American Express Company (NYSE: AXP) experienced a pullback in share price following the release of its fourth-quarter 2025 financial results, which presented mixed signals about its operational performance. While the payments giant demonstrated solid revenue growth and record-high Card Member spending, escalating expenses and credit losses tempered investor enthusiasm.
For the quarter, American Express posted revenue, net of interest expense, of $18.98 billion, reflecting a 10% increase compared to the same period in the prior year. This figure modestly surpassed the analyst consensus estimate of $18.92 billion, driven primarily by greater Card Member spending, an uptick in net interest income linked to growing revolving loan balances, and robust growth in card-related fees.
The adjusted earnings per share (EPS) reported stood at $3.53, marginally below the consensus estimate of $3.54. This slight shortfall was primarily attributable to a 10% escalation in total expenses, with significant contributions from marketing initiatives tied to the "Platinum refresh" campaign and heightened customer engagement fees linked to increased card usage.
Segment-Level Performance
Analysis of key business divisions reveals that Card Member spending, also referred to as Billed Business, increased 9% year-over-year to reach approximately $445.1 billion. The U.S. Consumer Services segment witnessed an 11% revenue growth, achieving $9.16 billion in the quarter. Commercial Services revenue expanded by 6.7% to $4.4 billion, while International Card Services realized a substantial 16.9% revenue increase, totaling $3.5 billion. Additionally, Global Merchant and Network Services experienced a 7.7% rise in revenue to $2.04 billion. Significantly, net card fees surged 17% year-over-year, reaching $2.63 billion.
Expense Growth and Credit Loss Trends
Despite encouraging top-line growth, the firm’s annual expenses climbed by 10% to $14.48 billion. This increase was chiefly driven by higher variable costs associated with encouraging enhanced customer engagement amid growing Card Member activity and the relaunch of the U.S. Platinum Card. Such initiatives represent strategic investments aimed at bolstering the brand and maintaining competitive positioning.
Provisions for credit losses also rose to $1.4 billion from $1.3 billion in the corresponding quarter of the previous year. The increase reflects higher net write-offs, partially offset by a reduction in the net reserve build compared to the year before. Notably, the fourth-quarter net write-off rate edged up to 2.1%, a modest rise from 1.9% in the prior year’s same period.
Shareholder Returns and Dividend Policy
In a move to reward shareholders, American Express announced it will increase its quarterly dividend per share by 16%, raising it from $0.82 to $0.95. This new rate will be effective starting with the first-quarter 2026 dividend payment, underscoring the company’s confidence in its cash flow generation capabilities despite pressures on profitability.
Insights on Consumer Behavior and Strategic Initiatives
Chairman and CEO Stephen Squeri highlighted an 8% increase in Card Member spending adjusted for foreign-exchange impacts during the fourth quarter. He emphasized the company’s continued strategic investments directed at strengthening its Membership Model and accelerating growth. These include the successful update of the U.S. Platinum Card as well as technology enhancements such as the deployment of new mobile app features and artificial intelligence capabilities powered by generative AI.
The firm also noted a notable shift in spending patterns, with declarations from CFO Christophe Le Caillec that for the first time, Gen Z and Millennial cohorts in the U.S. consumer segment have surpassed Gen X in total spending. This demographic trend reflects broader shifts in consumer dynamics, with younger generations increasingly gravitating toward premium financial products like the Platinum card to access lifestyle and travel benefits.
Amid a macro environment characterized by elevated borrowing costs, affluent card members have in particular maintained or grown expenditures on discretionary categories such as dining, luxury goods, and international travel.
Regulatory Concerns on Credit Card Rate Caps
Management addressed the potential implications of a proposed one-year cap on credit card interest rates at 10%, which is under consideration by the Trump administration. CFO Le Caillec expressed the company’s reservations about the effectiveness of such a cap in promoting affordability, highlighting American Express’s disciplined approach to managing its premium Membership Model as a core strength.
Looking Ahead: Fiscal Year 2026 Guidance
For the full year 2026, American Express projects revenues in the range of $78.73 billion to $79.45 billion, reflecting an anticipated growth rate between 9% and 10% year-over-year. This forecast is slightly above analyst expectations, which stand at $78.62 billion. Earnings per share guidance ranges from $17.30 to $17.90, closely aligned with the consensus EPS estimate of $17.41.
Despite positive fundamentals, shares of American Express closed the week down 3.32%, trading at $346.59 as of Friday’s market close. This decline likely reflects investor concerns over rising expenses, increasing credit loss provisions, and potential regulatory headwinds impacting credit card pricing power.
American Express’s fourth-quarter results demonstrate the dual challenges faced by premium financial services firms: sustaining revenue and customer engagement growth, while managing costs and credit risk in an evolving economic landscape.