[AXP] American Express: Q3 2026 earnings preview, card fees vs. Platinum perk costs

American Express is a "closed-loop" card company that issues its own cards, signs its own merchants and runs its own payment network, so it earns merchant discount revenue, card fees and lending interest at the same time while carrying the credit risk and the cost of cardholder benefits itself[1]. The company is scheduled to report results for the third quarter of 2026, ending September 30, 2026, on 2026-10-23; its last four quarterly releases came before the market open with an 8:30 a.m. Eastern Time investor call[2]. In the latest disclosed quarter, the second quarter of 2026, total revenues net of interest expense rose 10% to $19.64 billion, Card Member spending grew 9% to $455.8 billion and earnings per share rose 11% to $4.53[3]; across the four revenue lines, discount revenue rose 9% to $10.16 billion, net card fees rose 15% to $2.86 billion and net interest income rose 11% to $4.65 billion, while total expenses rose 12% to $14.48 billion, faster than revenue[4]. On July 24 management raised its full-year 2026 revenue growth guidance from 9%–10% to 10% and kept full-year earnings per share guidance at $17.30–$17.90, saying it will reinvest all revenue outperformance in long-term growth initiatives rather than let it flow into current-year profit[3][5]. Analyst consensus compiled by Drillr calls for third-quarter revenue of $20.137 billion (12 analysts, range $20.017 billion to $20.247 billion) and earnings per share of $4.56 (16 analysts, range $4.45 to $4.77), with full-year 2026 revenue of $79.512 billion and earnings per share of $17.65, in the upper half of the company's guidance range[6]; the earnings-calendar estimate is $4.574 per share and $20.144 billion of revenue[7].

Three things deserve attention in this report. The first is whether card-fee growth can return to 16% or more: second-quarter net card fees grew 15%, below 18% in the first quarter, and management has committed to an acceleration in the third quarter and high-teens growth by year-end[5]; because the September 2025 Platinum fee increase from $695 to $895 is amortized over 12 months, the third quarter is the first period in which the higher fee rolls in alongside Card Member services expense that is growing 50%[8]. The second is the relationship between U.S. consumer spending growth and benefit costs: U.S. Consumer Services billed business grew 11% in the second quarter, the direct reason the company raised its revenue guidance, but the three variable customer engagement expenses reached 44.6% of revenue and management lifted the full-year ceiling to 45%[9][5], so these two numbers will show whether growth still converts into profit. The third is the true state of the lending business and credit: net interest income growth slowed from 13% to 11% in the second quarter, which the company attributed to the transfer of the Lowe's cobrand portfolio, and it flagged the Amazon portfolio transfer for the third quarter[5]; at the same time the 23% year-over-year drop in provisions came entirely from a $190 million reserve release and the reserve ratio has fallen to 2.7%[10], so a reserve build in the third quarter would flip the earnings comparison.

Company Background and Business Structure

American Express was founded in New York in 1850 and is today a bank holding company regulated by the Federal Reserve, with about 75,000 full-time employees at the end of 2025[1]. Its biggest difference from Visa and Mastercard is the closed loop: it issues its own cards, signs its own merchants and runs its own network, so discount revenue, card fees and interest all accrue to it, and credit losses and benefit costs are all borne by it[1]. The company describes itself as the fourth-largest general-purpose card network globally by purchase volume, behind Visa, China UnionPay and Mastercard[11]; in 2025 billed business was $1.67 trillion, network volume was $1.90 trillion and cards-in-force were 152.8 million, of which 86.6 million were proprietary cards[12].

The company operates four reportable segments, and total revenues net of interest expense were $72.23 billion in 2025[13]. U.S. Consumer Services (USCS) generated revenue of $34.81 billion and pretax income of $6.81 billion on billed business of $707.5 billion; Commercial Services (CS, U.S. corporate and small-business cards) generated revenue of $16.93 billion and pretax income of $3.67 billion on billed business of $541.9 billion; International Card Services (ICS) generated revenue of $13.00 billion and pretax income of $1.60 billion on billed business of $418.0 billion, up 14% and the fastest of the three issuing segments; Global Merchant and Network Services (GMNS) generated revenue of $7.76 billion and pretax income of $3.97 billion[14][15].

By revenue type, 2025 discount revenue of $37.40 billion was 52% of the total, net card fees of $9.99 billion were 14%, net interest income of $17.36 billion was 24% and service fees and other revenue of $7.47 billion were 10%[16]. Discount revenue is the largest source and represents the amount the company earns and retains from the merchant payable for facilitating transactions between Card Members and merchants[1]; service fees and other revenue include network partner fees, foreign-exchange fees and travel commissions[1]. Customers are affluent consumers, small businesses and large corporations; acquisition relies on marketing ($6.25 billion in 2025) and cobrand partners, and retention relies on benefits[17][1].

Cobrand concentration is the single most important structural fact to remember. Delta Air Lines is the largest strategic partner, and as of December 31, 2025 the Delta cobrand portfolio represented about 13% of worldwide billed business and about 21% of worldwide Card Member loans, under an agreement that runs through the end of 2029[18]. Management's five strategic priorities, in order, are expanding premium consumer leadership, building on commercial payments, strengthening the global integrated network, leveraging its global footprint and reimagining customer and colleague experiences with technology[1]; the costs of those priorities already sit on the income statement: 2025 Card Member rewards of $18.41 billion, business development (payments to cobrand partners and others) of $6.46 billion and Card Member services (airport lounges, hotel and dining benefits) of $6.06 billion, three lines collectively called variable customer engagement expenses that move with billed business and benefit usage[17].

