American Express Company (AXP) Earnings Call Transcript & Summary

All right. Excellent. Thanks, everyone, for rejoining us. We just wanted to give everyone an opportunity there to get your morning snacks, run to the restroom before we got started on our next session, where we are very delighted to have American Express rejoining us this year with Jeff Campbell, the Chief Financial Officer from American Express.

Hi, Lisa. Good morning, everyone.

Jeff, as I see, not sporting the full quarantine beard that we had from our prior speaker.

Yes. So this is the longest hair I've had, Lisa, since, I think I was about 25. So...

That's good. That's all right. We're not going to look too closely at the roots going on up here. So...

All right. Well, let's dive in. Maybe before we get started, I mean, Jeff, is there anything you'd like to say just as maybe opening remarks for the...

Well, maybe just a little bit of context setting, Lisa, for everyone. Obviously, these are unprecedented times, as I'm sure all of your speakers have been talking about. I often refer to this as a little bit of a mixture of the great financial crisis, 9/11 and maybe -- I worry that maybe there's a little bit of the Great Depression mixed in as well. One of the things though that's really helpful for us is that we spent a tremendous amount of time last year as a management team with our Board going through an exercise, thinking through how we wanted to manage the company in the inevitable cycle in a major way. Frankly, I'm going to give shareholders a lot of credit. We just got so many questions starting about 18 months ago. Well, at some point, the economy is going to turn down, how are you guys going to manage? But it really spurred us to spend a whole lot of time thinking through and making sure, as a management team and as a Board, we're all agreed on the principles we would use on how to manage through the cycle. Now certainly, we never envisioned something that is as unusual, unprecedented as the environment we're in. But the basic principles we came up with are what we're using to manage the company. And it starts with, you got to support the team or support our colleagues and win as a team. You have to protect the customer and the brand. You have to think about how you're positioning the company to grow in the future in the inevitable rebound. You got to make sure you're remaining financially strong. And those 4 touchstones are really the things that have allowed us to move fairly quickly and fairly calmly over the last 90 days. But that's the context, Lisa. And I'm happy to dive wherever you'd like to dive.

Well, let's start with the pandemic because I think American Express is in a unique position, both as a payment network and then also as a lender particularly to small businesses who have faced so much pressure. Can you maybe talk a little bit about following on to those comments, the types of things you're doing to support your constituencies through the pandemic?

Yes. So I actually would start right with our colleagues because we made a decision early on, again, one we debated interestingly enough 12 months ago, that in a downturn of this environment and given the pandemic and what that means for people, we made a decision to make a no-layoff commitment for 2020 and to do a variety of other things to support our colleagues. Now one of the benefits of that is that we were able to transition to a completely work-from-home environment in the space in a couple weeks. We moved 30,000 call center reps around the globe into a work-from-home environment. We had only these most temporary of blips in all of our service levels, which I think is a little bit of a standout relative to our peers. And if you actually look at our Net Promoter Scores today, Lisa, they're actually higher than they were pre-COVID-19. So that first principle of supporting our colleagues, we think, has really been critical in going to the second principle of protecting the customer and the brand. Now from a customer perspective, certainly, with our premium fee-paying Card Members, we have done a variety of things to enhance the value propositions in light of the current environment. Certainly, many of our products have a travel event. And given the fact that things like our global lounge collection are not particularly useful right now for most of our Card Members, we've added different benefits that are more appropriate to today's environment on a temporary basis. We've done a variety of things to help our small businesses. We were a PPP lender, we -- well, we were put into the program by the government literally the night to bill was signed. So we got a little bit of a late start, but we have worked with many of our small business customers. With our merchants, we have made a variety of changes, extending periods to resolve disputes, certainly, increasing contactless limits. We have launched with many partners across industry in our stand for small initiatives. And of course, we have a long tradition of driving the Shop Small initiative. And so we're doing many things. And you will see us do many more things, Lisa, in the coming weeks to help support our small business customers. Now last, there is, of course, a portion of our consumers and our small businesses who have been hit very hard by the economic impact over the last 90 days. And so we have swung into place very quickly a variety of what we call customer pandemic relief programs to help those consumers and small businesses who need a little bit of temporary help in terms of managing their finances. So we feel good about the support we're providing for our Card Members, for our merchants. It does start -- or it is built upon a foundation of making sure we're taking care of our colleagues so they can take care of our Card Members and our merchants.

