American Express reported second-quarter 2026 net income of $3.11 billion, an 8% increase from $2.89 billion one year earlier. Diluted earnings reached $4.53 per share, up 11% from $4.08 and above the $4.40 analysts had expected.
Revenue net of interest expense climbed 10% to $19.64 billion as cardholder spending, card fees and interest income continued to expand. American Express also lifted its full-year revenue growth forecast to 10%, although it kept its earnings outlook unchanged at $17.30 to $17.90 per share.
That combination tells us almost everything about the company’s strategy. American Express is generating more revenue than previously expected, but management does not intend to let all that additional money flow immediately to the bottom line. It plans to reinvest part of the outperformance in marketing, premium benefits, technology and customer acquisition.
Why American Express earnings per share grew faster than profit.
The headline numbers contain an important distinction. Net income rose 8%, but earnings per share increased 11%.
Part of that difference came from American Express’s shrinking share count. The average number of diluted shares outstanding fell 3% to 679 million from 699 million a year earlier. With fewer shares dividing the company’s profit, each remaining share represented a larger portion of the earnings.
This does not diminish the underlying performance. Pretax income rose 15% to $4.07 billion, indicating meaningful improvement before taxes. However, the effective tax rate increased to 23.6% from 18.7%, partly because the previous year included discrete tax benefits. That higher tax burden limited net-income growth to 8%.
When we separate those moving parts, the quarter becomes clearer. Revenue growth, lower credit provisions and share repurchases strengthened earnings per share, while a higher tax rate and rapidly rising customer-related expenses held back the final profit increase.
Premium card spending remains the American Express advantage.
American Express does not operate like a conventional mass-market credit card issuer. Its business model is built around customers who are willing to pay annual fees in exchange for travel access, rewards, purchase protections, dining privileges and other benefits.
That distinction matters because premium cardholders often use one card for a large share of their spending. American Express earns discount revenue when those customers make purchases, collects annual card fees and can generate interest income when eligible balances are carried.
The company’s second-quarter performance showed that this premium membership model remains powerful. Cardholder spending grew at its fastest foreign-exchange-adjusted rate in three years, while net card fees increased 15% to $2.86 billion. Discount revenue rose 9% to $10.16 billion.
American Express also said its Platinum portfolio had become the fastest-growing product group in its U.S. consumer business. That growth is especially important because premium cards can produce several recurring revenue streams rather than relying solely on interest charges.
The result is a business that benefits when financially secure consumers remain confident enough to travel, eat out and spend on discretionary purchases. American Express earnings therefore offer a useful window into the behavior of higher-income households. However, they should not be treated as a complete measure of the financial health of all consumers.
Younger customers are reshaping the premium card market.
American Express is not relying exclusively on older, established professionals to sustain its premium franchise. Millennials and members of Generation Z have become central to its customer-acquisition strategy.
The company added approximately 3 million proprietary cards during the second quarter. About 75% of global new accounts, excluding corporate accounts, were opened on products carrying annual fees. Millennials and Generation Z represented 65% of new global consumer accounts.
Spending growth among younger U.S. consumer cardholders was particularly striking. Generation Z billed business increased 40% year over year, although the group represented only 7% of total U.S. consumer spending. Millennial spending rose 14% and accounted for 31% of the total. )
By contrast, spending among Generation X customers rose 10%, while spending among baby boomers and older cardholders increased 5%. The figures show why American Express is investing so aggressively in younger consumers: they may currently represent a smaller portion of total spending, but their growth rates and potential lifetime value are substantially higher.
Winning these customers early can create a long relationship. A young professional may begin with an entry-level rewards card, move into Gold or Platinum products, open deposit accounts, use travel services and eventually adopt a business card.
That progression helps explain why American Express is prepared to spend heavily today. The company is not merely purchasing a single credit card account. It is trying to build a decades-long financial and lifestyle relationship.
The American Express Platinum strategy is becoming more expensive.
The greatest tension in the quarter appeared on the expense side.