Financial History and Current Position

Revenue and profit rose in each of the last three years, but expense growth overtook revenue growth in 2025. Total revenues net of interest expense grew from $60.52 billion in 2023 to $65.95 billion in 2024 (up 9%) and $72.23 billion in 2025 (up 10%)[13]; net income rose from $8.37 billion to $10.13 billion to $10.83 billion, and diluted earnings per share from $11.21 to $14.01 to $15.38, with 2024 including a $0.66 per-share gain on the sale of Accertify[13]. Across the four 2025 revenue lines, discount revenue rose 6% to $37.40 billion, net card fees rose 18% to $9.99 billion, service fees and other revenue rose 12% to $7.47 billion and net interest income rose 12% to $17.36 billion[16][19]; billed business grew 8% to $1.67 trillion, the average discount rate was 2.24% (2.27% in 2024), the average fee per card rose 14% to $117 and proprietary new cards acquired were 12.5 million, below 13.0 million in 2024[12].

Expenses in 2025 rose 11% to $53.18 billion, faster than revenue, driven by Card Member rewards of $18.41 billion (up 11%), Card Member services of $6.06 billion (up 27%) and business development of $6.46 billion (up 10%); the three variable customer engagement expenses together rose 13% to $30.92 billion while marketing rose only 4% to $6.25 billion[17]; Card Member services expense rose because of higher usage of benefits and the introduction of new U.S. Platinum benefits[17]. Credit costs stayed flat: 2025 provisions were roughly unchanged at $5.26 billion, the principal net write-off rate was 2.0% and the 30-day-plus delinquency rate was 1.3%, the same as 2024 and below 2019 levels[20]; pretax income rose 7% to $13.79 billion[13].

The balance sheet and cash flow reflect a model that pays merchants first and collects from cardholders later. At the end of 2025, Card Member loans were $151.8 billion (up 9%), loans and receivables together were $224.79 billion (up 8%), customer deposits were $152.49 billion (up 9%), long-term debt was $56.39 billion, cash was $47.79 billion, the net interest yield was 8.1%, the CET1 ratio was 10.5% and return on equity was 33.9%[20][13]. Operating cash flow for the year was $18.43 billion; the $19.57 billion net increase in loans and receivables was matched by $13.05 billion of net deposit inflows and $6.22 billion of net long-term debt issuance; the company repurchased $5.81 billion of stock and paid $2.27 billion of dividends, $7.6 billion in total, diluted shares fell from 713 million to 696 million, and the CET1 target range remains 10%–11%[21].

The first half of 2026 kept the double-digit revenue pace. First-quarter revenue rose 11% to $18.91 billion, billed business grew 10% and earnings per share rose 18% to $4.28[22]. Second-quarter revenue rose 10% to $19.64 billion: discount revenue rose 9% to $10.16 billion as billed business grew 9% to $455.8 billion while the discount rate slipped to 2.23%[23][24]; net card fees rose 15% to $2.86 billion, the average fee per card rose 12% to $131 and proprietary new cards acquired were 3.0 million, slightly below 3.1 million a year earlier[4][24]; service fees and other revenue rose 7% to $1.96 billion; net interest income rose 11% to $4.65 billion as Card balances grew 8% to $218.05 billion with a net interest yield of 8.1%[4][25][26]. Expenses rose 12% to $14.48 billion, with rewards up 9% to $5.05 billion, business development up 10% to $1.76 billion, Card Member services up 50% to $1.95 billion, marketing up 6% to $1.65 billion and salaries up 9% to $2.34 billion; the three variable customer engagement expenses totaled $8.76 billion, or 44.6% of revenue[4][8].

Second-quarter profit was amplified by lower provisions and a smaller share count. Provisions fell 23% to $1.08 billion because the company released $190 million of reserves against a $198 million build a year earlier, with the release driven mainly by lower delinquencies[10]; the principal net write-off rate held at 2.0% and the 30-day-plus delinquency rate was 1.2%[25]. Pretax income rose 15% to $4.07 billion, but the effective tax rate rose from 18.7% to 23.6%, so net income rose only 8% to $3.11 billion while earnings per share rose 11% to $4.53 on a 3% smaller share count[4][27]. By segment, USCS pretax income rose 23% to $2.07 billion (billed business up 11% to $196.4 billion, provisions down 40%), CS rose 7% to $0.97 billion (billed business up 5% to $141.8 billion), ICS rose 3% to $0.48 billion (billed business up 13% to $117.2 billion) and GMNS rose 7% to $1.13 billion[28][29]. On capital, CET1 was 10.4% at quarter-end, the company repurchased $2.24 billion of stock (7.1 million shares at an average $315.77) and paid $645 million of dividends, the quarterly dividend rose 16% to $0.95 and deposits were $157.0 billion[27][30][31]; on August 12 the company issued $1.6 billion of 6.45% Series E preferred shares to redeem the 3.55% Series D[32].

Operating Model

The revenue equation is the sum of four lines: total revenue = discount revenue + net card fees + net interest income + service fees and other[1]. Discount revenue = billed business × average discount rate, which in the second quarter of 2026 was $455.8 billion × 2.23% ≈ $10.16 billion; the discount rate drifts down each year with shifts in spend mix by geography and merchant category, so discount revenue usually grows slightly slower than billed business[23][24]; billed business comes from USCS (about 43%), CS (about 31%) and ICS (about 26%), which grew 11%, 5% and 13% in the second quarter[9]. Net card fees = proprietary cards × average fee per card, and an annualized $131 on roughly 87 million cards divided by four gives about $2.86 billion for the quarter; fees are recognized over 12 months, so a price increase enters revenue gradually from each renewal date, which is why the September 2025 Platinum increase will not be fully reflected until the fourth quarter of 2026[24][5]. Net interest income = average Card balances × net interest yield, roughly $216.7 billion × 8.1% / 4 ≈ $4.65 billion in the second quarter, funded by $157.0 billion of deposits and by debt[26][31].