Excellent. All right. Well, this is a payments conference. So I won't make you give a long answer to this next question. But certainly, I have to ask. Can you just give a brief comment on how the pandemic is impacting your lending book, your major credit metrics, including things like loans extended, receivables, balances, write-offs, et cetera?

So you're correct. I think you have to remember, our business is not lending. When you look at our income statement, we say, as you know, about 80% of the income statement of the revenues come from a variety of discount revenue, fee-based services, et cetera. But there's 20% that comes from net interest income. And when you look at our balance sheet, you have to remember, it's a mixture of what we would call lending, which would be revolving balances and then the charge card receivables we pay off every 30 days. It's really a tale of 2 cities right now. So we -- on our earnings call on April 24, talked about the fact that we had about $8.5 billion combined between our lending and our charge card receivables of consumer and small business customers who had contacted us and said, "Gee, I need a little bit of help." And we put them into our pandemic relief program. So it's now -- what is today, June 3. So if you move on through April 24, actually, about half of that $8.5 billion is now rolled out of the program. It was meant to be a temporary program. But 2/3 of the people who have rolled out there are just back in current. And the remainder are split between people who have gone into one of our longer-term hardship programs and people who have not become current, and we're trying to find ways to work with those people as well. The interesting thing is, if you put back group of customers aside, so those are the customers who clearly -- these -- were hit by the shock to the economy. The rest of bottom book does not show today any signs of stress. And so the metrics on the rest of the book look as if not even a little bit stronger than they did when we went into the crisis about 90 days ago. So on balance, we feel really good. We -- one of the things we did, Lisa, a year ago, is we spent an immense amount of time going back and thinking about what are the lessons we need to learn from great financial crisis. And one of the lessons -- one of the many lessons is we were not, 10 years ago, as a company, prepared to really work well with our customers to help them through periods of temporary financial difficulty. We have really worked hard over the last year to develop capabilities that we're putting right into place right now. So I think the real question from our perspective on credit is going to be where does the economy go over the next 6 to 12 months. So have we had the main shock of unemployment, stress on small businesses and now the economy steady delay recovers or are you going to see further shocks? Are you going to see further shocks when some of the government support being provided to small business and consumers rolls out? Are you going to see further shocks when perhaps larger companies, perhaps like Amex might engage in some sort of round of layoffs ultimately but not until the end of this year or early next year? But for where we are right now, we feel we have isolated the group of customers who have felt an economic challenge, and we're working hard with them to get as many of them to the end of the line with their membership intact and our balance sheet intact.

All right. I'm going to have a follow-up, but one quick housekeeping item. [Operator Instructions] So if you saw me sort of madly typing it was because I was sorting out that technical issue, but it's...

That's okay. Lisa, I had my own technical difficulties getting in. As I said to you, I think, before we went on the air, it's kind of the equivalent of getting stuck in midtown traffic. So we're all learning, a whole new world.

Exactly. This is a brave new world for all of us. So let's -- I would just want to do a follow-up on your -- comment you made. You said when you looked back at preparing Amex better than where you were going into the financial crisis, not that, that was -- that Amex was in bad shape necessarily then. But I just mean in term -- what are some other things that you would highlight that are different about Amex now? You mentioned the customer support programs, other things compared to if people are trying to make that...