American Express’s total expenses rose 12% to $14.48 billion, growing faster than its 10% revenue increase. Variable customer engagement expenses jumped 17% to $8.76 billion.
Cardholder rewards costs increased 9% to $5.05 billion. Business-development expenses, including partner payments and client incentives, rose 10% to $1.76 billion. The most dramatic increase came from cardholder services, where expenses surged 50% to $1.95 billion.
American Express attributed the increase largely to heavier use of card benefits and the refreshed U.S. Platinum Card. This is the unavoidable cost of competing in the premium credit card market.
Airport lounge access, hotel status, statement credits, dining benefits, travel protections and exclusive events may attract customers, but they are not free for the issuer. The more cardholders use those benefits, the more expensive the membership model becomes.
American Express must therefore perform a difficult balancing act. It needs benefits that feel valuable enough to justify annual fees. Still, it cannot allow the cost of those benefits to overwhelm the revenue generated by card spending, fees and customer loyalty.
Marketing costs show the fight for affluent customers is intensifying.
Marketing expenses increased 6% to $1.65 billion as American Express spent more on customer acquisition and other growth initiatives. Operating expenses also rose 6% to $4.08 billion.
The growth in marketing reflects a fiercely competitive market. Premium customers can choose among numerous cards offering transferable points, airport lounges, travel credits, hotel benefits and large introductory bonuses.
That makes retention just as important as acquisition. A generous sign-up offer may convince a customer to open a card, but the issuer must continue demonstrating value when the annual fee comes due.
American Express appears willing to accept higher short-term costs to strengthen that relationship. Management raised its revenue forecast without raising its profit guidance because it intends to direct part of the additional revenue toward long-term growth initiatives.
The unchanged earnings outlook initially disappointed some investors, even though the company beat second-quarter profit expectations. The market’s concern was straightforward: stronger revenue does not automatically translate into faster profit growth when the company is deliberately increasing investment.
Credit performance provided an important profit cushion.
American Express also benefited from stronger credit trends.
Its provision for credit losses fell to $1.08 billion from $1.41 billion a year earlier. The proportion of consumer and small-business card balances at least 30 days past due improved to 1.2% from 1.3%, while the net write-off rate remained at 2%.
However, the lower provision requires careful interpretation. It did not mean that actual write-offs fell sharply.
American Express recorded approximately $1.28 billion in write-offs during the quarter, compared with about $1.18 billion a year earlier. The major accounting difference was that the company released $191 million from its credit reserves, while it added $222 million to reserves in the comparable period.
A reserve release occurs when a lender determines that it no longer needs as much money set aside for expected future losses. That change reduces the provision for credit losses and increases current-period earnings.
The improvement therefore reflects both solid customer payment behavior and a more favorable assessment of future losses. It should not be described simply as a large decline in borrowers failing to repay their balances.
American Express’s premium customer mix continues to support relatively stable credit performance. Yet management still identified unemployment, economic growth, geopolitical uncertainty, tariffs and changing consumer confidence as factors that could affect future spending and repayment trends.
Higher card fees are becoming a major growth engine
One of the most important developments in the American Express business is the growing contribution from annual card fees.
Net card-fee revenue increased 15% during the second quarter, outpacing the company’s overall revenue growth. The fact that three-quarters of new accounts were opened on fee-paying products suggests this momentum could continue.
Fee revenue gives American Express a recurring source of income that is not directly dependent on customers carrying debt. It also makes customer retention more valuable because each renewed card can generate another year of predictable revenue.
The challenge is that higher fees require stronger benefits. Customers will examine whether statement credits, lounge access, hotel privileges, rewards and travel protections actually outweigh the annual cost.
This creates a self-reinforcing cycle. American Express adds benefits to support higher fees and attract customers. Those benefits increase expenses. The company then needs greater spending, stronger retention and more partner-funded offers to maintain attractive returns.
The second-quarter results suggest the cycle is currently working. Premium account growth remained strong, spending accelerated and card-fee revenue expanded. Nevertheless, the 50% jump in cardholder-services costs shows how quickly the economics can become more demanding.
