American Express Q3 2026 Earnings: Fee Growth and Credit Strength Support Higher EPS Outlook

American Express reported record third-quarter revenue of $20.1B, up 9% year over year, while GAAP EPS increased 31% to $5.42. Excluding the net impact of a gain on the Global Business Travel Group investment sale and related restructuring charge, adjusted EPS rose 13% to $4.68.

The quarter extended the company’s pattern of high-single-digit revenue growth, strong premium-card spending and favorable credit performance. The main caveat is that reported earnings benefited from a large investment-sale gain and a lower tax rate, while underlying expenses still reflected increased marketing, legal reserves and continued investment in cardmember benefits.

Earnings Snapshot

The Bigger Story

American Express raised its full-year EPS outlook while maintaining its target for 10% revenue growth, reflecting confidence in spending, card-fee growth and portfolio credit quality. The company’s core strategy remains centered on premium customers who generate spending volume, annual card fees and, in some cases, borrowing revenue.

The most consequential operating trend was accelerating card-fee revenue. Net card fees grew 17% on an FX-adjusted basis, compared with 15% in the prior quarter, supported by the U.S. Platinum Card refresh and a greater mix of fee-paying accounts. That revenue stream is strategically important because it is less directly dependent on lending balances and credit losses than net interest income.

Management also emphasized that variable customer engagement costs should moderate in the fourth quarter as American Express laps the elevated costs tied to the Platinum refresh. Whether that moderation materializes while cardmember engagement remains high will be an important test of the company’s ability to sustain mid-teen EPS growth.

Revenue and Operating Performance

Billed business increased 8% to $454.0B, broadly consistent with the pace of the previous four quarters. Revenue increased 9% to $20.1B, driven by higher cardmember spending, net interest income growth and card fees. Management said revenue growth would have been roughly one percentage point higher without small-business co-brand portfolio exits.

Travel and entertainment spending remained a key contributor. T&E spending increased 10%, including 13% growth in airline spending and 9% growth in restaurant spending. Management said spending at Resy-affiliated restaurants increased 18%, while spending through Fine Hotels + Resorts and The Hotel Collection rose 50%, highlighting the company’s effort to use travel, dining and lifestyle benefits to capture a greater share of premium-cardmember spending.

U.S. consumer spending rose 9.4%, which management characterized as its third-highest quarterly growth rate in the past three years. The company also said spending retention in the U.S. Consumer Platinum portfolio remained 99% one year after the card refresh.

Commercial spending increased 3%, though management said growth was 5% excluding co-brand portfolio exits. American Express is attempting to improve its position in the middle-market commercial segment through its Center acquisition, the Nova platform, corporate cash-back products and integrated expense-management tools. That initiative is designed to strengthen its offering against expense-management-focused competitors, but management acknowledged that the middle market has not grown as quickly as desired.

International billed business grew 11%, down from 13% in the prior quarter but still extending a long period of double-digit international growth. Merchant acceptance reached more than 190 million locations globally, up from 160 million a year earlier.

Profitability and Margins

GAAP EPS rose 31% to $5.42, but that result included a $1.11 per-share after-tax gain from the sale of American Express’s equity investment in Global Business Travel Group. The company used part of that gain to fund a $336M pretax restructuring charge, or $0.37 per share after tax.

Excluding both items, adjusted EPS was $4.68, up 13% from $4.14 a year earlier. Adjusted net income increased 11% to $3.2B.

The quarter also included several offsetting items. Management cited a $0.51-per-share increase in legal reserves, including the previously unreserved portion of an OCC civil money penalty and a reserve for an unrelated anticipated settlement. A $0.29-per-share discrete tax benefit and a $0.24-per-share benefit from updated CECL reserve models largely offset those legal costs.

The effective tax rate fell to 18.1% from 24.1%, primarily due to discrete tax benefits related to prior-period tax items. That lower rate helped reported net income growth exceed revenue growth, but it is not necessarily a recurring operating benefit.

Total expenses rose 9% to $14.5B. Higher spending drove variable customer engagement costs, while the Platinum refresh also added to cardmember-service costs. Marketing expense increased 11% as the company stepped up acquisition investment following a strong first half.

The variable customer engagement expense-to-revenue ratio was 44.3%. Management expects dollar growth in those costs to moderate significantly in the fourth quarter as the company laps the Platinum refresh. It also said underlying operating expenses, excluding the GBTG gain, restructuring and legal items, increased 3%.

Demand, Customers and Pricing

American Express acquired 3.1 million new cards during the quarter, with 76% of new accounts on fee-paying products. That mix supports management’s objective of attracting customers who are willing to pay for premium card benefits and tend to have stronger credit profiles.

The lending portfolio also continued to grow without visible deterioration in headline credit metrics. Total balances increased 8%, matching billed-business growth, while net interest income rose 10%. Write-off dollars increased only 3%, according to management, and the net write-off rate improved 10 basis points to 1.8%.