Yes. So I'd probably go to 3 or 4 themes, Lisa. And I'd actually start the themes with we have spent a tremendous amount of time as a management team that support, agreeing on what's important as you manage the company through the cycle. And as you know, I was sitting blissfully as a CFO in health care in the great financial crisis, untouched by the great financial crisis. But we have spent an immense amount of time going back with all the parts of the team that were there. And we just weren't ready to thoughtfully think through how to manage the company in a downturn. So what's different? So first, you have a range of risk management capabilities that are far superior than they were 10 years ago. You have a range of collection capabilities that were completely nonexistent 10 years ago and, today, we think, are amongst the best-in-class in the industry. You have a much more sophisticated view into who are across the many different parts of our integrated network, Lisa, our most important and most valuable customers. If you think about it, we might touch someone in the consumer part of our issuing business. We might touch them in the small business issuing part of our business. We might touch them in the merchant part of our business. In the great financial crisis, we were not prepared to think in a coordinated fashion about how to manage and work with people who had multiple relationships with the company but needed some kind of support from us to help get through some financial arch. We have developed very sophistic capabilities to think broadly about our customer base. If you look at the portion of our business that is lending, as you said, it's not our main part of business, but it has a totally different characteristic than a decade ago. We -- boy, when you study the history, as I have extensively, the great financial crisis, we were building the loan book by doing lots of balance transfers, by building lots of low FICO into the portfolio. And so for the past couple of years, every single month, we have stared at, what did our portfolio look like in 2007? Let's make sure it doesn't look anything like that right now. And it does from the perspective of low-tenure customers with low FICOs or people with whom we've done balance transfers. The last comment I'd make is just a financial one, which is we did go into the great financial crisis with a chunk -- big chunk of the company's funding still provided by commercial paper. Today, we have tremendously strong capital and liquidity positions, and we feel really good about having the financial strength to do the things we need to do to make sure the company is really well positioned to rebound strongly coming out of this, which, even in the great financial crisis, despite all the challenges I just talked about, I would remind everyone that the company actually gained a whole bunch of share in a couple of years coming after the great financial crisis and the rebound. And our goal was to position the company to have that kind a really strong rebound again.

All right. Let's talk about spending volumes. Many of your peer networks have been providing pretty real-time updates on what's going on. I think that's been enormously valuable not only to the investor community, of course, but also to governments too, retailers too, just people trying to manage their businesses through this and understand what is going on. Just what are the latest trends that Amex that you've disclosed as a company?

So the first comment I'd make, maybe overarchingly, Lisa, is like you, we hoover up every single bit of data that any of our competitors, any of the many different companies gathering data are publishing these days. And the observation I would make actually is that we're all seeing pretty similar trends if you adjust for different mixes of industry, different mixes of customer segments and different mixes of product, right? So debit is down less than credit across the industry because it is more about essential spending. So if you think about Amex, we are fairly unique in the fact that we went into this. If you look at last year's numbers, with about 29% of the spending volume over our network being travel and entertainment-oriented, much higher than anybody else's, we also had a more premium-focused Card Member base, which is going to do a higher percentage of discretionary spend. So if you think about those mix differences and you dive into our numbers, they're showing really the same trends you see elsewhere. So on April 24, we showed, to your point, very real-time data. And we showed that at that time, overall volumes were down about 45%. Today, they're down probably in the mid-30%. So you're seeing about 10 points of improvement. If you break that down, T&E was down about 95% in mid-April. Today, it's probably down around 90%. And if you were to break T&E down into its components, again, I think you can see that the results are pretty intuitive, which is cruise line and airlines are down still more than 90%. Hotels look a little better as do restaurants -- or excuse me, restaurants look a little bit better. And then hotels are right about at that 90% average. If you look at non-T&E spending, it was down 20% to 25% in mid-April. Today, it's down probably in the low teens. And if you break that into online and off-line, online spending is actually growing in the nice -- as long as you take the T&E piece out because, of course, a lot of T&E is done online. Maybe the -- a couple of other bits of color. If you think about things by state, again, you see pretty intuitive results, which is really big states for us include some of the harder-hit states that have been slower to reopen like New York, New Jersey, California and other important states for us include states like Texas, Georgia and Florida. So as you would expect, if you just think about the pace of reopening, you see a little bit stronger rebounds in places like Georgia and Texas and Florida; a little weaker rebound in places like New York, New Jersey and California. The last comment I would make on volumes is that if you think about different customer types, again, it's pretty intuitive. So these small business Card Members, even at the trough, were down less than the average. So even at the absolute trough point, our overall spending was down about 45%. Our small business Card Members were only down 30% and have rebounded in line with the overall average. And I think something we, maybe, Lisa, don't always do a good job of communicating is that we are fairly unique in our mix of business and being an integrated number. And so I think when people think about our small business Card Members, sometimes they conflate it with our mix of merchants. So if you think about the merchant network, there is, of course, a very important component. There are smaller restaurants and other small entertainment venues. That's actually not true, though, of the small business Card Members. So the small business Card Members, the biggest individual industry category, it's interestingly enough, are people running small construction businesses. The second big category are professional services firms. So it's lawyers, it's doctors, it's architects, et cetera. And so if you think about that small business issuing mix, those people were actually less impacted by the shutdown than the average consumer or, frankly, than the restaurant footprint that you would see in our merchants. And maybe the last comment I would make, just going back to customer type, is what was most impacted by customer type. Well, large corporates, right? So if you look at our large corporate spends, so these are, in particular, large corporations using our Corporate Card product to travel, I mean that number was down 60% at the trough versus the 45% average as large companies like Amex have essentially just stopped all travel. So maybe that's more color than you wanted, but it's a kind of a thorough view of the landscape in terms of our volumes. But I guess I will go back to where I started, which is I think, adjusted for customer types, geographies, et cetera, I think we're all seeing pretty similar trends there.

