American Express Company

What they do

American Express offers credit and charge cards, banking and payment products, merchant acquisition and processing, and network services to consumers, small businesses, mid-sized companies, and large corporations. It operates through four segments: U.S. Consumer Services, Commercial Services, International Card Services, and Global Merchant and Network Services, supported by an integrated payments platform that connects Card Members and merchants directly.

Revenue drivers

• Discount revenue — Largest revenue source; fees earned from merchants for facilitating transactions, varying by industry, volume, and settlement terms.
• Interest income — Earned on outstanding loan balances, including credit card loans and revolve-eligible charge card balances.
• Net card fees — Annual card membership fees, varying by card type and number of cards per account.
• Service fees and other revenue — Includes network partnership royalties, foreign currency fees, loyalty coalition fees, and travel commissions.

Recent performance

For Q2 2026, total revenues net of interest expense were $19.6 billion, up 10% year-over-year, with card member spending growth of 9% (FX-adjusted). Net income was $3.1 billion, up 8%, and diluted EPS was $4.53, up 11%. Provisions for credit losses decreased to $1.1 billion from $1.4 billion, driven by a reserve release. For the first half of 2026, revenues rose 11% to $38.5 billion, and EPS was $8.81, up 14%.

Strategy

Management plans to reinvest the outperformance from the first half of 2026 into growth initiatives, given significant opportunities ahead. Investments in value propositions have accelerated spend and revenue growth, with the Platinum portfolio becoming the fastest-growing in U.S. Consumer business. The company is focusing on attracting Millennials and Gen-Z customers, who represent greater lifetime value, and continues to invest in its differentiated Membership Model.

Risks

• Macroeconomic sensitivity — Results are highly dependent on consumer and business spending; economic contraction, inflation, or shifts in trends could reduce card spending and loan demand.
• Credit risk — Higher net write-offs or deteriorations in Card Member credit quality could increase provisions for credit losses and hurt profitability.
• Regulatory supervision — As a bank holding company, American Express is subject to extensive Federal Reserve regulations and capital standards; changes could affect operations.
• Competitive pressure — The global payments industry is competitive, with evolving technologies and alternative payment mechanisms that could erode market share.

Outlook

Management raised full-year 2026 revenue growth guidance to 10% (FX-adjusted) and expects full-year EPS of $17.30 to $17.90. They cite better-than-expected first-half performance and strong momentum, with plans to reinvest in growth initiatives. The company expects continued acceleration in card member spending and benefits from investments in value propositions.