Delinquency remained stable at a low level. Management said the delinquency rate has remained between 1.2% and 1.3% for 15 consecutive quarters, while newer account vintages have generally performed better than prior vintages. The provision for credit losses fell to $985M from $1.3B, reflecting a $211M reserve release tied to CECL model enhancements, partly offset by higher net write-offs.

The company’s premium positioning remains exposed to competitive spending by large card issuers, but management said it has not seen a material change in the competitive environment. American Express’s response remains focused on a combination of rewards, travel and dining access, service, security, partnerships and broader banking relationships rather than competing solely on points or cash-back rates.

What Is American Express’ FY 2026 Guidance?

American Express reaffirmed its expectation for 10% revenue growth in 2026.

The company raised its full-year GAAP diluted EPS guidance to $18.30 to $18.60, from fiscal 2025 GAAP EPS of $15.38. The range implies year-over-year growth of 19% to 21%.

Adjusted diluted EPS guidance was raised to $17.60 to $17.90, implying growth of 14% to 16% from $15.38 in 2025. Adjusted guidance excludes the after-tax GBTG sale gain and restructuring charge.

Management expects variable customer engagement expense growth to moderate substantially in the fourth quarter as it fully laps the U.S. Platinum refresh. It also said the OCC-related remediation costs are included in its ongoing expense run rate and are not expected to affect 2027 guidance.

Strategically, American Express is expanding its business-banking offerings, including a new Business Savings account, while investing in commercial payments tools and expense management. It also announced a partnership with Airbnb that will add more than one million listings to Amex Travel and extend benefits for eligible U.S. cardmembers.

Management views artificial intelligence and agentic commerce as longer-term opportunities to improve product discovery, personalization, service and payment security. The near-term financial contribution is uncertain, however, as management said agentic transaction volumes remain small.

Balance Sheet, Cash Flow and Capital

American Express returned $2.2B of capital to shareholders in the third quarter, including $1.6B of share repurchases and $0.6B of dividends. Average diluted shares outstanding declined 3% year over year to 674 million, contributing to EPS growth.

The company ended the quarter with a CET1 ratio of 10.9%, aided by the GBTG sale gain late in the quarter. Its ability to continue repurchasing shares remains dependent on earnings, capital generation, credit performance and regulatory requirements.

The restructuring program is expected to eliminate approximately 5% of global positions. Management said the program is intended to simplify the organization, reduce layers and create capacity for investment in technology, marketing and other growth priorities. The financial benefit from those actions was not quantified.

What Investors Should Watch

1. Card-Fee Growth After the Platinum Refresh

Net card fees grew 17% on an FX-adjusted basis, making them the company’s fastest-growing revenue line. Investors should watch whether that pace remains strong after the initial effect of the U.S. Platinum refresh becomes more fully embedded in comparisons.

2. Customer Engagement Costs and Operating Leverage

Management expects variable customer engagement cost growth to moderate in the fourth quarter. A slower growth rate in benefits and servicing costs, without weakening spending or retention, would support the case for renewed operating leverage.

3. Credit Performance and Reserve Releases

Credit metrics remain strong, with a 1.8% net write-off rate and stable delinquencies. Still, the provision decline included a $211M reserve release from CECL model changes, so investors should distinguish underlying portfolio performance from reserve-model benefits.

4. Commercial Spending Recovery

Commercial billed business grew only 3%, or 5% excluding co-brand exits, trailing consumer and international growth. The pace of adoption for new expense-management capabilities, corporate cards and business banking products will show whether American Express can gain more traction in the middle market.

5. Competitive Pressure in Premium Cards

American Express continues to face aggressive competition for affluent consumers and small businesses. The relevant question is not simply whether competitors raise rewards or marketing budgets, but whether American Express can preserve retention, spending share, card fees and credit quality while continuing to invest in benefits.

AlgovestIQ Takeaway

American Express delivered another solid quarter, with 9% revenue growth, accelerating card-fee revenue and resilient premium-customer spending. The decision to raise full-year EPS guidance reinforces management’s view that its core revenue and credit trends remain intact.

The headline 31% increase in GAAP EPS overstates the underlying earnings progression because it includes the GBTG investment-sale gain. Adjusted EPS growth of 13% is the more useful measure of the quarter’s operating performance, though even that result included meaningful offsetting legal-reserve, tax and CECL-model items.

The core investment case continues to rest on American Express’s ability to generate durable growth from a premium customer base with high retention, rising fee income and relatively favorable credit behavior. The 17% increase in card fees and 99% Platinum spending retention are evidence that the strategy is working so far.

The unresolved issue is whether the company can maintain that growth while managing increasingly rich cardmember benefits, higher marketing investment and heightened premium-card competition. Management expects engagement-cost growth to moderate in the fourth quarter, making expense discipline a near-term focal point.

Evidence that card-fee growth remains elevated, spending stays near current levels and credit losses remain contained would strengthen the case for sustained mid-teen adjusted EPS growth. Conversely, weaker consumer spending, higher credit losses, an inability to translate commercial investments into volume growth, or persistently high customer engagement costs would challenge that outlook.