The profit equation subtracts credit costs and three layers of expense from revenue: pretax income = total revenue − provisions − variable customer engagement expenses (rewards + business development + Card Member services) − marketing − operating expenses. For the second quarter that reads $19.64 billion − $1.08 billion − $8.76 billion − $1.65 billion − $4.08 billion = $4.07 billion[4]. Variable customer engagement expenses move with billed business and benefit usage, their 44.6% share of revenue is the core margin variable for the quarter, and each percentage point higher absorbs roughly $200 million of quarterly pretax income[8]; provisions = net write-offs + the change in reserves, which in the second quarter meant $1.21 billion of net write-offs and a $190 million reserve release, with delinquencies typically leading write-offs by one to two quarters[10]. Net card fees carry almost no direct variable cost, so most of the increment reaches pretax income, but the accompanying benefits land in Card Member services expense, which grew 50% in the second quarter[8].

The cash equation has a funding-match half and a capital-return half. The company pays merchants before it collects from cardholders, so Card balance growth (up 8% year over year in the second quarter) must be matched by deposits and debt issuance, and the 2026 funding plan calls for $4–8 billion of unsecured and $1–3 billion of secured debt[25][31]. Net income, after retaining what is needed to support growth in risk-weighted assets, is returned to shareholders against a 10%–11% CET1 target: in the first half of 2026 the company repurchased $3.91 billion of stock and paid $1.30 billion of dividends, $5.20 billion in total, or about 86% of net income attributable to common shareholders[30][21].

The boundaries of this model need stating. Net card fees, the discount rate and variable customer engagement expenses are disclosed only on a consolidated basis, and the Platinum portfolio has no separate financial disclosure; the sale prices of the two small-business cobrand portfolios were not disclosed; and the variable customer engagement share of revenue is calculated as the sum of the three expense lines[8]. Quarterly swings in service fees and other revenue and in the GMNS segment come mainly from one-time items and network partner fees, so they are not a current point of contention[29].

Industry and Competitive Position

At the network level, the moat is closed-loop data rather than scale. The company describes itself as the fourth-largest general-purpose card network globally and acknowledges that Visa and Mastercard are larger in most countries[11]; its advantage comes from the premium cardholder and merchant data the closed loop produces and from controlling pricing on both the issuing and acquiring sides[1].

At the issuing level, competition centers on high-spending customers and experiential benefits. The direct rivals are JPMorgan Chase (Sapphire Reserve), Capital One (Venture X, which has also acquired the Discover and Diners Club networks) and issuers such as Citi, competing for affluent customers, airline and hotel cobrand partners and benefits such as airport lounges and dining, and the 10-K states plainly that benefit costs "may continue to rise due to competition"[11]. On the merchant side, the discount rate has long sat above Visa and Mastercard interchange, which is both a revenue advantage and a regulatory and litigation target: the 10-K specifically flags the settlement Visa and Mastercard proposed in November 2025, which would require reductions and caps on interchange fees, give merchants greater options to surcharge credit transactions and allow merchants to refuse certain categories of credit cards; if approved by the court it could bring more surcharging, refusal of premium cards and downward pressure on the discount rate[33].

In funding and risk structure, the company sits between a bank and a pure network. It funds itself with $157.0 billion of deposits (savings accounts paid an average 3.1% in the second quarter of 2026) and bonds, targets a 10%–11% CET1 ratio and keeps its stress capital buffer at the 2.5% floor through September 2027[31][27][21]. Compared with a bank it has no mortgages or corporate loans and its credit risk is concentrated in premium credit cards; compared with a pure network it bears credit losses and benefit costs but also collects card fees and interest[1]. The available peer comparison has clear limits: competitors' premium card portfolios are not broken out in public segment disclosure, so the judgments above rest on the company's own disclosures and the competition discussion in its 10-K.

Core Debates

A year after the Platinum fee rose from $695 to $895, is card-fee revenue really accelerating, or are cardholders quietly walking away?

Net card fees are the fastest-growing and most subscription-like revenue line at American Express. In 2025 they grew 18% to $9.99 billion, which the company attributed to high levels of new card acquisitions on fee-paying products, strong Card Member retention and its ongoing cycle of product refreshes[16][19]; Investing.com's analysis counts 32 consecutive quarters of double-digit growth[34], and the line carries almost no direct variable cost. The September 2025 Platinum refresh raised the annual fee from $695 to $895, a 29% increase, but fees are amortized over 12 months and the revenue will not be fully reflected until the fourth quarter of 2026[5]. Management publicly committed in July to an acceleration in the third quarter and high-teens growth exiting 2026[5], which makes this report the first quarter that can answer the question with numbers.

The second-quarter figures sit between acceleration and slowdown. Net card fees of $2.862 billion grew 15%, below 18% in the first quarter and 18% for full-year 2025, which the company explained as the base effect of the prior product refresh cycle and the new price increase not yet rolling in[4][23][35]; the average fee per card rose 12% to $131, and 3.0 million proprietary new cards were acquired (3.1 million a year earlier), 75% of them on fee-paying products, the highest share since the premium strategy began[24][5]. On the call, management said the Platinum refresh "exceeded expectations", that spending growth across the U.S. Platinum portfolio accelerated by 600 basis points and that retention after the price increase was "very high"[5].

