10-Q: Amex Q3 2025: Strong Growth, Platinum Card Demand Fuels Results

American Express reports robust third-quarter 2025 results with increased net income, strong billed business growth, and excellent credit performance, driven by premium product demand.

Summary

• Net income for the third quarter of 2025 was $2.9 billion, a 16% increase from $2.5 billion in the prior year.
• Diluted earnings per common share for the third quarter of 2025 reached $4.14, up 19% from $3.49 a year ago.
• Total revenues net of interest expense increased 11% year-over-year to $18.4 billion in Q3 2025.
• Billed business growth accelerated to 9% year-over-year (8% on an FX-adjusted basis), with network volumes reaching $479.2 billion.
• Provisions for credit losses decreased by 5% to $1.287 billion in Q3 2025, primarily due to a lower reserve build, partially offset by higher net write-offs.
• Total expenses increased 10% year-over-year to $13.314 billion in Q3 2025, reflecting investments in value propositions, marketing, and enterprise risk management.
• Acquired 3.2 million proprietary new cards during the third quarter of 2025.
• Returned $2.9 billion of capital to shareholders in Q3 2025 through $2.338 billion in share repurchases and $567 million in common stock dividends.
• The Common Equity Tier 1 (CET1) capital ratio was maintained at 10.5% as of September 30, 2025, within the target range of 10% to 11%.
• Net interest yield on average Total loans and Card Member receivables was 8.2% in Q3 2025, up from 8.0% in Q3 2024.
• Net write-off rate (principal, interest, and fees) for Card Member loans and receivables remained stable at 2.2% in Q3 2025.
• 30+ days past due as a percentage of total for consumer and small business remained stable at 1.3% in Q3 2025.
• Completed the acquisition of Center ID Corp. on April 16, 2025, recognizing $590 million of Goodwill in the Commercial Services segment.
• Reclassified $1.6 billion of Card Member loans related to the Amazon small business cobrand portfolio to Card Member loans held for sale (HFS) on June 1, 2025.
• A jury awarded $12.5 million in damages for an Illinois consumer law claim in the David Moskowitz, et al. antitrust case after a trial in August 2025.
• Reached an agreement in principle to settle the B&R Supermarket, Inc. et al. v. Visa Inc., et al. antitrust action on March 31, 2025.

Sentiment

Score: 8

Explanation: The filing demonstrates robust financial health and strategic execution. Strong growth in net income, EPS, and billed business, coupled with stable credit quality and significant capital returns to shareholders, indicates a well-managed company with a resilient business model. The successful refresh of premium card products and continued customer acquisition efforts highlight effective growth strategies. While legal and regulatory challenges exist, the company is actively addressing them, including reaching an agreement in principle for a major antitrust case. The overall performance and positive outlook suggest continued value creation for investors.

Positives

• Net income increased 16% to $2.9 billion and diluted EPS grew 19% to $4.14 for Q3 2025, demonstrating strong profitability.
• Total revenues net of interest expense rose 11% year-over-year, indicating robust top-line growth.
• Billed business growth accelerated to 9% year-over-year, driven by strong retail and rebounding travel and entertainment (T&E) spend.
• U.S. Consumer Services billed business grew 9%, with continued strength from Millennial and Gen-Z Card Members.
• International Card Services billed business grew 14% (13% FX-adjusted), reflecting strong global spend growth.
• Net interest income increased 12%, primarily due to growth in revolving loan balances and net yield expansion.
• Credit performance remained excellent with stable and 'best-in-class' net write-off and delinquency rates.
• Acquired 3.2 million proprietary new cards in Q3 2025, indicating successful customer acquisition strategies.
• Returned $2.9 billion of capital to shareholders in Q3 2025 through share repurchases and common stock dividends, reflecting a strong capital position.
• Maintained the CET1 capital ratio at 10.5%, within the target range of 10% to 11%, providing financial flexibility.
• The acquisition of Center ID Corp. enhances expense management software capabilities, supporting business growth.
• An agreement in principle to settle the B&R Supermarket, Inc. et al. antitrust action reduces a significant legal overhang.

Negatives

• Provisions for credit losses decreased primarily due to lower reserve builds, but this was partially offset by higher net write-offs, indicating an underlying increase in actual credit losses.
• Net card fee revenue growth moderated from the prior quarter, despite increased annual card fees for refreshed Platinum products.
• Card Member rewards, Card Member services, and Business development expenses collectively grew faster than revenues, impacting operating leverage.
• Marketing expense increased 9% year-over-year, reflecting continued high investment in customer acquisition and brand advertising.
• Salaries and employee benefits expense increased 9% year-over-year, contributing to overall expense growth.
• A jury awarded $12.5 million in damages against the company for an Illinois consumer law claim in the David Moskowitz, et al. antitrust case.
• The effective tax rate increased to 24.1% for Q3 2025, primarily due to the global minimum tax and a California tax law change.
• An IRS Notice of Proposed Adjustment for 2017 and 2018 tax years proposes an additional $185 million in U.S. federal income tax and $50 million in penalties, which the company plans to contest vigorously.

