Amex Q3 Net Income Jumps 16% on Strong Card Spending, Premium Growth

Ticker: AXP · Form: 10-Q · Filed: 2025-10-17T00:00:00.000Z

Sentiment: bullish

Topics: Credit Cards, Financial Services, Payments Network, Premium Customers, Shareholder Returns, Revenue Growth, Credit Quality

Related Tickers: AXP, V, MA, DFS, COF

TL;DR

AXP is crushing it with premium card growth and disciplined credit, making it a solid buy despite macro headwinds.

AI Summary

AMERICAN EXPRESS CO (AXP) reported strong third-quarter 2025 results, with net income increasing 16% to $2.9 billion, or $4.14 per share, up from $2.5 billion, or $3.49 per share, in the prior year. Total revenues net of interest expense rose 11% year-over-year to $18.4 billion, driven by a 9% increase in billed business, reaching $421.0 billion. Discount revenue, the largest revenue line, grew 7% to $9.4 billion, while net card fees increased 18% to $2.55 billion, primarily due to growth in premium card portfolios. Provisions for credit losses decreased 5% to $1.287 billion, mainly due to a lower reserve build compared to the prior year, despite a 9% increase in Card Member loan net write-offs to $928 million. The company acquired 3.2 million proprietary new cards during the quarter and returned $2.9 billion of capital to shareholders through share repurchases and common stock dividends, maintaining its CET1 capital ratio within the 10-11% target range.

Why It Matters

American Express's robust performance, particularly the 16% net income growth and 11% revenue increase, signals continued strength in consumer spending, especially among premium cardholders and the Millennial and Gen-Z cohorts. This indicates a resilient customer base less impacted by economic uncertainties, which is crucial for investors evaluating AXP's stability and growth potential against competitors like Visa and Mastercard. The disciplined capital return of $2.9 billion to shareholders underscores management's confidence and commitment to investor value, while the focus on premium products and risk management positions AXP favorably in a competitive payments landscape.

Risk Assessment

Risk Level: low — The risk level is low due to 'excellent credit performance' and 'Net write-off and delinquency rates remained stable and best-in-class,' supported by a 'premium global customer base' and 'strong focus on risk management.' Provisions for credit losses decreased by 5% to $1.287 billion, indicating controlled credit risk.

Analyst Insight

Investors should consider increasing their exposure to AXP, given the strong financial performance, effective capital allocation, and resilient premium customer base. The company's strategic investments in value propositions and technology, coupled with disciplined expense management, suggest continued growth and shareholder returns.

Financial Highlights

revenue
$18.4B
net Income
$2.9B
eps
$4.14
revenue Growth
+11%

Revenue Breakdown

SegmentRevenueGrowth
Discount Revenue$9.4B+7%
Net Card Fees$2.55B+18%
Net Interest Income+12%

Key Numbers

Key Players & Entities

FAQ

How did American Express's net income perform in Q3 2025?

American Express's net income for the third quarter of 2025 increased by 16% to $2.9 billion, or $4.14 per share, compared to $2.5 billion, or $3.49 per share, in the same period last year.

What were the key drivers of American Express's revenue growth in Q3 2025?

Total revenues net of interest expense for American Express increased 11% year-over-year to $18.4 billion, primarily driven by a 9% increase in billed business and an 18% rise in net card fees due to growth in premium card portfolios.

How did American Express manage credit risk in Q3 2025?

Provisions for credit losses at American Express decreased 5% to $1.287 billion in Q3 2025, mainly due to a lower reserve build compared to the prior year, with net write-off and delinquency rates remaining stable and 'best-in-class'.

What is American Express's strategy for customer acquisition?

American Express acquired 3.2 million proprietary new cards during Q3 2025, driven by investments in marketing and enhancements to value propositions, such as expanded U.S. Platinum benefits, to attract high-spending, high credit-quality customers.

How much capital did American Express return to shareholders in Q3 2025?

American Express returned $2.9 billion of capital to its shareholders in Q3 2025 through share repurchases and common stock dividends, while maintaining its CET1 capital ratio within the target range of 10% to 11%.

