American Express (AXP.US) raised its annual profit guidelines, improving the consumption and credit quality of the high-end customer base

The Zhitong Finance App learned that American Express (AXP.US) announced the financial results for the third quarter of 2026 ahead of the market on October 23 and raised its full-year profit guidelines. According to financial reports, the company's third-quarter revenue (after interest expenses) reached a record of US$201 billion, up 9% year on year, in line with market expectations; adjusted earnings per share were 4.68 US dollars, up 13% year over year, higher than market expectations of about 4.49 US dollars.

The GAAP diluted EPS was $5.42, up 31% year over year, including pre-tax proceeds of $982 million ($751 million after tax) from the sale of Global Business Travel Group (GBTG) shares, partially offset by $336 million in pre-tax restructuring charges.

As a direct reading of the willingness of wealthy customers to spend money in a “K-shaped differentiation” consumption environment, card member spending increased 8% to US$454 billion this quarter. This growth rate falls at the lower end of the market consensus range (8% — 9%), but it is consistent with management's previous forecast of “about 8% so far in Q3”, and did not constitute a negative surprise — against the backdrop of stock prices falling by more than 10% during the year, the “deceleration in consumption” signal that the market is most concerned about did not appear.

Changes on the cost side are also critical. The 12.2% growth rate of total expenses in the previous quarter once exceeded the revenue growth rate, causing the market to worry that platinum card renewal and customer equity costs would erode profits; the total expenses for the quarter were US$14.5 billion, an increase of 9% year-on-year, in line with the revenue growth rate, and the pressure on expenses eased marginally.

American Express has been upgrading some of its credit cards, adding a range of benefits to its Platinum Card last year. Earlier this month, the company said it would partner with Airbnb to allow cardholders to reserve some luxury properties on its travel website and count that into their annual stay credit. Chief Financial Officer Christophe Le Kelleck previously stated that marketing spending in the second half of 2026 is expected to increase by about 10% compared to last year.

Credit quality turned in better-than-expected responses. The credit loss provision for the quarter was $1 billion, down from $1.3 billion in the same period last year. The reason behind this was a shift in reserves from accrual to release; the net write-off rate was 1.8%, down from 1.9% in the same period last year. Under a valuation framework where the premium logic of the high-end customer base is highly dependent on credit performance, improvements in these two indicators directly support management's expressions of confidence.

CEO Steve Squirrey said in a statement: “Our business continues to be strong, with outstanding performance in bill amounts, new acquisitions, and cardholder retention rates, and excellent credit quality.”

Upgrading guidelines

In terms of guidance, the company raised its EPS forecast for the full year 2026 to $18.30; the adjusted caliber excluding GBTG earnings and restructuring expenses was raised from $17.30-17.90 to $17.60-17.90, that is, the lower edge moved up by $0.30, and the upper edge remained unchanged.

CEO Stephen Squeri said that with strong billing growth, customer acquisition and card member retention, and excellent credit quality, the company “is expected to achieve 10% revenue growth for the second year in a row”, that is, maintaining the 10% annual revenue growth guideline.

The effective tax rate of 18.1% this quarter was significantly lower than 24.1% in the same period last year. This is a one-time benefit brought about by the resolution of some early tax matters, which contributed to an increase in EPS.

The company also faced a $350 million fine for violating anti-money laundering regulations. Earlier this month, the US Monetary Supervisory Service and the Federal Reserve filed an enforcement lawsuit against American Express, alleging flaws in the company's anti-money laundering system.

American Express said at the time that the penalty would not affect its previously issued 2026 full-year results guidance or any 2027 outlook, and that the order would not impose an asset cap on the company.