Jeff Campbell
Chief Financial Officer at American Express
Well, thank you, Steve. Good morning, everyone. It's great to be here to talk about our fourth quarter and full-year 2021 results, the ambitious new growth plan that Steve just talked about, and what it all means for 2022 and beyond. You see the growth momentum that Steve just discussed in our summary financials on Slide 2 with fourth quarter revenues of $12.1 billion, up 31% and full-year revenues of $42.4 billion, up 17%, both on an FX adjusted basis.
In understanding our full year net income of $8.1 billion and earnings per share of $10.02, I would point out that we had around $3.5 billion of significant impacts from items that we do not expect to repeat in the same magnitude going forward, including a $2.5 billion credit reserve release benefit in provision, as well as a few sizable net gains on equity investments.
Getting into a more detailed look at our results, let's start with volumes. You will notice in the several views of volumes on slides 3 through 9. But we continue to show 2021 volume trends on both a year-over-year basis and relative to 2019. There are a few key insights that I would highlight across these slides that strengthen our conviction in the investment strategy we have been focused on to deliver our new growth plan.
To start, we saw record levels of spending on our network in both the fourth quarter and full-year 2021 with total network volumes and billed business volumes, both up more than 10% relative to 2019 on an FX adjusted basis in the fourth quarter, as you can see on Slide 3. This growth in billed business as shown on slides 4 and 5 is being driven by continued momentum in spending on goods and services which strengthened sequentially and grew 24% versus 2019 in Q4. This momentum is from the strong growth in online and card-not-present spending that continued throughout 2021, even as offline spending fully recovered and resumed growth, demonstrating the lasting effect of the behavioral changes we've seen during the pandemic. Importantly, this 24% growth versus 2019 in Q4 represents a cumulative growth rate over the past two years that is well above the growth rate we were seeing pre-pandemic.
In our consumer business, our focus on attracting and engaging younger cohorts of card members through expanding our value propositions and digital capabilities is fueling the 50% growth in spending from our Millennial and Gen Z customers you see on Slide 6, and spending from all other age cohorts also showed steady improvement throughout 2021 and exceeded pre-pandemic levels in Q4.
Our strategic focus on helping our small and medium-size enterprise clients run their businesses by expanding the range of products and capabilities that meet their B2B payments and working capital needs, is driving the strong SME spending trends you see on Slide 7. Global SME expanding particularly B2B spending on goods and services has been driving the growth of our commercial billed business throughout 2021 and reached 25% above pre-pandemic levels in Q4.
Now turning to T&E spending, you can see on Slide 8 that it continues to recover in line with our expectations, with overall T&E spending reaching 82% of 2019 levels in the fourth quarter. We did see some modest impacts from the Omicron variant in T&E spending as the pace of recovery slowed a bit in December. But even with that modest slowdown, US consumer T&E was not only fully recovered in the fourth quarter but actually grew 8% above 2019 levels. On balance, the T&E trends we have seen throughout 2021 reinforce our view that travel and entertainment spending will eventually fully recover but at varying paces across customer types and geographies, and we remain focused on maintaining our leadership position in operating -- offering differentiated travel and lifestyle benefits to our consumer and commercial customers as they return to travel.
Finally, on Slide 9, you see that our billed business momentum continues to be led by the US, where spending improved sequentially throughout 2021 and grew 16% above 2019 levels in the fourth quarter. International billed business has also shown continued steady though smaller improvement with spending almost fully recovered in Q4. Importantly though, growth in goods and services spending continues to be strong both in the US and outside of US.
Self, what to all of these takeaways mean for 2022 and beyond? Most importantly, we expect the strong momentum in goods and services spending to continue given the investments we've made in premium card member engagement, prospect acquisition, value propositions that particularly appeal to our Millennial Gen Z and SME customers, growing our coverage and expanding relationships with key partners.
For T&E, we expect the total global consumer and SME T&E spending will be fully recovered by the end of 2022 led by the growth in the US. The recovery will be slower for the international and cross-border components of the spend, we've also long said that large and global corporate T&E spending would be the last to recover across our customer types.
So these spending types may represent a steady tailwind in both '22 and 2023, as they gradually recover.
