American Express (AXP) Q3 2026 earnings review
American Express card fees rise faster, but perk costs climb
American Express collected higher annual card fees this quarter, but rising perk costs and slower commercial spending held back operating profit. Revenue rose 9% to $20.1 billion, while profit per share excluding one-offs grew 13% to $4.68 with help from a $235 million loan reserve release and a lower tax rate. Chief executive Stephen Squeri lifted the bottom of the full-year profit-per-share plan by 30 cents, which by our math points to 21% growth in the fourth quarter.
| Revenue | $20.1B +8.9% from a year ago |
|---|---|
| Profit per share, excluding one-offs | $4.68 +13% from a year ago |
| Net card fees | $2.97B +16.4% from a year ago |
| Full-year profit-per-share outlook (clean) | Raised $0.15 middle of the range: $17.75 (+15.4%) |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because the expected rebound in annual card fee growth was offset by higher customer perk and overhead costs. Net card fee growth stepped up to 16% as existing Platinum cardholders renewed at higher prices, and the company finished exiting its Amazon small-business portfolio. The bad news: Commercial Services spending growth slowed to 3%, and the pretax profit margin excluding the travel-stake gain and restructuring fell 1.4 percentage points by our math.
The question now is whether higher Platinum fees will widen profit margins once last year's card upgrade passes its one-year anniversary, or whether airport lounges, card perks, and legal costs have permanently raised the expense base. If the fee hike wins, pretax margins expand without reserve releases; if perk costs keep climbing, earnings depend on lower credit provisions and buybacks. Fourth-quarter customer engagement costs and commercial spending will tell.
🐂 Bull Case
Platinum Fee Renewals Lifted Card Fee Growth
American Express charges annual membership fees on its premium cards and spreads each fee across twelve months of revenue. After the company raised the price of its flagship U.S. Platinum Card in September 2025, existing cardholders only started paying the higher rate as their annual renewals arrived from January 2026.
That renewal wave accelerated net card fee growth to 16.4% from a year ago, reaching $2.97 billion and stepping up from 15.4% in the second quarter. The average fee per card rose 14% to $136. Chief executive Stephen Squeri said "our business momentum continues, with strength in billings, new acquisitions and Card Member retention, and excellent credit quality".
The acceleration matters because card fees grow almost twice as fast as the rest of the company's revenue. While American Express acquired 3.1 million new proprietary cards, down from 3.2 million a year ago, existing customers are accepting the higher subscription price.
What to watch: fourth-quarter net card fee growth against the high-teens rate management previously targeted. Reaching 17% or higher would confirm the price increase is flowing through without higher cancellations.
International and Travel Spending Stayed Double-Digit
The card group is expanding its international merchant network, travel perks, and artificial intelligence tools to keep cardholders spending on its network. In the third quarter, the company signed an exclusive partnership with Airbnb, extended its co-branded card deal with Marriott International, and opened its 33rd Centurion airport lounge in Amsterdam.
It also connected its Resy restaurant booking platform with OpenAI and released an "Intent Intelligence framework for trusted agentic commerce", which sets rules for AI assistants to shop safely on a cardholder's behalf. International Card Services billed business — the total dollar amount customers spent on its cards outside the United States — grew 11% from a year ago, while overall travel and entertainment spending rose 10%.
Worldwide merchant acceptance reached 190 million locations, more than doubling outside the United States over four years. Overseas and travel spending now carry the top line because everyday goods and services spending slowed from 9% growth in the second quarter to 7%.
What to watch: fourth-quarter International Card Services billed business growth, which will show whether overseas holiday travel can offset slower everyday retail spending.
🐻 Bear Case
Card Perks and Legal Costs Squeezed Margins
American Express has argued that higher annual card fees more than pay for the airport lounges, dining credits, and travel perks it adds to its cards. Reported pretax profit rose 18% from a year ago to $4.53 billion, lifting the reported pretax margin by 1.8 percentage points to 22.6%.
That expansion came from a one-off $982 million pretax gain on the sale of its stake in Global Business Travel Group, a corporate travel agency, alongside a $336 million restructuring charge. Excluding both one-offs, pretax profit grew 1% and the pretax margin fell 1.4 percentage points to 19.4% by our math. The company pointed to "higher variable customer engagement costs due to increased Card Member spending and the U.S. Platinum Card" refresh, plus "an increase in legal reserves for previously-disclosed matters, and restructuring costs".
- Card Member services (lounge and travel perks): 10.0% of revenue, up 2.0 percentage points from a year ago by our math
- Total customer engagement costs (rewards, partner payments, and perks): 44.3% of revenue, up 2.6 percentage points by our math
- Salaries and employee benefits: 12.8% of revenue, up 0.7 percentage points by our math
- Operating overhead excluding the travel-stake gain and restructuring: up 12.7% from a year ago by our math
What to watch: the fourth-quarter customer engagement cost ratio as the September 2025 Platinum upgrade passes its one-year mark. A ratio that stays near 44.3% would show that richer card perks are permanently taking a larger share of revenue.
Reserve Releases and Tax Gains Drove the Beat
When cardholders miss payments, American Express records a provision for credit losses, which combines actual loan write-offs with money added to or released from its loss reserves. Total provisions fell 23% from a year ago to $985 million, which the company said reflected "a reserve release during the quarter compared to a reserve build in the prior year, partially offset by higher net write-offs".
By our math, the lender released $235 million from its card loss reserves, reducing total card reserves to 2.5% of balances from 2.9% a year ago, even as card write-offs rose 2% to $1.13 billion. In addition, the effective tax rate dropped to 18.1% from 24.1% a year ago on "discrete tax benefits in the current year related to the resolution of certain prior-period tax items".
