American Express indicated that its high-income clientele is increasing expenditures at restaurants and on luxury goods, while continuing to favor its premium credit cards.
"We are encouraged by the continued strength and stability we see across our customer base," stated CEO Stephen Squeri during the company's fourth-quarter earnings call on Friday. "From a consumer standpoint, we feel very good."
The credit card company reported a 9% increase in restaurant spending and a 10% rise in retail spending for the fourth quarter. Expenditure at luxury merchants surged by 15%, which Squeri said reflects the "continued strength of our customer base."
During the call with analysts, Squeri also criticized a proposal from former President Donald Trump to cap credit card interest rates at 10%. He argued that such a move would trigger a "vicious cycle" by reducing the number of credit cards available in the market and shrinking credit lines. "The U.S. economy runs significantly on credit, and I think it would have an impact on small businesses, among others," Squeri stated.
American Express specifically targets wealthier consumers who are willing to pay substantial annual fees for cards offering exclusive perks and benefits.
Last year, the company launched refreshed versions of its personal and business Platinum cards, accompanied by increased annual fees. The company noted that demand and usage for the new cards have exceeded expectations, with customer retention rates remaining unaffected under the new fee structure.
"We are seeing tremendous demand for premium products, particularly the Platinum Card," Squeri said. "Platinum Card acquisitions were very strong during the holiday season."
American Express stated that its premium products are accounting for a growing share of its business and are driving the majority of the growth in its card fee revenue.
Despite this, the company reported a decline in total card counts in the fourth quarter compared to the third quarter, attributing this to a reallocation of marketing spend focused on its premium offerings.
The company's stock price fell 2.8% to close at $348.35. Over the past 12 months, the stock has accumulated a gain of 9.2%.
For the fourth quarter, the company posted net income of $2.46 billion, or $3.53 per share, up from $2.17 billion, or $3.04 per share, in the same period last year. Analysts surveyed by FactSet had anticipated earnings per share of $3.54.
Revenue climbed 10% year-over-year to $18.98 billion, driven by increased cardmember spending, growth in card fee revenue, and higher net interest income from rising revolving loan balances. Wall Street had projected revenue of $18.92 billion.
Cardmember spending increased by 9%, while card fee revenue achieved double-digit growth.
The company's expenses rose 10% year-over-year to $14.5 billion, primarily due to increased customer engagement costs associated with higher spending and expenses related to the launch of the new Platinum cards.
The company forecasts revenue growth of 9% to 10% for 2026, with earnings per share projected to be in the range of $17.30 to $17.90. Analysts had previously expected 2026 earnings per share of $17.43.
American Express also announced a 16% increase in its quarterly dividend to 95 cents per share, effective in the first quarter of next year.
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