All right. And then for American Express, how should investors think about the relationship between those volume trends that you just highlighted and revenues?

So of course, the biggest single component of revenue for us, around 60% pre-COVID, is discount revenue. And so discount revenue is, in general, going to follow volumes, except for the fact that you have such a disproportionate impact today on T&E spend versus non-T&E spend. So because we generally get higher average discount rates from our T&E merchants than from our non-T&E merchants, that will have an impact as long as you see the disproportionate impact on the average discount rate we're generating from merchants. And so we gave an estimate that it's probably still as good as any back on the April 24 earnings call. Then in the second quarter, that could drive the discount rate down 14 to 18 basis points. And so you will see, therefore, discount revenues go down a little bit more than volumes. Card fees, second important source of revenues, which have been growing near 20% in recent quarters, will actually continue to grow very strongly in the mid-teens. Because our history, Lisa, as you know, is that even in downturns, when you study history, our already very low rates of attrition amongst our Card Members generally don't move at all when you study history. And we are very pleased in that if you -- I'm going to knock on my wooden desk here, that thus far, we don't see any change in attrition amongst our Card Members who are on fee-paying products. And of course, we're doing things to help support the value in those products. So I would expect to see continued strong growth in card fees. Now as the current environment goes on for a longer time periods, you will see a little bit of sequential slowdown in that high-teens to mid-teens growth rate of card fees because one driver of the high rich growth is just the steady acquisition of new Card Members. And we have greatly slowed new Card Member acquisition at this point because we just don't have visibility into what the actual credit quality is of people in the current environment. You don't know if that's super successful small business that existed 90 days ago actually is hugely impacted by COVID. You don't know if the 780 FICO consumer actually doesn't have a job anymore. So we're pretty cautious about acquiring new Card Members. Net interest income, of course, will be a little bit stickier than discount revenues because it is not as quickly driven by volumes. You saw only a very modest decline in our interest-bearing receivable and lending balances on March 31. You'll see a little bit more decline in June 30, but it will be more modest relative to discount revenues. And then I guess the last comment I would make when you think about the geography of our financial statements is as our revenues come down in this environment, there's about a 50% save on what I'm going to call our variable cost of customer engagement. So that's fewer rewards costs. It's fewer Card Member services costs. It's lower payments to some of our partners. And so for every $1 billion that -- depending on what you want to believe about the shape of the economic recovery, for every $1 billion of revenue if you were to take out of your expectations, you would gain back about half of it in saved expenses on those 3 lines. So that's the way I would think about the way the P&L is going to react to the evolving volume environment.