The alternative reading is that benefit costs arrive before the fees. Card Member services expense was $1.949 billion in the second quarter, up 50%, because of higher benefit usage and the new U.S. Platinum benefits[4][8]; Investing.com also notes that fee recognition works with a lag while total expenses grew 12% against 10% revenue growth[34]. The transmission chain runs: the price increase plus 75% of new accounts choosing fee products lifts the average fee per card, card fees amortize into revenue and most of the increment reaches pretax income; but the new lounge, dining and subscription-credit benefits land in Card Member services expense and offset part of that profit[8]. The third quarter is the first in which the higher fee rolls in on top of a high benefit-cost base, and if card-fee growth cannot return to 16% or more, the acceleration narrative loses credibility.

Three sets of numbers matter. First, whether third-quarter card-fee growth exceeds the second quarter's 15% and whether the 10-Q still attributes growth to premium portfolios, new card acquisition and retention[23]; second, whether the average fee per card keeps growing at a double-digit rate, whether proprietary new cards stay at 3.0 million or more and whether the fee-paying share stays above 70%[24]; third, whether Card Member services expense growth comes down from 50% and whether variable customer engagement expenses stay within 45% of revenue[8]. The observable falsifiers are renewal attrition or downgrades to lower-fee cards that pull average fee-per-card growth back to single digits, or benefit usage that keeps climbing so that Card Member services expense growth does not slow and the fee increment is consumed by cost.

Are affluent U.S. cardholders still spending faster, or is American Express buying that growth with ever-richer perks?

U.S. Consumer Services is close to half of company revenue, and its billed-business growth is the starting point of the whole income statement. Second-quarter USCS billed business grew 11%, the highest reading in the five-quarter trend (the prior four quarters were 10%, 9%, 9% and 7%), and the company attributed it to premium card portfolios, including the acceleration in the U.S. Platinum portfolio after last year's refresh[36][9]; that growth was the direct reason full-year revenue guidance was raised to 10%[3]. In the same quarter, however, the three variable customer engagement expenses grew 15% and reached 44.6% of revenue, and the company promptly raised its full-year range to 44%–45% while reinvesting all revenue outperformance instead of lifting profit guidance[5]. The shares fell about 6% on results day, which BigGo Finance attributed to a market "on high alert for signs that consumer momentum may be peaking"[37]. The third quarter is an ordinary pre-holiday quarter with no seasonal distortion, which makes it a fair test of whether 11% is sustained momentum or a one-time benefit stimulus.

The second-quarter spending picture was broad rather than driven by one category. Total billed business grew 9% to $455.8 billion, with USCS up 11%, CS up 5% and ICS up 13%; by category, goods and services grew 9% and travel and entertainment grew 10%, with restaurants steady and airlines accelerating, and transactions grew 10%[9][36]. The company attributed the acceleration to the Platinum refresh (spending growth across the entire U.S. Platinum portfolio accelerated by 600 basis points, from new customers, higher spending by existing customers and upgrades) and to Millennial and Gen Z customers, who made up 65% of new U.S. accounts[5]. On the cost side, Card Member rewards rose 9% to $5.051 billion, business development rose 10% to $1.755 billion and Card Member services rose 50% to $1.949 billion[4]; within USCS these three lines together grew 20%, faster than the segment's 11% revenue growth, and segment pretax income of $2.065 billion grew 23% mainly because provisions fell 40%[28].

The alternative explanation is that the marginal cost of growth is rising. The company still plans to lift marketing growth to about 10% in the second half, "reinvestment" can be read as paying to sustain the growth rate, and the CFO acknowledged on the call that the variable customer engagement ratio was raised because billed business was stronger than expected, meaning benefit usage scales with spending[5]. The transmission chain runs: new Platinum benefits and younger-customer acquisition lift U.S. consumer billed business, discount revenue = billed business × discount rate (2.23%, drifting down with mix), but billed business simultaneously generates rewards expense at the rewards rate and benefit usage generates Card Member services expense, so pretax income = revenue × (1 − VCE ratio) − provisions − marketing − operating expenses, and each percentage point of VCE ratio absorbs roughly $200 million of quarterly pretax income[23][8]. If third-quarter USCS billed business holds 10% growth and the VCE ratio stays at or below 45%, the "sustained momentum" reading holds; otherwise it is "buying growth".

Three sets of numbers to watch: whether third-quarter USCS billed business still grows 10% or more and whether travel and entertainment growth stays at 8% or above[9]; the gap between discount revenue growth and billed-business growth, that is, whether the discount rate keeps slipping[23]; and whether the three variable customer engagement expenses stay within 45% of revenue and whether USCS pretax income still grows year over year once provisions stop being released[28]. The falsifiers are cooling affluent spending that pulls USCS billed-business growth back to single digits, or benefit usage that keeps rising so the VCE ratio breaks above 45.5% and growth stops producing profit.

After selling two small-business cobrand portfolios and releasing reserves, how much real growth is left in American Express's lending book?

Net interest income is close to a quarter of revenue and one of the fastest-growing large lines of the past two years, up 12% in 2025 primarily on balance growth and net yield expansion[19][16]. Growth slowed from 13% in the first quarter to 11% in the second, which the company called a one-time effect of the April transfer of the Lowe's cobrand portfolio (about a 1-point drag), and it flagged the Amazon portfolio transfer for the third quarter, with an annualized drag from the fourth quarter of 2.5 points on net interest income growth and 1 point on billed-business growth[5]. At the same time second-quarter net income grew only 8% because the effective tax rate rose from 18.7% to 23.6%, and the beat rested on a $190 million reserve release[4][10]. The third-quarter report will expose both the core growth rate of the lending business excluding the portfolio transfers and whether reserve releases can continue, and those two items determine whether second-half earnings per share land in the upper half of the $17.30–$17.90 guidance range (consensus $17.65)[5][6].