Those two accounting tailwinds explain why profit per share excluding one-offs rose 13% while clean pretax profit before provisions grew only 1% by our math. Reserve releases and prior-period tax settlements do not repeat indefinitely.
What to watch: fourth-quarter card reserve levels as a percentage of card balances. With Delinquencies steady at 1.2%, reserves cannot fall much further below 2.5% to pad quarterly earnings.
Commercial Spending Slowed Despite New Corporate Software
Commercial Services issues cards and loans to small businesses and large corporations, where software rivals such as Ramp and Brex are competing for business spending. In the third quarter, American Express launched its next-generation corporate platform with "new integrated Expense Management software and Amex Expense mobile app", alongside new cashback cards and a business savings account.
It also completed the sale of its co-branded small-business portfolio with Amazon, reducing card balances held for sale from $1.75 billion to zero and trimming total proprietary cards in force by 100,000 from last quarter to 87.5 million. Despite the new software, Commercial Services billed business grew just 3% from a year ago, down from 5% in the second quarter, and segment pretax profit fell 6% to $1.03 billion as marketing spend jumped 29%.
What to watch: Commercial Services billed business growth in the fourth quarter, when the exit of both co-branded small-business portfolios is complete. A reading below 2% would show business spending is weakening beyond the portfolio sales.
Risks this quarter didn't answer
Four standing legal, regulatory, and accounting concerns received no updated figures in the earnings release and await the quarterly Form 10-Q filing.
- Anti-money-laundering enforcement action: the release mentioned higher legal reserves for previously disclosed matters, but did not state whether a fine has been settled or accrued.
- Rewards redemption model change: the company still has not quantified the dollar benefit from last quarter's revision to its Membership Rewards redemption estimates.
- Merchant surcharging and fee rules: the release gave no financial read on Australia's October 2026 surcharging rules or European co-brand fee litigation.
- Bank capital rule proposals: no updated estimate was provided on how proposed U.S. Category II bank rules will affect risk-weighted assets.
👓 Other Themes
Travel Stake Sale Funded Restructuring
American Express closed the sale of its ownership stake in Global Business Travel Group during the third quarter, recording a $982 million pretax gain ($751 million after tax) inside other operating expenses. Management used part of that windfall to fund a $336 million pretax restructuring charge ($253 million after tax) for efficiency initiatives, and excluded both items from its adjusted profit figures.
Consumer Spending Growth EasedSlightly
The company reiterated warnings over macroeconomic and geopolitical conditions, including tariffs, interest rates, and a potential economic slowdown. Across its network, total billed business growth slowed to 8% from a year ago ($454.0 billion) after rising 9% in the second quarter, as U.S. Consumer Services spending growth eased from 11% to 9%.
💲 Other KPIs
Total card balances — customer loans and monthly card bills combined — grew 7.4% from a year ago. Net interest yield, the annualised profit margin earned on those loan balances after funding costs, rose to 8.5% from 8.1% last quarter and 8.2% a year ago as deposit interest expenses fell 9%, lifting net interest income 10% to $4.94 billion.
The Common Equity Tier 1 ratio — core bank capital measured against risk-weighted assets — rose 0.5 percentage points from last quarter and 0.4 percentage points from a year ago to 10.9%. The gain from selling the Global Business Travel Group stake lifted retained earnings, putting the ratio at the top of management's 10% to 11% target range.
The payment network repurchased 5 million common shares during the third quarter, down from 7 million shares in the second quarter. Over the past four quarters, buybacks reduced the average diluted share count by 2.7%, which added 3 percentage points to third-quarter profit-per-share growth.
🔮 Guidance
Raised. The company lifted the bottom of its full-year profit-per-share plan by $0.30, raising the middle of the range by $0.15 to $17.75 (about 15.4% growth from a year ago), after holding it unchanged for two quarters. By our math, that leaves $4.26 per share for the fourth quarter, up 20.7% from $3.53 a year ago as last year's Platinum launch costs pass.
Raised. Including the net $0.73 per share after-tax gain from the Global Business Travel Group stake sale and third-quarter restructuring charges, the middle of the reported profit-per-share outlook sits at $18.45, up 20.0% from $15.38 in 2025.
Unchanged. Chief executive Stephen Squeri said the company remains "on track to deliver another year of 10 percent revenue growth" after raising the target from 9%–10% last quarter. With nine-month revenue up 10.1% ($58.61 billion), the plan implies 9.8% growth in the fourth quarter by our math, despite a 1 percentage point drag from exited co-brand portfolios.
❓ Key Questions
How large were the third-quarter legal reserve additions?
The release noted an increase in legal reserves for previously disclosed matters inside operating expenses. Investors need to know the dollar amount and whether it covers the expected anti-money-laundering enforcement penalty.
What drove the 13% jump in clean operating overhead?
Excluding the $982 million travel-stake gain and $336 million restructuring charge, operating expenses grew 12.7% from a year ago by our math, well above the full-year mid-single-digit plan. Management did not say how much came from legal reserves versus salaries.
Why is Commercial Services spending growth still slowing?
Commercial Services billed business growth slipped from 5% in the second quarter to 3% in the third, and segment profit fell 6%. How much of that slowdown came from the Amazon portfolio exit versus middle-market customers moving to rival software?
How much will the $336 million restructuring save annually?
American Express used part of its travel-stake sale gain to fund a $336 million pretax restructuring charge for efficiency initiatives, but did not disclose what positions or facilities were cut or how much annual cost the programme will remove.