Got it. Okay. And above and beyond that, so you just kind of gave that walk from volumes to the revenue line and then the direct expenses. What other actions are you taking? I know you mentioned no personnel actions through 2020. That's a fantastic thing you and many of your peer companies are doing I love to watch. But then there's obviously other things that you can do. So what are some of the other...

So within probably a couple of weeks, Lisa, of realizing the unprecedented nature of the environment we're in, we went through every bit of the cost structure of the company. And we really asked ourselves a couple of questions. We said, what are the things that we can just stop doing in the current environment because they're just not as productive as they were? Knowing that we can put them back as the economy rebounds, what are the things that, in fact, we probably need to do even faster or more of in the current environment? And what are the things we can just defer? The sum total of all that hold about $3 billion out of our original plan for 2020 on the marketing and operating expense line. And we then made a decision to reinvest, if you will, about $1 billion of that in some of the support we're providing to our Card Members who are on fee-paying products, and the rest will drop to the bottom line. So we think those are the right actions to make sure remain -- we remain financially strong this year. They are the right actions to do things that are prudent but are not going to hurt our ability to rebound or to be strong in the inevitable rebound. And it positions us to just watch the pace of the recovery, which I don't think anyone can forecast, although I'm sure you'll ask me. And we will be ready to move as things get stronger.

Yes. I will ask you. In fact, I'll ask you right now. Of course, no one has a crystal ball. But sitting in your seat and engaging day-to-day with your many, many partners and customers, you probably have a better crystal ball than most. So what type of economic outlook or scenarios, even range of outcomes, are you contemplating when you're thinking about your planning for the next year?

Yes. So I think the keyword, Lisa, you used there is scenario. So this is a world of scenario planning because we can't count on being able to forecast. This is the precise direction. And so it's all about making sure you're managing a company in a way that gives you optionality, depending on the outcomes here. Now if you look around the globe, and we have a fairly global view, you have seen countries around the world open up a little bit of at varied time, right? So Asian countries began to open up before Europe started to open up even within the U.S., as I mentioned earlier, you've seen different cases at which geographies in the U.S. are opening. So that gives us a little bit of a view that there is a -- we've certainly hit the economic trough in mid-April. Around the globe, you see steady increases in spending, particularly on the non-T&E side. You see much slower recoveries of spending on T&E. And our most likely expectation or path here is that you're going to continue to see just steady improvements. It's a little hard for us to imagine that the governments around the globe are going to want to go back to the kind of severe lockdowns that drove the economic environment you saw in April. And so we would expect some sort of steady rebound. Now that said, there has been a lot of damage already done to the economy, right? The environment over the last 90 days is going to hurt small businesses all over the U.S., all over the globe. And there are a chunk of them that are not going to come back no matter what the shape of the recovery is. And there are a chunk of consumers who are going to continue to have challenges because we expect a slow build back on the unemployment side. So I would say those who are talking about a really strong V, if you will, to use some of the popular vernacular, certainly, I hope I'm wrong, but we're certainly not running the company with any expectation that's -- that there is a V. We're running the company with the expectation that there is a slow but steady rebound back. And so much of it, Lisa, is about what consumers really do in terms of behavior, right? And I will say, if you just look around the world, the -- some of the human urges to congregate, to get out are pretty insatiable. And as recent -- if I can go maybe for 1 second to our business and value propositions, our view is that business travel is going to be very slow to come back, right? The -- despite the technical glitches, the learnings that we've all had in business about how much can be done in this kind of virtual environment, we think, that will have a pretty permanent effect on the level of business travel. And so as we think about the very small portion of our business that is about providing a travel-oriented card to mid- to large-sized corporations, now that is years and years and years from being the size it was in 2019. Consumer travel, we think, will come back more quickly because of the insatiable urge that people have to travel. I was an airline CFO in the aftermath of 9/11. Lots of people said after 9/11, "Oh, my gosh. Well, how are people ever going to get comfortable getting on an airplane?" And well, they sure did. It just took a little while. And I think you will see the same thing here. But even that will take a little while. And one of the things we think -- I'm spending a lot of time thinking about right now on the consumer side is that consumers are going to want to get lifestyle experiences just as they did 6 months ago. The range, as you think about the next 6 to 12 months of things they spend their money on, may evolve a little bit. And that's where we need to think a little bit about how we evolve our value propositions to build upon the unique brand strength we have -- we think we have to build upon our -- the right we have from our Card Members' perspective to be about a little broader lifestyle proposition. So those are some of the things we're thinking about. But to go all the way back to your original question, the economy is about scenario planning.