Current lending and credit data sit at their best levels in years. Second-quarter net interest income of $4.649 billion grew 11%, with interest income up 5% and interest expense down 6% (lower deposit rates), and the net interest yield was 8.1% against 7.9% a year earlier[4][26]; Card balances grew 8% to $218.05 billion[25]. On the call, management attributed "almost all" of the slowdown to the Lowe's portfolio and said core growth excluding it was in line with balance and spending growth[5]. On credit, the principal net write-off rate held at 2.0%, the 30-day-plus delinquency rate of 1.2% was the lowest in more than three years, the $190 million reserve release was driven mainly by lower delinquencies, and the reserve ratio fell from 3.0% to 2.7% of balances[25][10][5]; the master trust's annualized default rate net of recoveries was 1.0% in August[38].

The alternative reading is that both the room for releases and the cost of funding are deteriorating. The reserve ratio is already down to 2.7%, leaving limited room for further releases; the small-business principal write-off rate of 2.4% is above the consumer rate of 1.9%, and the credit quality of the remaining small-business balances after the Amazon transfer is not necessarily better[25][10]; and in August the company issued $1.6 billion of 6.45% preferred shares to replace 3.55% preferred, so funding costs are rising at the margin[32]. The transmission chain runs: Card balance growth (+8%) × net interest yield (8.1%, supported by falling deposit rates) gives net interest income, and cobrand transfers remove balances and interest directly; provisions = net write-offs + the change in reserves, delinquencies lead write-offs by one to two quarters, net interest income minus provisions is the lending business's net contribution, and in the second quarter the reserve release accounted for all of the year-over-year decline in provisions[10][26]. If third-quarter net interest income holds 8% growth and no reserve is built, the company's account holds.

What to watch is third-quarter net interest income growth and whether the 10-Q attributes it to portfolio transfers, yield or balances[26]; whether the principal write-off rate and the 30-day-plus delinquency rate stay within 2.1% and 1.3% and whether small business and consumer diverge[25][20]; and whether the Card balance reserve is built or released and whether the reserve ratio keeps falling[10]. The falsifiers are net interest income growth falling below 6% with the cause attributed to yield or balances rather than portfolio transfers, or delinquencies rising and reserves turning to a build so that provisions flip from a year-over-year decline to an increase.

Have small-business customers finally opened their wallets, or was this just the last good quarter before the cobrand portfolios leave?

Commercial Services contributes 23% of company revenue and 31% of billed business, yet it has been the weakest link of the past two years: billed business grew only 3% in 2025 and 2% in 2024[15][14]. Management lists "building on commercial payments" as its second strategic priority, acquired Center for expense management and launched a mid-market expense platform pilot in the second quarter[1][5]. The second quarter's acceleration to 5% is the first time those investments showed up in the numbers, but at the same time the company is selling the Lowe's and Amazon small-business cobrand portfolios and the segment's proprietary card count has already fallen 5%[28]. The third quarter is the first after the Amazon transfer, so it can distinguish an improvement in core customers' spending from a last leg before the held-for-sale portfolios exit.

Second-quarter segment data show spending per card improving while the card count shrinks. CS billed business grew 5% to $141.8 billion, and the call said U.S. small and medium-sized enterprise and large corporate customers both grew 5%[28][5]; proprietary cards-in-force fell 5% year over year to 14.6 million (with the cobrand portfolios held for sale), and average spending per card rose 9% to $9,607[28]. Segment revenue rose 7% to $4.503 billion, of which net interest income rose 15% to $912 million; pretax income rose 7% to $970 million and marketing expense rose 15%[28]. The small-business principal write-off rate was 2.4% (2.3% a year earlier) and delinquency 1.4%, slightly above consumer levels[25]. The 10-Q states plainly that billed-business growth is expected to slow after the exit of the small-business cobrand held-for-sale portfolios[36], and the call quantified the annualized impact as −1 point on consolidated billed-business growth and −2.5 points on net interest income growth[5].

The alternative reading is that the acceleration comes from removing a drag rather than from new demand. The held-for-sale portfolios are low-spend, high-revolve small-business cards, so after they leave, CS spending per card and credit quality would improve; if third-quarter spending per card still grows 5% or more while total billed-business growth drops below 2%, that is what happened. The transmission chain runs: U.S. small and mid-sized business spending drives CS billed business, which drives CS discount revenue and rewards expense; small-business revolving balances drive CS net interest income ($912 million in the second quarter, up 15%); cobrand transfers directly reduce cards, billed business and balances; and CS pretax income = segment revenue − provisions − VCE − marketing − operating expenses[28][14].

What to watch is whether third-quarter CS billed-business growth stays at 3% or more and whether the 10-Q describes small-business spending as "accelerating", "moderate" or "slowing"[36]; the growth in average spending per proprietary card and the drop in the card count after the Amazon transfer[28]; and how far CS net interest income growth comes down from 15% and whether segment pretax income can hold the high base of $1.090 billion from the third quarter of 2025[28]. The falsifiers are slowing small-business spending stacked on the portfolio exit that pushes CS billed-business growth back below 2%, or rising segment marketing and product investment with falling profit, so that the commercial payments strategy produces no segment profit in 2026.

