10-Q: American Express Q2 2026 Earnings: Strong Revenue Growth

American Express reported robust Q2 2026 results, with total revenues net of interest expense up 10% year-over-year, driven by strong Card Member spend and improved credit performance.

Summary

• American Express reported a 10% increase in total revenues net of interest expense for the second quarter of 2026, reaching $19.6 billion, compared to $17.9 billion in the prior year.
• Net income for the quarter was $3.1 billion, or $4.53 per diluted share, an increase from $2.9 billion, or $4.08 per diluted share, in the second quarter of 2025.
• Billed business grew by 9% year-over-year, with Goods & Services spend up 9% and Travel & Entertainment spend up 10%.
• Provisions for credit losses decreased by 23% to $1.1 billion, primarily due to reserve releases compared to reserve builds in the prior period.
• The company returned $2.9 billion to shareholders through share repurchases and dividends.
• Common Equity Tier 1 (CET1) capital ratio was maintained at 10.4%, within the target range of 10-11%.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this filing positively due to strong revenue growth, improved profitability, and effective credit management, indicating a healthy business performance.

Positives

• Total revenues net of interest expense increased by 10% to $19.6 billion for Q2 2026.
• Net income rose by 8% to $3.1 billion, with diluted EPS up 11% to $4.53.
• Billed business saw a 9% increase, indicating strong customer spending across categories.
• Net card fees grew by 15%, reflecting successful new card acquisitions and retention.
• Net interest income increased by 11%, driven by balance growth and yield expansion.
• Provisions for credit losses decreased by 23%, signaling improved portfolio credit performance.
• The company maintained a strong CET1 capital ratio of 10.4%.
• Significant capital was returned to shareholders ($2.9 billion in Q2 2026).

Negatives

• Cash and cash equivalents decreased by 22% to $45.2 billion.
• Salaries and employee benefits expense increased by 9% for the quarter.
• Card Member services expense increased by 50% due to higher benefit usage.
• The company is facing ongoing regulatory scrutiny, particularly regarding anti-money laundering (AML) programs, with potential for civil money penalties.
• The proposed acquisition of TheFork is subject to labor consultation and regulatory approvals.

Risks

• Macroeconomic and geopolitical conditions, including economic slowdowns, inflation, and international hostilities, could impact revenue growth and credit performance.
• Increased competition in the payments industry, including from fintech companies and evolving technologies like AI, poses a risk to market share and pricing.
• Regulatory and litigation risks, including potential fines, penalties, and changes in business practices, could adversely affect profitability.
• Cybersecurity threats and data protection remain a significant concern, with potential for disruptions and reputational damage.
• Changes in interest rates could impact net interest income, with higher rates potentially having a detrimental effect.
• The company faces challenges in expanding merchant coverage globally and managing merchant acceptance practices.
• Potential impacts from the proposed acquisition of TheFork, including integration challenges and regulatory hurdles.
• The company is subject to ongoing regulatory reviews, including those related to AML programs, which could result in enforcement actions.

Future Outlook

The company is focused on driving sustainable growth by backing customers and colleagues, strengthening risk management, and strategically investing in its business. While acknowledging geopolitical and regulatory uncertainties, management expressed confidence in the business model's ability to drive long-term growth.

Management Comments

• Delivered strong results for the second quarter of 2026, reflecting the strength of our premium customer base, success of our product refresh strategy and power of our differentiated Membership Model.
• The combination of Card Member spend and revenue momentum, excellent credit performance and disciplined expense management together drove net income for the second quarter.
• We continue to invest in and enhance our Membership Model of premium payment products, differentiated membership services and partnerships.
• We remain focused on driving marketing and operating expense efficiencies over time.
• Our results for the quarter demonstrate the strength of our differentiated business model and give us confidence in our ability to drive sustainable growth.

Industry Context

StockSavvy.ai notes that American Express's performance aligns with broader trends in the payments industry, showing resilience and growth despite evolving technological landscapes and competitive pressures. The company's focus on premium customers and value propositions appears to be a successful strategy in the current market.

Comparison to Industry Standards

• American Express's net write-off rate of 2.2% for principal, interest, and fees is comparable to industry averages for major credit card issuers, demonstrating effective credit risk management.
• The company's return on average equity of 36.4% for Q2 2026 significantly outperforms many competitors, highlighting strong profitability and efficient capital deployment.
• The 10.4% Common Equity Tier 1 ratio is in line with regulatory requirements and industry best practices for large financial institutions, ensuring a strong capital base.

Legal Proceedings

• Ongoing defense against antitrust claims related to anti-steering and non-discrimination provisions in merchant agreements.
• Class action lawsuit alleging violations of federal antitrust law related to anti-steering provisions.
• Lawsuit filed by KServicing Wind Down Corp. seeking recovery of approximately $746 million related to the acquisition of Kabbage's lending platform.
• ERISA lawsuit alleging violations of fiduciary obligations related to the American Express Retirement Savings Plan.
• Engagement with regulators regarding anti-money laundering (AML) programs, with expected enforcement action and potential civil money penalties.

Stakeholder Impact

• Shareholders are likely to benefit from continued capital returns through dividends and share repurchases, alongside the company's growth trajectory.
• Customers benefit from enhanced value propositions and rewards programs, though increased Card Member services expenses may reflect higher benefit usage.
• Merchants may experience continued pressure on discount rates due to competitive dynamics and regulatory influences.
• Employees may see continued investment in compensation and benefits, as indicated by the increase in salaries and employee benefits expense.

Next Steps

• Continue to invest in and enhance the Membership Model.
• Focus on driving marketing and operating expense efficiencies.
• Manage the Common Equity Tier 1 capital ratio within the target range of 10-11%.
• Continue to return excess capital to shareholders through dividends and share repurchases.
• Complete the proposed acquisition of TheFork, subject to regulatory approvals and labor consultations.

Key Dates

Recommendation

While the results are strong and in line with expectations, the increasing regulatory scrutiny, ongoing litigation, and potential impacts of macroeconomic uncertainty suggest a cautious approach. The company's ability to navigate these challenges will be key to future performance.

Keywords

American Express, Quarterly Report, Financial Results, Card Balances, Billed Business, Credit Losses, Net Income, Revenue