You were just commenting on travel, so let's go there for a minute. As you highlighted, I think it's -- obviously, it's the hardest-hit category and will likely remain hard-hit for a while. Maybe my question is -- I have 2 questions, and 1 of them is coming in from the audience on this point, too. One, how does that impact Amex' big travel co-brand relationships and your strategy around those relationships? And then maybe second question and a little bit more broadly, how are you shaping how that traveler experience reward and kind of card experience looks in the future as you're envisioning how consumers might act differently for a longer period of time?

Yes. Well, boy, Lisa, we feel pretty good about the travel-oriented co-brand partners we have, right? And it's interesting. Even if you look at the last 90 days, our largest and most important co-brand partner is, of course, Delta Airlines. And the spending by Card Members who have Delta co-brand products has declined less than our average. And that's a reminder, I think, to all of us that a Delta, a Hilton, a Marriott, an Air France, a BA co-brand is not really about using that product to spend on Delta or Air France or Hilton. It's about the affinity that the customer feels for that brand, their desire, in particular, to be a really strong, higher-level member of the loyalty programs that those travel companies run. And the spending occurs across the rest of their life and how they manage all of their spending. And if you go back to what I said a few minutes ago, our belief when you study history is that, that human urge to travel, that human urge to explore and experience is insatiable. And even if people are a little slow to get back on -- to Delta Airlines or to stay at Marriotts all over the world or Hiltons all over the world, it will come back. And in the meantime, we don't think that the consumers' desire to maintain their ties to that brand changes. And I am going to go back to 9/11 and being an airline CFO, right? The power of the loyalty programs in the travel businesses is just incredible, right? And it's the most important thing that any of those companies have, the biggest asset that any airline has or those hotels have are the members who have -- whose loyalty they drive through their loyalty programs. And so those companies themselves are incredibly motivated in the current environment to stay focused on how they retain that kind of connection with their customers. So we feel good about our partners. We feel good about the long-run nature of those relationships. And we think it will remain an important part of our driver. Now certainly, we are working with all of those partners to think about how do you, in the short to medium run, help people back with the transition into feeling comfortable traveling, but we think we'll get there.

All right. Let's transition to talking about a few of the secular trends that have been occurring as a result of the pandemic. One, first, let's talk about the in-store environment. You at Amex recently reached domestic coverage parity in the U.S. and now, presumably, are engaging heavily with your merchants around contactless, getting contactless cards out there. How do you see the in-store payment experience changing the adoption of digital forms of payment changing? And then where is Amex positioned in that?