Risks and Falsifiers

The first risk is the interchange settlement flowing through to the discount rate. The settlement Visa and Mastercard proposed in November 2025 would require reductions and caps on interchange fees, give merchants greater options to surcharge credit transactions and allow merchants to refuse certain categories of credit cards; if approved by the court it would bring more surcharging, refusal of premium cards and competitive downward pressure on the discount rate[33]. The exposed line is discount revenue, 52% of revenue ($37.40 billion in 2025); each basis point of discount rate is worth about $170 million of annual revenue on $1.67 trillion of billed business, and the rate has already fallen from 2.29% in 2023 to 2.23% in the second quarter of 2026[16][12][24]. The falsifier is a third-quarter discount rate no lower than 2.21% with no mention in the 10-Q of merchant acceptance or discount-rate changes caused by the settlement or surcharging.

The second risk is Delta cobrand concentration. As of the end of 2025 the Delta portfolio represented about 13% of worldwide billed business and 21% of Card Member loans under an agreement that runs through the end of 2029[18]; any disruption to air travel or to Delta itself would hit discount revenue, card fees and interest income at once, and competition in premium benefits such as lounges raises the cost of renewal[11]. On 2025 billed business of $1.67 trillion, the Delta portfolio corresponds to roughly $217 billion of billed business and about $32 billion of loans[18][20]. The falsifier is third-quarter travel and entertainment billed-business growth of at least 8%[9] with no disclosure in the 10-Q of changes to the Delta relationship terms.

The third risk is renewal attrition after the Platinum price increase. Attrition or downgrades after a 29% fee increase surface gradually over the 12-month renewal cycle, card-fee growth may fall short of the acceleration path management promised, and the cost of the benefits added to win renewals has already been incurred[5]. The exposed line is net card fees ($9.99 billion in 2025, $2.86 billion in the second quarter of 2026); each percentage point of growth is worth about $25 million of quarterly revenue that is almost entirely pretax income, and Card Member services expense in the first half of 2026 was already $1.295 billion higher than a year earlier[4][16][8]. The falsifier is third-quarter card-fee growth of at least 16% and average fee-per-card growth of at least 10%[24].

The fourth risk is that the spending acceleration is only a one-time benefit stimulus. If the acceleration from the Platinum refresh is not sustained momentum, USCS billed-business growth would fall back in the third quarter while the benefits already committed, second-half marketing growth of about 10% and TheFork integration costs still occur as planned[5]. The exposed line is the USCS segment ($34.81 billion of revenue in 2025, $196.4 billion of billed business in the second quarter of 2026); each percentage point of billed-business growth is worth about $44 million of quarterly discount revenue, while each percentage point of VCE ratio absorbs about $200 million of pretax income[14][28][8]. The falsifier is third-quarter USCS billed-business growth of at least 10% with a consolidated VCE ratio no higher than 45%[9].

The fifth risk is a reversal in reserve direction. The second quarter's year-over-year decline in provisions came entirely from the reversal in reserve direction (a $190 million release against a $198 million build a year earlier), and the reserve ratio has fallen to 2.7% of balances[10][25]; if delinquencies rise or macro assumptions worsen in the third quarter, reserves would turn to a build, provisions would flip from a year-over-year decline to an increase, and earnings per share would be squeezed directly. The exposed line is provisions ($5.26 billion in 2025); each 0.1-point rise in the reserve ratio requires about $220 million of build, roughly $0.25 per share before tax[20][25]. The falsifier is a third-quarter Card balance reserve build of no more than $100 million with a 30-day-plus delinquency rate no higher than 1.3%.

What to Watch Next

• Platinum card fees: net card fees were $2.862 billion in the second quarter of 2026, up 15%[4]; watch third-quarter growth and the 10-Q attribution. Growth back above 16% confirms the acceleration; average fee-per-card growth falling to single digits falsifies it.
• Platinum card fees: the average fee per card was $131 (up 12%) and proprietary new cards were 3.0 million[24]; watch whether double-digit fee growth holds and the fee-paying share stays above 70%. New cards at 3.0 million or more with double-digit fee-per-card growth confirms.
• Platinum card fees: Card Member services expense was $1.949 billion, up 50%[8]; watch whether growth comes down. VCE within 45% of revenue confirms; a continued climb falsifies.
• U.S. consumer spending versus benefit costs: USCS billed business was $196.4 billion, up 11%[28]; watch whether growth stays at 10% or more and travel and entertainment at 8% or more. A fall to single digits falsifies.
• U.S. consumer spending versus benefit costs: discount revenue was $10.163 billion at a 2.23% discount rate[23]; watch the gap between discount revenue growth and billed-business growth. A discount rate no lower than 2.21% confirms.
• U.S. consumer spending versus benefit costs: the VCE ratio was 44.6% and USCS pretax income $2.065 billion[8][28]; watch whether segment profit still grows once reserves stop being released. A VCE ratio above 45.5% falsifies.
• Lending and credit: net interest income was $4.649 billion, up 11%[4]; watch growth and its attribution to portfolio transfers, yield or balances. Growth below 6% not caused by transfers falsifies.
• Lending and credit: the principal write-off rate was 2.0% and the 30-day-plus delinquency rate 1.2%[25]; watch whether they stay within 2.1% and 1.3% and whether small business and consumer diverge. Rising delinquencies falsify.
• Lending and credit: the Card balance reserve was released by $190 million and the reserve ratio was 2.7%[10]; watch whether the third quarter builds or releases. A build of no more than $100 million confirms; a large build falsifies.
• Commercial Services: CS billed business was $141.8 billion (up 5%) and spending per card $9,607 (up 9%)[28]; watch whether growth stays at 3% or more and how far the card count drops. Billed-business growth back below 2% falsifies.
• Commercial Services: CS net interest income was $912 million (up 15%) and pretax income $970 million[28]; watch how far growth comes down and whether profit holds the $1.090 billion base of the third quarter of 2025. Falling profit with rising investment falsifies.