What was the billed business growth for American Express in Q3 2025?

American Express's billed business growth accelerated to 9% year-over-year in Q3 2025, reaching $421.0 billion, with G&S spend growing 9% and T&E spend rebounding to 8%.

How did American Express's international segment perform in Q3 2025?

International Card Services billed business grew 14% (13% on an FX-adjusted basis) in Q3 2025, driven by strong spend growth across all regions and customer types outside the United States.

What changes did American Express make to its reporting metrics?

Beginning in Q3 2025, American Express ceased reporting Net interest yield on average Card Member loans (non-GAAP) and began reporting Net interest yield on average Total loans and Card Member receivables (GAAP), which was 8.2% for Q3 2025.

What is American Express's outlook on the macroeconomic environment?

American Express acknowledges the uncertainty of the geopolitical and macroeconomic environment but believes its differentiated business model, including its global premium customer base and spend- and fee-centric revenue mix, is resilient and positions it well to navigate various economic conditions.

What is the significance of the U.S. Consumer and Business Platinum Cards refresh?

The refreshed U.S. Consumer and Business Platinum Cards, launched in Q3 2025 with expanded lifestyle and business benefits and increased annual fees, have seen strong early demand and engagement, contributing to net card fee growth and driving Card Member engagement.

Risk Factors

Industry Context

The global payments industry is dynamic, driven by technological advancements and evolving consumer preferences. American Express competes with a wide array of players, including traditional networks, issuers, acquirers, and emerging fintech solutions. The focus on premium customers and lifestyle services remains a key differentiator for AXP in this competitive landscape.

Regulatory Implications

American Express operates under significant regulatory scrutiny in multiple jurisdictions. Evolving regulations concerning data privacy, consumer protection, and financial stability could necessitate operational adjustments and impact compliance costs. Adherence to capital adequacy ratios like CET1 is crucial for maintaining market confidence and regulatory approval.

What Investors Should Do

  1. Monitor credit loss trends: While provisions decreased, net write-offs increased, warranting close observation of credit quality in the loan portfolio.
  2. Assess premium card portfolio growth: The strong performance of net card fees highlights the importance of premium products; track continued success in this segment.
  3. Evaluate competitive positioning: Given the intense competition, assess AXP's ability to maintain its premium brand and technological edge.
  4. Analyze capital return strategy: Observe the balance between capital returned to shareholders and maintaining robust capital ratios (CET1) for future growth and stability.

Glossary

Billed Business
The total value of purchases made by customers using American Express cards. (A key driver of revenue, particularly discount revenue, indicating customer spending activity on the AXP network.)
Discount Revenue
Revenue earned from merchants for processing card transactions, typically a percentage of the transaction value. (The largest single revenue stream for American Express, directly tied to the volume of transactions on its network.)
Net Card Fees
Provisions for Credit Losses
An expense set aside by a financial institution to cover potential losses from loans that may not be repaid. (Reflects the company's assessment of credit risk within its loan portfolio and its impact on profitability.)
Common Equity Tier 1 (CET1) ratio
A measure of a bank's core equity capital relative to its risk-weighted assets, indicating financial strength and ability to absorb losses. (Shows AXP's capital adequacy and its ability to meet regulatory requirements and withstand financial stress.)
Proprietary New Cards
New credit or charge cards issued directly by American Express. (Indicates customer acquisition and growth in the company's direct customer base.)

Year-Over-Year Comparison

Compared to the prior year, American Express has demonstrated robust growth, with total revenues net of interest expense increasing by 11% and net income rising by 16%. This growth was supported by an 18% increase in net card fees, driven by premium card portfolios, and a 9% rise in billed business. While provisions for credit losses decreased by 5%, a 9% increase in net write-offs suggests a need for continued vigilance on credit quality. The company also maintained its CET1 capital ratio within its target range, indicating stable financial health.