So there's a couple of -- to your point, Lisa, there's a couple of secular trends that are long running but are clearly being expedited or going through a bit of a step-function change as a result of the current environment. The move towards contactless is one more broadly. The move just towards digital payments is another. And we think those play really well for Amex. So to be a little specific on contactless, about 55% of our proprietary cards around the globe that we offer today are contactless. But of course, growth in contact was as high. Now I would point out that U.S. is a [ refinery ], right? And so right, the starting point in the U.S. for contactless is still remarkably low because, on a percentage basis, it's accelerating a lot in the current environment. But if you look at other countries around the globe where the use of contactless is so much far further advanced, the U.S. has a long, long ways to go. All of which we see is upside, all of which, just like all the networks and all the issuers, were very focused on trying to drive even faster. One of the statistics for Amex that, I think, surprises people is even prior to the last 90 days, if you looked at our overall volumes, about a 60% of our dollar volumes were in a card-not-present fashion. And that number in the current environment is all the way up to 70%, which actually is kind of remarkable, because remember, a big chunk of our business is T&E. When was the last time anyone presented a card to buy an airline ticket? So that portion is actually falling away. So it's a little bit of an indicator of just how much growth there has been in card-not-present transactions in all other forms. But all of that plays well to us. Also, the current environment is certainly accelerating the growth of e-commerce. And you brought a coverage. I would point out that we are at virtual parity coverage in the U.S. Outside the U.S., we're not, right? And we are -- have been working hard with coverage outside the U.S., but we have a completely different dynamic outside the U.S. since in most countries, we still have a significant discount rate premiums to Visa/MasterCard interchange. And our coverage is much lower. But interestingly enough, if you think about it, Lisa, our coverage outside the U.S. with online merchants is very, very good. And our coverage gaps outside the U.S. are generally more as it used to be in the U.S. with the smaller physical merchants. So accelerating growth outside the U.S. and e-commerce actually is a really good thing on a relative basis for American Express. So we feel really good about those trends. I mean the other obvious related trend that is a great thing for our business longer term is the acceleration in the long-running trend of our Card Members and our merchants wanting to interact with us ever more digitally. And it's that long-running secular trend that has helped enable us to keep our operating expenses with very, very little growth as the company has continued to grow. And boy, that -- the pace of that desire to accelerate digitally has accelerated, and that's just going to help our cost structure.

All right. Let's transition to some of the maybe adjustments or nonadjustments, maybe, to your strategy and investment priorities that are occurring now that we are in this pandemic and then subsequent recession. Steve at Amex has highlighted and reiterated these 4 strategic imperatives for American Express and recently highlighted that those have not changed, of course, in the current environment. Can you just talk about -- maybe just recap the 4 imperatives and then how they're sort of expressing themselves...

So the 4 imperatives, which Steve rolled out a couple of years ago when he became CEO absolutely remain valid as you think about coming out of this. And it starts with we are all about building upon our strength with premium consumers. And we're always cautious to remind people. Premium, we mean in a very specific way. It's about people who care about a differentiated value proposition as to close to a pure commodity proposition. That retain -- that remains the #1 priority of the company, right? One of the things that we think about as we think about the current environment, Lisa, is the real test of our success in the trough of the downturn here is going to be do we remain having strong relationships with all of our best customers, and that's all about the premium consumer. The second key priority is building upon the tremendous franchise we have with our commercial Card Members but expanding more beyond the card. Well, back to the current environment, it is accelerating the use of digital amongst businesses for B2B payments. That's a really good thing for us. And businesses in the current environment certainly need help with short-term working capital, which is really the part of business lending that we plan. The third part of growing our merchant network right through the current environment, we continue to make great progress on our effort to launch a network in China. And we continue to make great strides on growing our coverage outside the U.S. And as I mentioned a minute ago, you see stronger coverage now in the e-commerce world outside the U.S. than you do in the physical world. And of course, our fourth imperative was getting along. Being all about having a stronger digital relationship with our Card Members and merchants in the current environment just even further heightens the importance of that. So those 4 strategic priorities really don't change as you go through this. Now in the midst of the current trough, you think a lot about what are the places that we want to accelerate spending even right now, and that's obviously places like digital servicing, how the mobile app is working. What are the things you can probably delay a little bit? What we are going to roll out fewer new value propositions this year in the current environment, and what are the things that you need to keep steadily working at because they're going to remain important in the long run? And that's things like merchant coverage. So yes, those are our long-standing 4 strategic priorities, and we think they will remain as valid in the aftermath of the current challenges as they were before.

All right. You just touched on a couple of things there, but can you elaborate a little bit from an investment perspective, what changes? So we talked about some of the expense controls and stuff, but more from an investment perspective, what things have you accelerated as a result of the pandemic and then maybe other things that you have pushed out?