Moving on to receivable and loan balances on Slide 10, we are seeing good sequential growth in our lending balances but is led by spending. And so the portion of our lending balances that are revolving is recovering more slowly. Because our balances are spend-driven, we do expect to continue to see a strong rebound with loan balances surpassing 2019 levels in 2022, but we expect it to take more time for the interest-bearing portion of these balances to rebuild as paydown rates continue to remain elevated due to the liquidity and strength amongst our customer base.
Turning next to credit and provision on slides 11 through 13, as you flip through these slides, there are a few key points I'd like you to take away. Most importantly, we continue to see extremely strong credit performance with card member loans and receivables, write-off and delinquency rates remaining around historical lows. As loan balances begin to rebuild more meaningfully, we do expect delinquency and loss rates to slowly move up over time, but we expect them to remain below pre-pandemic levels in 2022.
This strong credit performance combined with continued improvement in the macroeconomic outlook throughout 2021 drove a $1.4 billion provision expense benefit for the full year, as the low write-offs were fully offset by the reserve releases as shown on Slide 12.
As you see on Slide 13, we ended 2021 with $3.4 billion of reserves, representing 3.7% of our loan balances and 0.1% of our card member receivable balances respectively. This is well below the reserve levels we had pre-pandemic given the strong credit performance we've seen. In 2022, we will be growing over the $2.5 billion reserve release benefit we saw in 2021, since I would not expect to see reserve releases of the same magnitude going forward. In fact, depending on credit trends and the pace at which our balance sheet grows, it's possible we may need to build some modest level of reserves.
Moving next to revenues on Slide 14. Total revenues were up 30% year-over-year in the fourth quarter, up 17% for the full year. This is well above our original expectations for the year, driven by the successful execution of our investment strategy and it is part of what emboldens us to launch our new growth plan.
Before I get into more details about our largest revenue drivers in the next few slides, I would note that other fees and commissions and other revenue were both up year-over-year in the fourth quarter and for the full year, primarily driven by the uptick in travel-related revenues we began to see in the second half of 2021. These travel-related revenue still remain well below 2019 levels, however, and their complete recovery will likely lag and be a tailwind into 2023 along with international and cross-border travel.
Turning to the largest revenue line, discount revenue, on Slide 15, you see it grew 36% year-over-year in Q4 and 25% for the full year on an FX adjusted basis. This growth is primarily driven by the momentum in goods and services spending we saw throughout 2021. Net card fee revenues have grown consistently throughout the pandemic and for the full year of 2021 were up 10% year-over-year and up 28% versus 2019, as you can see on Slide 16.
The resiliency of these subscription-like revenues demonstrates the impact of the investments we've made in our premium value propositions and the continued attractiveness of those value propositions to both prospects and existing customers. As a result, I expect net card fee growth to accelerate from these already high growth rates in 2022.
Turning to net interest income on Slide 17, you can see that it was up 11% year-over-year in the fourth quarter. This is the second consecutive quarter of year-over-year growth, as we clearly hit an inflection point in the second half of 2021. The growth in net interest income is slower than the growth in lending AR due to the strong liquidity demonstrated by our customers that I spoke about earlier, which is leading to both our historically low credit costs and to high paydown rates that are driving lower net interest yields and a slower recovery in revolving loan balances. Looking ahead, we expect net interest income to be a tailwind to our revenue growth in 2022 and likely 2023 due to the slower recovery in revolving loan balances.
So, to sum up on revenues. The successful execution of our investment strategy has driven the revenue recovery momentum, you see on Slide 18. Looking forward into 2022, we expect to see revenue growth of 18% to 20% driven by the continued strong growth in spend and card fee revenues and the lingering recovery tailwinds from net interest income and travel-related revenues.
The revenue momentum we saw in 2021 was clearly accelerated by the investments we made in marketing, value propositions, technology and people and those investments show up across the expense lines you see on Slide 19. Starting with variable customer engagement expenses at the top of Slide 19, there are a few things to think about. Most importantly, the investments we are making in our premium value propositions are resonating with our customers and this of course is driving growth in these expense lines. In addition, over the course of the pandemic, we added some temporary incremental benefits to many of our premium products in an effort we refer to as value injection because our customers were not able to take advantage of many of the travel-related aspects of our value propositions. The cost of this value injection effort generally showed up in the marketing expense line. Throughout 2021, we gradually wound down the value injection offers as our customers were again engaging more with the travel aspects of our value propositions, as well as with the new rewards and benefits we introduced through recent product refreshes.