Conclusion

The American Express business consists of three revenue lines and one layer of benefit cost: billed business times the discount rate gives discount revenue, half of the total; proprietary cards times the average fee gives net card fees, the fastest-growing line; Card balances times the net interest yield gives net interest income, close to a quarter; and all three lines together feed variable customer engagement expenses that consume 44.6% of revenue[4][8]. The current financial position is double-digit revenue growth with profit amplified by reserve releases and buybacks: second-quarter revenue rose 10% to $19.64 billion, pretax income rose 15% to $4.07 billion, net income rose 8% to $3.11 billion, earnings per share rose 11% to $4.53 and CET1 was 10.4%[4][27]. The unresolved core relationships are card-fee acceleration a year after the Platinum price increase, the ratio of U.S. consumer spending momentum to benefit cost, and the effect of cobrand exits and reserve direction on the lending business's net contribution.

The two independent assessments published after the results emphasize opposite things. BigGo Finance noted on results day that second-quarter revenue of $19.6 billion missed the $19.7 billion consensus by less than 0.3% yet was magnified in an environment of heightened macro uncertainty, and that raised revenue guidance with unchanged profit guidance means management plans heavier second-half marketing and technology investment that could limit near-term margin expansion; it attributed the contradictory reaction of an earnings beat, raised guidance and a roughly 6% share-price drop to a market "on high alert for signs that consumer momentum may be peaking"[37]. Itai Smidt at Investing.com instead argues that net card fees are the most important and fastest-growing line in the business, with 32 consecutive quarters of double-digit growth driven by the U.S. Platinum refresh and a lag in revenue recognition; to the concern that expenses grew 12% against 10% revenue growth, he responds that the expenses are largely variable and demand-driven and that rising benefit utilization shows cardholders are actually using the value; but he also warns that a reserve release is a one-time earnings contribution and that a second-half build would invert the provision comparison into an earnings headwind[34]. The two views agree that reinvestment suppresses near-term profit; they differ on whether 50% growth in benefit cost is demand validation or rising marginal cost, the former mapping to the second debate and the latter, together with the reserve warning, to the first and third. Both are outside interpretations rather than facts or a vote; Drillr's analyst report library has no coverage of American Express, and no independent analyst commentary on the third quarter appeared after August.

The combination of observations that would materially strengthen the current understanding is third-quarter card-fee growth back above 16% with double-digit average fee-per-card growth, USCS billed-business growth holding 10% with a consolidated VCE ratio no higher than 45%, net interest income still growing 8% or more after the Amazon transfer with a reserve build of no more than $100 million and a 30-day-plus delinquency rate no higher than 1.3%, and CS billed-business growth above 3% with segment pretax income holding $1.090 billion[4][9][10][28]. The combination that would materially weaken it is average fee-per-card growth falling to single digits while Card Member services expense growth does not slow, USCS billed-business growth back in single digits with the VCE ratio above 45.5%, net interest income growth below 6% attributed to yield or balances, reserves turning to a build so provisions flip from decline to increase, and the discount rate breaking below 2.21% or the 10-Q reporting merchant-acceptance changes linked to the settlement or surcharging[33].

Sources

[1] AXP 10-K filed 2026-02-06 · business overview and revenue types · 2026-02-06 · 10-K · https://www.sec.gov/Archives/edgar/data/4962/000000496226000080/

[2] Drillr earnings calendar · AXP earnings call scheduled 2026-10-23 (calendar last updated 2026-09-22, source fmp); the company's last four quarterly releases were issued before the market open with an 8:30 a.m. Eastern Time investor call · 2026-09-22 · Drillr earnings calendar

[3] AXP 8-K filed 2026-07-24 · 2Q26 results headline · 2026-07-24 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000004962&type=8-K&dateb=&owner=include&count=40

[4] AXP 8-K filed 2026-07-24 · 2Q26 consolidated income statement (five quarters) · 2026-07-24 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000004962&type=8-K&dateb=&owner=include&count=40

[5] AXP 2Q26 earnings call 2026-07-24 · Drillr structured summary · 2026-07-24 · earnings-call · https://ir.americanexpress.com/events-and-presentations/default.aspx

[6] Drillr analyst_financial_estimates AXP · quarter ending 2026-09-30 (updated 2026-09-22) · 2026-09-22 · Drillr analyst_financial_estimates · https://gateway.drillr.ai/mcp/private

[7] Drillr earnings calendar AXP 2026-10-23 (updated 2026-09-22) · 2026-09-22 · Drillr earnings calendar (fmp) · https://gateway.drillr.ai/mcp/private

[8] AXP 10-Q filed 2026-07-24 · 2Q26 expense commentary · 2026-07-24 · 10-Q · https://www.sec.gov/Archives/edgar/data/4962/000000496226000322/

[9] AXP 8-K filed 2026-07-24 · 2Q26 billed business growth by segment and category · 2026-07-24 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000004962&type=8-K&dateb=&owner=include&count=40

[10] AXP 10-Q filed 2026-07-24 · 2Q26 provisions and reserve release · 2026-07-24 · 10-Q · https://www.sec.gov/Archives/edgar/data/4962/000000496226000322/

[11] AXP 10-K filed 2026-02-06 · competition · 2026-02-06 · 10-K · https://www.sec.gov/Archives/edgar/data/4962/000000496226000080/