So the biggest thing we've really accelerated are our digital efforts, Lisa. And so it's about having the ability to interact digitally with our customers in every single customer journey that they go through from how they acquire a card, to how they service the card, to how we interact with them from a credit perspective and how we even do collections in the current environment. It's also about accelerating development on the mobile app side, where the mobile app will become ever more important as customers want to interact with us digitally. It's interesting. The average number of calls per card member began declining, Lisa, even shortly before COVID-19, and we are just trying to drive that average down at a much faster rate as a result of the current environment. But things like new product enhancements, which drive a lot of technology work are things that we're going a little slower on right now. In the current environment, we don't see a competitive battle to acquire a lot of new Card Members because of the lack of visibility that I talked about earlier. So those are the kind of things that, as we've thought about how we evolve the business in the current environment, that we've made some adjustments to our plan spending on.

All right. Since we've only got a couple more minutes, I'm going to transition to our -- a couple of wrap-up questions. First is maybe how are you thinking that American Express will look different 12 to 24 months from now as you work through this pandemic, the recession and reshape and position Amex even stronger coming out of it?

So I'd probably, Lisa, focus on 3 or 4 things. First, on the consumer side, in 12 to 24 months, you should see some broadening of our value propositions to extend across a little broader range of lifestyle experiences in response to the fact that we do think some travel and entertainment spending comes back more slowly. And some of our value propositions, which are particularly focused in that area, you will see us broaden them. On the commercial side, you should see greater growth in the B2B payment. So certainly, one of the things we have pointed out to people for a long time is the majority of spending by our commercial Card Members is about B2B. It's not about T&E. And the current environment is further accelerating that. We want to make sure we are building the capabilities to ride that wave even more strongly. On the -- one exception to that is on the Corporate Card business. So the Corporate Card business, which mid- to large-sized companies using the card for travel, which was about 9% of our volumes going into this crisis, that will be a smaller business. And you will, in our view, not see that come back at the pace you do. Otherwise, so we're thinking through what does that mean for how we manage that business and the structure. And the last thing I would say that's very different 12 to 24 months from now is there's advantages to our cost structure. So the growth in digital servicing, the fact that we, I think, like many companies, Lisa, have realized, we probably never need to have 100% of our people back in our offices 100% of the time. We're not going to the other extreme. We're not one of the companies saying nobody ever needs to come to the office again. But there are real savings, and we will have a more efficient company. We will have less real estate, and we will be more about digital servicing. Those are all good things for our cost structure. So those are really the biggest themes I would focus on: the broadening of the consumer value propositions; having the commercial business a little more focused on noncard growth in the B2B world; having a little smaller Corporate Card business; and having a more efficient infrastructure because of the growth in digital servicing and working virtually as you and I are right now.

Exactly. All right. And then the final word. What are maybe -- we've covered a lot of ground, obviously. Given the current difficult environment, what are the top couple of things you'd like investors to really understand about Amex in the current environment?

Well, so I'm going to go back to the principles we've set out for ourselves for how to manage the company in the downturn. We are going to support our colleagues and win as a team. And I think you see that in the really strong performance we've had with our customers in terms of having Net Promoter Scores higher than we had going into this. The second thing I'd say is the test is for us. And our whole focus is about making sure we come out of this with an even stronger brand and with great relationships with our best customers. As you know, Warren Buffett is our largest shareholder. And Warren is incredibly focused on this, right? And his comments to us are all about it's making sure we come out ready to take advantage of the rebounds because the brand and the customer relationships are strong. The third thing is we are very thoughtful, though, about cutting spending in some areas right now but accelerating spending in those areas that are really important to making sure we're ready to, just as we did after the great financial crisis, actually come out stronger than many others and, in fact, gain share and rebound strongly. We're incredibly focused on that. And the last comment I'd make is, remember, the company is incredibly strong financially, right? We have -- we went into this pre-COVID with a 30% return on equity. We have tremendous liquidity, tremendous capital strength. And that means we have the luxury of doing all the things we need to do to make sure we're achieving the first 3 goals I just talked about. So those are the things I hope investors think about, and those are the things that I hope people remember from this session.

Excellent. Well, thank you. We can go on all day, I'm sure, but we'll have to wrap it up here. So Jeff, many, many thanks for joining us today. And [ we're ] continuing the dialogue with you over the coming months.

Okay. Well, thanks, Lisa, and thanks to everyone for your interest this morning.

All right. Perfect. Thanks, Jeff. Thank you.