Filing Stats: 4,744 words · 19 min read · ~16 pages · Grade level 11 · Accepted 2025-10-17 12:24:18

Key Financial Figures

Filing Documents

Financial Statements

Financial Statements Consolidated Statements of Income – Three Months Ended September 30, 2025 and 2024 37 Consolidated Statements of Income – Nine Months Ended September 30, 2025 and 2024 38 Consolidated Statements of Comprehensive Income – Three and Nine Months Ended September 30, 2025 and 2024 39 Consolidated Balance Sheets – September 30, 2025 and December 31, 2024 40 Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2025 and 2024 41 Consolidated Statements of Shareholders' Equity – Three and Nine Months Ended September 30, 2025 and 2024 42

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 44 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)

Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) 1 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 74 Item 4.

Controls and Procedures

Controls and Procedures 74 Part II. Other Information Item 1.

Legal Proceedings

Legal Proceedings 75 Item 1A.

Risk Factors

Risk Factors 75 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 76 Item 5. Other Information 77 Item 6. Exhibits 78

Signatures

Signatures 79 Throughout this report the terms "American Express," "we," "our" or "us," refer to American Express Company and its subsidiaries on a consolidated basis, unless stated or the context implies otherwise. The use of the term "partner" or "partnering" in this report does not mean or imply a formal legal partnership, and is not meant in any way to alter the terms of American Express' relationship with any third parties. Amounts presented in this report may not sum and percentages may not recalculate due to rounding. Refer to the "MD&A Glossary of Selected Terminology" for the definitions of other key terms used in this report. Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A) Business Introduction American Express is a global payments and premium lifestyle brand powered by technology. Founded in 1850 and headquartered in New York, American Express' card-issuing, merchant-acquiring and card network businesses offer products and services to a broad range of customers, including consumers, small businesses, mid-sized companies and large corporations around the world. Our range of products and services includes: Credit card, charge card, banking and other payment and financing products Merchant acquisition and processing, servicing and settlement, fraud prevention, and point-of-sale marketing and information products and services Network services Travel and lifestyle services Expense management products and services Other services, such as the design and operation of customer loyalty programs These products and services are offered through various channels, including mobile and online applications, affiliate marketing, customer referral programs, third-party service providers and business partners, in-house sales teams, direct mail, telephone and direct response advertising. We compete in the global payments industry with networks, issuers, acquirers and other payment service providers and methods of payment, including paper-based transactions (e.g., cash and checks) and electronic transfers (e.g., wire transfers and Automated Clearing House (ACH)), as well as evolving and growing alternative mechanisms, systems and products that leverage new technologies, business models and customer relationships to create payment, financing or banking solutions. The payments industry continues to undergo changes in response to evolving technologies, business dynamics and competition for premium customers.

Forward-Looking Statements and Non-GAAP Measures

Forward-Looking Statements and Non-GAAP Measures Certain of the statements in this Form 10-Q are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Refer to the "Cautionary Note Regarding Forward-Looking Statements" section. We prepare our Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (GAAP). However, certain information included within this Form 10-Q constitutes non-GAAP financial measures. Our calculations of non-GAAP financial measures may differ from the calculations of similarly titled measures by other companies. Beginning in the third quarter of 2025, we ceased reporting Net interest yield on average Card Member loans, a non-GAAP measure that was computed by dividing adjusted net interest income by average Card Member loans, and began reporting (together with prior period comparative information) Net interest yield on average Total loans and Card Member receivables, a GAAP measure that represents net interest income, computed on an annualized basis, divided by average Card Member loans, Card Members loans held for sale (HFS), Other loans and Card Member receivables. We believe that this new net interest yield metric reflects the evolution of our products over time, such as the expansion of lending features on our charge card portfolio. See Table 1 for more information. Bank Holding Company American Express is a bank holding company under the Bank Holding Company Act of 1956 and The Board of Governors of the Federal Reserve System (the Federal Reserve) is our primary federal regulator. As such, we are subject to the Federal Reserve's regulations, policies and minimum capital standards. We are also subject to evolving and extensive government regulation and supervision in jurisdictions around the world. 1 Table of Contents Table 1: Summary of Financial Performance As of or for the Three Months Ended September 30, Chan

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