American Express (AXP) Q4 2025 earnings review
International Strength and Fees Power Double Beat
American Express closed FY25 with momentum, delivering 10% revenue growth and a 16% jump in EPS in Q4. The narrative has shifted: while U.S. Consumer revenue grew 11%, profit there was flat due to heavy investment in the Platinum Card refresh. The real earnings engine was International Card Services, where pretax income skyrocketed nearly 9x YoY driven by 17% revenue growth. Management signaled confidence for 2026 with guidance calling for 9-10% revenue growth and ~14% EPS growth at the midpoint, alongside a generous 16% dividend hike.
🐂 Bull Case
International Card Services (ICS) is now the company's growth star. Revenue surged 17% YoY to $3.5B, and segment pretax income exploded to $316M from just $34M a year ago, proving the long-term global investment strategy is finally yielding significant margin expansion.
Net Card Fees jumped 17% YoY to $2.6B in Q4, marking the 30th consecutive quarter of double-digit growth. The ability to push through fee increases—specifically with the U.S. Platinum refresh—without crushing retention demonstrates the resilience of the premium membership model.
🐻 Bear Case
Despite 11% revenue growth in U.S. Consumer Services, segment pretax income was flat ($1.55B vs $1.54B). Expenses in this segment surged 15%, driven by a massive 53% consolidated jump in 'Card Member Services' costs linked to the Platinum refresh. The cost of retaining customers is rising.
Commercial Services remains the laggard, with revenue growing just 7% (vs 11% US Consumer and 17% International) and billed business up only 4%. With U.S. small business sentiment fragile, this segment risks becoming a drag on the broader double-digit growth algorithm.
⚖️ Verdict: 🟢
Bullish. While the cost of the Platinum refresh weighed on U.S. margins, the explosion in International profitability and sustained double-digit fee growth validate the premium strategy. Guidance for 2026 implies no slowdown, effectively dismissing macro concerns.
Key Themes
International Segment Profitability inflection
International Card Services (ICS) has transitioned from a revenue driver to a profit engine. While revenue grew 17% (accelerating from +13% in Q3), the real story is operating leverage. Pretax income for the segment jumped to $316M from a meager $34M in 24Q4. This diversification protects Amex against U.S. saturation.
Cost of the Platinum Refresh
The strategic refresh of the U.S. Platinum Card is expensive. 'Card Member Services' expenses spiked 53% YoY to $1.95B. Management noted this was driven by the refresh (likely enhanced benefits/partner costs). This dragged U.S. Consumer pretax margins down, keeping profit flat despite top-line growth. Investors must watch if this expense line normalizes in 2026.
Credit Normalization Continues
The consolidated net write-off rate ticked up to 2.1% from 1.9% a year ago and 1.9% in Q3 (principal only). Provision for credit losses rose 9% to $1.4B. While these metrics remain healthy relative to peers, the 'normalization' trend is steadily climbing, acting as a slow leak on earnings growth.
Fee Income as a Stabilizer
Net card fees grew 17% to $2.63B in Q4. This revenue stream is disconnected from spend volatility and interest rate fluctuations. It now represents ~14% of total revenue net of interest, providing a high-margin floor to earnings even if consumer spending softens.
Commercial Services Lagging
Commercial Services (CS) continues to underperform the broader portfolio. Billed business growth was only 4% (vs 9% for US Consumer and 17% for International). Pretax income grew only 3%. This segment appears most sensitive to macro uncertainty and lacks the 'refresh' momentum seen in consumer products.
Other KPIs
Stable. Up 10% YoY (9% FX-adjusted), consistent with the 10-11% range seen throughout FY25. Growth was driven by robust card member spending (+9%) and net interest income (+12%).
Expanding slightly. Up from 16.0% in 24Q4. While expenses grew 10% matching revenue, lower effective tax rate (20.3% vs 21.3%) and International profitability helped support the bottom line.
Stable. While down slightly from 34.6% a year ago, it remains exceptional for a financial institution, supporting the decision to hike the dividend by 16%.
Guidance
Stable. Consistent with the 10% delivered in FY25. Implies management sees no immediate recessionary impact on premium consumer spending.
Accelerating. The midpoint ($17.60) implies ~14.4% growth over FY25's $15.38. This is slightly faster than revenue growth, indicating expected operating leverage or share buyback support.
Accelerating. A ~16% increase from the prior $0.82, signaling management's confidence in cash flow durability.
Key Questions
Platinum Refresh Cost Cadence
Card Member Services expenses spiked 53% YoY in Q4 due to the Platinum refresh. Is this a one-quarter shock, or is this the new run-rate for servicing costs throughout 2026?
Commercial Services Recovery
With Commercial Services billed business growing only 4% and income up just 3%, what specific macro or competitive factors are holding back the B2B segment compared to the robust Consumer business?
Credit Deterioration
Net write-off rates ticked up to 2.1% this quarter. Are you seeing stress in specific vintage cohorts or geographies, and does the 2026 guidance assume a further increase in credit costs?
International Profitability Sustainability
International Card Services profit jumped nearly 9x YoY. How much of this was one-time expense timing versus a structural shift in the profitability of the international book?