Risks

• Macroeconomic and geopolitical conditions, including slowdowns in economic growth, changes in consumer/business confidence, higher unemployment, global trade relations, international tensions, interest rates, inflation, and market volatility, could impact financial performance.
• The actual amount spent on Card Member rewards and services and business development could be higher than expected, or grow faster than revenues, due to changes in Card Member behavior or value proposition enhancements.
• Changes in the competitive environment, including pricing pressures, merchant acceptance, and the emergence of new payment technologies and competitors, could adversely affect business.
• Regulatory initiatives, including pricing and network regulation, could negatively impact discount revenue, network business, and the ability to maintain cobrand relationships (e.g., EU interchange fee caps).
• Increased surcharging, steering, suppression, or other differential acceptance practices by merchants could have a material adverse effect on the company and Card Member experience.
• Future credit performance, including delinquency, reserve, and write-off rates, is dependent on macroeconomic factors, Card Member behavior, and the effectiveness of risk management strategies.
• Inability to control operating expenses, including salary and benefit expenses, technology costs, fraud costs, and legal/compliance fees, could impact profitability.
• A failure in or breach of operational or security systems, including cyberattacks, could compromise data, disrupt operations, and lead to regulatory scrutiny, litigation, and reputational harm.
• Non-compliance with anti-money laundering (AML), countering the financing of terrorism (CFT) laws, and economic sanctions could result in significant supervisory, criminal, and civil proceedings, penalties, and loss of licenses.
• The ultimate outcome of ongoing legal proceedings, including antitrust litigation and VAT challenges, is uncertain and could have a material adverse effect on results of operations or business practices.
• Changes in capital and credit market conditions, including volatility, could affect liquidity, funding costs, asset valuation, and credit ratings.
• A hypothetical 10% strengthening of the U.S. dollar could result in an adverse impact of approximately $207 million on pretax income, net of hedges.

Future Outlook

The company expresses confidence in its Membership-focused business model and proven product refresh strategy, believing its differentiated model (global premium customer base, spendand fee-centric revenue mix, operating expense leverage) is resilient to geopolitical and macroeconomic uncertainty. Plans include continuing to return excess capital to shareholders while managing the CET1 capital ratio within the target range and supporting balance sheet growth. The company expects to continue high levels of investment in its brand, value propositions, coverage, marketing, technology, and talent, while focusing on controlling operating expenses and effectively managing risk. The financial services industry is anticipated to face ongoing rigorous scrutiny and high regulatory expectations, particularly concerning AML/CFT compliance and economic sanctions.

Management Comments

• "We delivered strong results for the third quarter of 2025, with record levels of Card Member spending and excellent credit performance."
• "During the quarter, we launched our refreshed U.S. Consumer and Business Platinum Cards with expanded lifestyle and business benefits and have seen strong early demand and engagement."
• "Total spend continues to be driven by transaction growth, up 10 percent in the quarter, a good indicator of engagement from our customer base."
• "Net write-off and delinquency rates remained stable and best-in-class, supported by our premium global customer base, our strong focus on risk management and disciplined growth strategy."
• "Operating expense growth continues to reflect our investments in enterprise risk management capabilities and technology to support business growth. We remain focused on driving marketing and operating expense efficiencies over time."
• "Our robust capital, funding and liquidity positions provide us with significant flexibility to maintain a strong balance sheet."
• "Our strong third quarter performance continues to give us confidence in our Membership-focused business model and proven product refresh strategy as we navigate the evolving competitive landscape."
• "While we recognize the uncertainty of the geopolitical and macroeconomic environment, we believe our differentiated business model, which includes our global premium customer base, spendand fee-centric revenue mix and operating expense leverage, is resilient and positions us well to navigate a range of economic environments."
• "We continue to manage the company for the long term, focusing on backing our customers and colleagues, exercising disciplined expense management and strategically investing in our business."

Industry Context

The global payments industry continues to evolve rapidly due to new technologies, changing business dynamics, and intense competition for premium customers. American Express competes with traditional networks, issuers, acquirers, and emerging fintech companies offering alternative payment solutions. The industry is also subject to increasing regulatory scrutiny worldwide, particularly concerning card network operations, interchange fees, merchant practices, privacy, data protection, artificial intelligence, and anti-money laundering compliance. These factors create a dynamic and challenging operating environment, requiring continuous innovation and adaptation.