This is all a good thing in terms of our long-term customer retention and growth prospects. It does however mean you see more year-over-year growth in these variable customer engagement costs. Putting all these dynamics together, I'd expect the variable customer engagement costs overall to run at around 42% of total revenues in 2022.
Moving to the bottom of the slide, iperating expenses were just over $11 billion for full-year 2021 and in line with 2020. In understanding our OpEx results however, it's important to point out that we've benefited from $767 million in net mark-to-market gains in our Amex Ventures strategic investment portfolio in 2021 and that these gains are reported in the OpEx line. We also increased investments in the incredible areas of technology and our talented colleague base in 2021 and expect to continue to grow our investments in these areas this year. For 2022, we expect our operating expenses to be a bit over $12 billion and we see these costs as a key source of leverage relative to our much higher level of revenue growth.
Last, our effective tax rate for 2021 was around 25% and I'd expect a similar effective tax rate in 2022 absent any legislative changes.
Turning next to our marketing investments we are making to build growth momentum, you can see on Slide 20 that we invested around $1.6 billion in marketing in the fourth quarter and $5.3 billion for the full year as we continue to ramp up new card acquisitions while winding down our value injection efforts. We acquired 2.7 million new cards, up 54% year-over-year.
Steve emphasized the critical point, however, that in particular, we see great demand for our premium fee-based products with new accounts acquired on these products almost doubling year-over-year and representing 67% of the new accounts acquired in the quarter. Acquisitions of new US consumer and small business Platinum Card members were all-time highs this year with Q4 being a record quarter of new account acquisitions for both of these refresh products. Mch more importantly though than just the total number of cards, we focus, internally on the overall level of spend and fee revenue growth we bring on from these new acquisitions. We are pleased to see that the revenues from 2021's acquisitions are trending significantly stronger than what we saw pre-pandemic. Looking forward, we expect to spend around $5 billion in marketing in 2022.
Turning next to capital on Slide 21, we returned $9 billion of capital to our shareholders in 2021 including common stock repurchases of $7.6 billion and $1.4 billion in common stock dividends on the back of a starting excess capital position and strong earnings generation. As a result, we ended the year with our CET1 ratio back within our target range 10% to 11%.
In Q1 2022, an another sign of our growing confidence in our growth prospects, we expect to increase our dividend by around 20% to $0.52 and to continue to return to shareholders the excess capital we generate while supporting our balance sheet growth.
That brings me to our growth plan on Slide 22 and then we'll open up the call for your questions. The combination of our pre-pandemic strategies, our learnings from the pandemic and the strong momentum we have achieved have all come together to embolden us to announce our new growth plan. What does that mean financially? In the near term, we expect our revenue growth to be significantly higher than our long-term aspiration due to the range of pandemic recovery tailwinds that I've talked about throughout my remarks, which is why we have given 2022 guidance of 18% to 20% revenue growth. We've also give an EPS guidance for 2022 of $9.25 to $9.65.
We feel good about this earnings guidance, as the momentum we have built on the revenue side helps us to grow over the number of notable items that benefited our 2021 results that we certainly don't expect to repeat in the same magnitude in 2022, as I discussed the very beginning of my remarks this morning.
Our 2022 guidance does assume an economy that will continue to improve and reflects what we know today about the regulatory and competitive environment. It also assumes that based on current exchange rates, we would not see a significant impact from FX on our reported revenue growth in 2022. In 2023, we expect our revenue growth to remain above our long-term aspirational targets to go to due to the lingering recovery tailwinds which should create a platform for producing mid-teens EPS growth.
Longer term, as we get to a more steady-state macro environment, we have an aspiration of delivering revenue growth in excess of 10% and mid-teens EPS growth on a sustainable basis in 2024 and beyond.
In closing, we are committed to executing against our new growth plan and will be running the company with a focus on achieving our accelerated growth aspirations.
With that, I will turn the call back over to Vivian.