[12] AXP 10-K filed 2026-02-06 · FY2025 card-related statistics (Table 5) · 2026-02-06 · 10-K · https://www.sec.gov/Archives/edgar/data/4962/000000496226000080/

[13] AXP 10-K filed 2026-02-06 · FY2025 summary of financial performance · 2026-02-06 · 10-K · https://www.sec.gov/Archives/edgar/data/4962/000000496226000080/

[14] AXP 10-K filed 2026-02-06 · FY2025 segment results (Note 23) · 2026-02-06 · 10-K · https://www.sec.gov/Archives/edgar/data/4962/000000496226000080/

[15] AXP 10-K filed 2026-02-06 · FY2025 segment statistics USCS/CS/ICS · 2026-02-06 · 10-K · https://www.sec.gov/Archives/edgar/data/4962/000000496226000080/

[16] AXP 10-K filed 2026-02-06 · FY2025 consolidated statement of income · 2026-02-06 · 10-K · https://www.sec.gov/Archives/edgar/data/4962/000000496226000080/

[17] AXP 10-K filed 2026-02-06 · FY2025 expenses · 2026-02-06 · 10-K · https://www.sec.gov/Archives/edgar/data/4962/000000496226000080/

[18] AXP 10-K filed 2026-02-06 · partners and Delta cobrand concentration · 2026-02-06 · 10-K · https://www.sec.gov/Archives/edgar/data/4962/000000496226000080/

[19] AXP 10-K filed 2026-02-06 · FY2025 business performance · 2026-02-06 · 10-K · https://www.sec.gov/Archives/edgar/data/4962/000000496226000080/

[20] AXP 10-K filed 2026-02-06 · FY2025 credit statistics · 2026-02-06 · 10-K · https://www.sec.gov/Archives/edgar/data/4962/000000496226000080/

[21] AXP 10-K filed 2026-02-06 · capital strategy and FY2025 cash flows · 2026-02-06 · 10-K · https://www.sec.gov/Archives/edgar/data/4962/000000496226000080/

[22] AXP 8-K filed 2026-04-23 · 1Q26 results headline · 2026-04-23 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000004962&type=8-K&dateb=&owner=include&count=40

[23] AXP 10-Q filed 2026-07-24 · 2Q26 revenue line commentary · 2026-07-24 · 10-Q · https://www.sec.gov/Archives/edgar/data/4962/000000496226000322/

[24] AXP 10-Q filed 2026-07-24 · 2Q26 card-related statistics (Table 5) · 2026-07-24 · 10-Q · https://www.sec.gov/Archives/edgar/data/4962/000000496226000322/

[25] AXP 8-K filed 2026-07-24 · 2Q26 card balances and credit reserves (five quarters) · 2026-07-24 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000004962&type=8-K&dateb=&owner=include&count=40

[26] AXP 10-Q filed 2026-07-24 · 2Q26 summary of financial performance (Table 1) · 2026-07-24 · 10-Q · https://www.sec.gov/Archives/edgar/data/4962/000000496226000322/

[27] AXP 8-K filed 2026-07-24 · 2Q26 capital ratios and shares · 2026-07-24 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000004962&type=8-K&dateb=&owner=include&count=40

[28] AXP 8-K filed 2026-07-24 · 2Q26 segment tables USCS/CS/ICS · 2026-07-24 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000004962&type=8-K&dateb=&owner=include&count=40

[29] AXP 10-Q filed 2026-07-24 · 2Q26 GMNS segment and consolidated segment table · 2026-07-24 · 10-Q · https://www.sec.gov/Archives/edgar/data/4962/000000496226000322/

[30] AXP 10-Q filed 2026-07-24 · 2Q26 dividends, repurchases and CET1 target · 2026-07-24 · 10-Q · https://www.sec.gov/Archives/edgar/data/4962/000000496226000322/

[31] AXP 10-Q filed 2026-07-24 · 2Q26 deposits and funding plan · 2026-07-24 · 10-Q · https://www.sec.gov/Archives/edgar/data/4962/000000496226000322/

[32] AXP 8-K filed 2026-08-12 · Series E preferred issuance and Series D redemption · 2026-08-12 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000004962&type=8-K&dateb=&owner=include&count=40

[33] AXP 10-K filed 2026-02-06 · regulation, litigation and Visa/Mastercard settlement risk · 2026-02-06 · 10-K · https://www.sec.gov/Archives/edgar/data/4962/000000496226000080/

[34] Investing.com 2026-07-28 · American Express Card Fee Growth Supports the Long-Term Bull Case · 2026-07-28 · Investing.com · https://www.investing.com/analysis/american-express-card-fee-growth-supports-the-longterm-bull-case-200684743

[35] AXP 1Q26 earnings call 2026-04-23 · Drillr structured summary · 2026-04-23 · earnings-call · https://ir.americanexpress.com/events-and-presentations/default.aspx

[36] AXP 10-Q filed 2026-07-24 · 2Q26 business performance · 2026-07-24 · 10-Q · https://www.sec.gov/Archives/edgar/data/4962/000000496226000322/

[37] BigGo Finance 2026-07-24 · American Express Q2 Revenue Narrowly Misses; Upgraded Full-Year Outlook Fails to Stem Pre-Market Decline · 2026-07-24 · BigGo Finance · https://finance.biggo.com/news/6ae57a20-3d89-4356-bed6-063fe162faf4

[38] AXP 8-K filed 2026-09-15 · master trust monthly performance August 2026 · 2026-09-15 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000004962&type=8-K&dateb=&owner=include&count=40