Corporate Governance

Legal Proceedings

• **Pizza Hazel, Inc., et al. v. American Express Co., et al.**: Filed September 30, 2024, alleging anti-steering and non-discrimination provisions in merchant agreements violate federal antitrust law. Plaintiffs seek unspecified damages and an injunction. The company's motion to compel arbitration was rejected, and an appeal is planned.
• **5-Star General Store aka Bento LLC, et al. v. American Express Co., et al.**: Filed March 21, 2024, alleging anti-steering and non-discrimination provisions violate federal antitrust law. Plaintiffs seek an injunction and declaration of antitrust violations. The company's motion to compel arbitration was rejected, and an appeal has been filed to the Court of Appeals for the First Circuit.
• **David Moskowitz, et al. v. American Express Company and American Express Travel Related Services Company Inc.**: A putative class action filed January 29, 2019, alleging non-Amex cardholders paid higher prices due to anti-steering/non-discrimination provisions. After trial in August 2025, a jury found in favor of the company on most claims but awarded $12.5 million in damages for an Illinois consumer law claim. Post-trial motions and appeals are ongoing.
• **B&R Supermarket, Inc. d/b/a Milams Market, et al. v. Visa Inc., et al.**: Filed March 8, 2016, alleging a conspiracy to shift liability for fraudulent transactions after EMV chip implementation. A class was certified, and the company's motion to compel arbitration was granted for certain class members, but claims were not stayed. An appeal for a stay was filed November 15, 2024. An agreement in principle to settle this action was reached March 31, 2025, subject to negotiation and court approval.
• **Mawarid Investments Limited arbitration**: An ongoing arbitration since 2006 concerning the allocation of acquirer discount revenue for airline transactions in the Middle East. Several partial awards have been rendered, with a final award expected in 2025.
• **Value-Added Tax (VAT) challenges**: The company is being challenged in several countries regarding its application of VAT to international transactions. While the company believes it has complied, tax authorities may determine additional VAT is owed. The estimated range of possible loss in excess of accruals for all disclosed legal proceedings is zero to $300 million.

Stakeholder Impact

• **Shareholders**: Positive impact from strong financial performance, increased EPS, and significant capital return through share repurchases and dividends. Potential negative impact from ongoing legal and regulatory risks.
• **Card Members**: Enhanced value propositions and benefits from refreshed Platinum Cards, continued investment in customer acquisition, and stable credit performance. Potential negative impact from increased merchant surcharging or differential acceptance practices.
• **Employees**: Higher compensation and incentive costs, reflecting investments in talent.
• **Merchants**: Potential negative impact from antitrust litigation outcomes, increased surcharging, steering, or differential acceptance practices. The acquisition of Center ID Corp. could offer improved expense management solutions.
• **Regulators**: Continued engagement and compliance efforts due to evolving and extensive government regulation and supervision globally.

Next Steps

• Continue post-trial motions and appeals in the David Moskowitz, et al. antitrust case.
• Pursue appeal to the Court of Appeals for the First Circuit regarding the motion to compel arbitration in the 5-Star General Store aka Bento LLC, et al. case.
• Negotiate a complete stipulation of settlement and seek court approval for the B&R Supermarket, Inc. et al. v. Visa Inc., et al. action.
• Await a final award in 2025 for the Mawarid Investments Limited arbitration.
• Vigorously contest the IRS Notice of Proposed Adjustment for the 2017 and 2018 tax years.
• Assess the impact of updated FASB guidance on Disaggregation of Income Statement Expenses and internal-use software.
• Continue to return excess capital to shareholders through dividends and share repurchases.
• Continue investing in enterprise risk management capabilities and technology to support business growth.
• Focus on driving marketing and operating expense efficiencies over time.
• Manage the CET1 capital ratio within the 10-11% target range.
• Manage the company for the long term, focusing on backing customers and colleagues, exercising disciplined expense management, and strategically investing in the business.

Key Dates

Recommendation

The filing demonstrates robust financial health and strategic execution. Strong growth in net income, EPS, and billed business, coupled with stable credit quality and significant capital returns to shareholders, indicates a well-managed company with a resilient business model. The successful refresh of premium card products and continued customer acquisition efforts highlight effective growth strategies. While legal and regulatory challenges exist, the company is actively addressing them, including reaching an agreement in principle for a major antitrust case. The overall performance and positive outlook suggest continued value creation for investors.

Keywords

American Express, AXP, Quarterly Results, Financial Performance, Credit Cards, Payments Network, Financial Services, Q3 2025, Earnings, Revenue, Profit, Credit Quality, Card Member Spending, Share Repurchase, Dividends, Capital Ratios, Regulatory Compliance, Antitrust Litigation, Cybersecurity, AML, CFT, Platinum Card, Small Business, International Card Services, Commercial Services, US Consumer Services, Expense Management