the year. But the reality is our mantra stays the same. It's really about share, scale and relevance. And we will invest to grow when that time is right. And we'll know how the time is right as we look at sort of unemployment, as we look at general economic indicators. From a priority perspective, I think our priorities are absolutely right. Again, over the banner of navigate the crisis, position yourself to win coming out of the recovery, but then when you come out of a recovery, aggressively grow. I think focusing on a premium consumer and having a focus on the premium consumer will -- has served us well and will continue to serve us well because I think ultimately, they will be better credit prospects for us, and we have more affinity. Small business, when we talk about commercial, it's going to be all about small business going forward. We'll continue to have our Corporate Card business, but small business will be that growth area. Look, 2.5 years ago, we said, be embedded in people's digital lives. I mean, that was as prophetic as we're going to invest, as I said, in October. That's really important. And our network is important, continuing to add value to our network. So I think the 4 priorities will stand the test of time, and we'll pivot some of the investment within those priorities, but we will invest. We will invest to grow, and we'll get back to a share, scale and relevance story.

Okay. With that, I have to wrap it up. Steve, thank you so much for making the time today. I hope you and your family stay happy, healthy and safe. And...

Same to you, Craig. And thanks for having me on. And I hope everybody that's listening and watching, that you're all safe and stay healthy, and look forward to seeing everybody in person.

Thanks. And just a reminder to the audience, please click that Procensus link to the left. It's just a few questions, and you'll see the results instantly. Thanks again, Steve, and everybody else. Take care.

Take care. Bye.