American Express (AXP.US) released its third-quarter 2026 financial results before the market opened on October 23 and raised its full-year profit guidance.
The results showed that the company's third-quarter revenue, net of interest expense, reached a record $20.1 billion, up 9% year over year, in line with market expectations. Adjusted earnings per share came in at $4.68, up 13% year over year, above the roughly $4.49 expected by the market. On a GAAP basis, diluted EPS was $5.42, up 31% year over year, including a $982 million pre-tax gain, or $751 million after tax, from the sale of its stake in Global Business Travel Group, Inc. (GBTG), partly offset by $336 million in pre-tax restructuring charges.
As a direct read on the willingness of affluent customers to spend in a "K-shaped" consumer environment, card member spending rose 8% this quarter to $454 billion. That growth rate sat at the lower end of the market consensus range of 8% to 9%, but it matched management's earlier guidance of about 8% quarter to date and did not amount to a negative surprise. With the stock down more than 10% this year, the most feared signal of a consumer slowdown did not materialize.
Changes on the expense side were equally important. Last quarter, total expenses grew 12.2%, outpacing revenue growth and fueling market worries that the refreshed Platinum Card and customer benefit costs were eroding profit. This quarter, total expenses were $14.5 billion, up 9% year over year, matching the pace of revenue growth, easing pressure on the expense side. American Express has been upgrading some of its credit cards, adding a series of benefits to its Platinum Card last year. Earlier this month, the company said it would partner with Airbnb to let cardholders book selected luxury properties on its travel website and count them toward their annual lodging credit. Chief Financial Officer Christophe Le Caillec previously said marketing spending in the second half of 2026 is expected to rise about 10% from a year earlier.
Credit quality also delivered a better-than-expected result. This quarter's provision for credit losses was $1 billion, down from $1.3 billion a year earlier, as reserves shifted from builds to releases. The net write-off rate was 1.8%, down from 1.9% a year earlier. Under a valuation framework in which the premium-customer thesis depends heavily on credit performance, the improvement in these two metrics directly supported management's confident tone.
Chief Executive Officer Steve Squeri said in a statement: "Our business momentum continued to be strong, with standout performance in billings, new acquisitions and card member retention, and credit quality was also excellent."
Guidance raised
On guidance, the company raised its full-year 2026 EPS forecast to $18.30 to $18.60. On an adjusted basis, excluding the GBTG gain and restructuring charges, the range was lifted to $17.60 to $17.90 from $17.30 to $17.90, meaning the lower end moved up by $0.30 while the upper end was unchanged. CEO Stephen Squeri said billings growth, customer acquisition and card member retention were all strong and credit quality was excellent, and that the company is "on track to deliver 10% revenue growth for a second consecutive year," keeping its full-year revenue growth guidance of 10% unchanged.
The quarter's effective tax rate of 18.1% was notably below the 24.1% of a year earlier, reflecting a one-time benefit from the resolution of certain prior tax matters, which boosted EPS. The company also faces a $350 million fine for violating anti-money-laundering rules. Earlier this month, the Office of the Comptroller of the Currency and the Federal Reserve filed enforcement actions against American Express, alleging deficiencies in its anti-money-laundering systems. American Express said at the time that the penalty would not affect its previously issued full-year 2026 guidance or any 2027 outlook, and that the order would not impose an asset cap on the company.
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