American Express (AXP) Q4 2025: Premium Card Fee Growth Hits 18% as Product Refresh Drives Engagement
American Express capped 2025 with a decisive shift toward premium card growth, leveraging product refreshes and technology investment to deepen engagement and margin resilience. The company’s disciplined capital allocation and focus on high-value customers reinforced its membership model, while competitive and regulatory headwinds remain top of mind. 2026 guidance signals continued confidence in premium-led expansion and high-teens earnings growth.
Summary
- Premium Shift Accelerates: Strategic focus on platinum and fee-paying cards is reshaping the customer base.
- Technology and Product Investment: Digital and AI initiatives drive engagement and operating leverage.
- Competitive and Regulatory Watch: Management eyes industry consolidation and potential credit cap risks.
Performance Analysis
American Express delivered double-digit revenue and earnings growth for 2025, propelled by an 18% surge in net card fees and robust spend from premium customers. The company’s $72 billion in annual revenue was supported by strong cardholder engagement, especially in retail and luxury segments, and by continued international momentum where FX-adjusted spend rose 12%. Notably, net card fees hit a record $10 billion, a testament to the success of the platinum refresh and the firm’s ability to attract and retain high-value members.
Credit metrics remained best-in-class, with both delinquency and write-off rates below 2019 levels, enabling management to sustain elevated marketing and technology investment without sacrificing profitability. Operating leverage improved as OPEX as a percentage of revenue declined four points since 2022, even as tech spend climbed 11% year-over-year. Meanwhile, the value proposition investments in premium cards led to a temporary uptick in value card expenses (VCE), expected to normalize around 44% of revenue in 2026.
- Premium Card Penetration: Fee-paying cards in the U.S. consumer portfolio rose by eight percentage points year-over-year, driving higher spend and engagement.
- Millennial and Gen Z Growth: These cohorts now represent the largest share of U.S. consumer spending, with average new platinum cardholder age at 33.
- International Outperformance: Broad-based double-digit spend growth across geographies and customer types highlights global brand strength.
Management’s ability to flex marketing between products and geographies is translating into higher ROI, with acquisition incentives at multi-year lows and strong retention even as new annual platinum fees are implemented.
Executive Commentary
"The key to driving our growth has been our investment philosophy. We consistently invest to strengthen our competitive advantages across key areas, including our customer value propositions, marketing, technology, partnerships, and coverage."
Steve Squirey, Chairman and CEO
"Our momentum continued in 2025. We saw healthy spending and loan growth throughout the year and continued demand for our premium products. Net card fee grew at 18% and reached a record of $10 billion for the year."
Christoffel Kayak, Chief Financial Officer
Strategic Positioning
1. Premiumization of the Card Portfolio
American Express is doubling down on its premium card strategy, shifting marketing and product refresh resources away from lower-cost cashback offerings and toward platinum and gold products. This approach is not only increasing card fee revenue but also deepening customer engagement and spend, as evidenced by the surge in luxury and restaurant transactions. The company’s focus on attracting younger, affluent customers—average new platinum cardholder age is 33—creates a long runway for future relationship and revenue growth.
2. Technology and Digital Engagement as Growth Levers
Technology investment is central to Amex’s operating model, with $5 billion annually allocated to both infrastructure and customer-facing development. The rollout of a third-generation data and analytics platform, built on public cloud, is already reducing key process times by 90%, enabling greater personalization and AI-driven engagement. Enhanced app experiences, such as the new platinum onboarding and travel app, are driving measurable increases in digital engagement and operating efficiency, with service center call volume per account down 25% over three years.
3. Disciplined Capital Allocation and Shareholder Returns
Capital return remains a core pillar, with $7.6 billion returned in 2025 through dividends and buybacks and a planned 16% dividend increase in 2026. The company’s payout ratio target of 20% to 25% is supported by robust ROE and a share count reduction of 7% since 2022. Management’s willingness to flex between reinvestment and direct returns is underpinned by a rigorous focus on long-term value creation and sustainable earnings growth.
4. Commercial and SME Segment Dynamics
The commercial segment remains a competitive battleground, especially in middle market where spend has softened. Amex’s acquisition of Center, an expense management software provider, is aimed at enhancing its small and mid-sized business (SMB) offering to counter new entrants and bank-fintech combinations. While small business remains strong, management acknowledges industry-wide middle market softness and commits to further product innovation and integration in 2026.
5. Regulatory and Competitive Landscape
Management is closely monitoring the proposed 10% credit card cap, viewing it as a potential headwind for the entire industry, though Amex’s premium focus offers some insulation. The competitive environment remains intense, with rivals emulating Amex’s playbook and industry consolidation (e.g., Capital One’s acquisition of Brex) raising the stakes in both consumer and commercial verticals.
Key Considerations
This quarter’s results underscore a multi-year transformation toward premiumization, digital engagement, and operating leverage. The company’s ability to dynamically reallocate investment and innovate in product and technology is central to its strategy.
Key Considerations:
- Marketing Efficiency Gains: Acquisition incentives for premium cards are at multi-year lows, reflecting improved targeting and digital onboarding.
- Card Fee Growth Trajectory: Card fee growth is expected to accelerate through 2026 as more platinum renewals occur at higher price points.
- Balance Sheet Strength: High-yield savings balances rose 8%, with significant cross-sell opportunity as less than 10% of U.S. cardholders hold these accounts.
- Expense Management Software Integration: The Center acquisition will be critical to defending and expanding Amex’s commercial customer base as fintech competition intensifies.
- AI and Data Platform Rollout: Full migration to the new data analytics platform by 2027 is expected to unlock further personalization, fraud prevention, and marketing ROI.
Risks
Potential regulatory actions, such as a credit card rate cap, pose a material risk to industry economics, though Amex’s premium focus offers partial protection. Competitive intensity, especially in commercial and travel rewards, could pressure margins or force higher investment. Macroeconomic shocks or a downturn in premium consumer spending would test the resilience of Amex’s strategy. Management’s guidance assumes a stable spend environment and continued credit outperformance, both of which could be challenged by external shocks.
Forward Outlook
For Q1 2026, American Express guided to:
- Continued strong spend and engagement trends across premium and international segments
- Stable credit metrics, with seasonal variation in provision
For full-year 2026, management raised guidance:
- Revenue growth of 9% to 10%
- EPS of $17.30 to $17.90
- Dividend increase of 16% to $0.95 per share
Management emphasized ongoing investment in product, technology, and marketing, with a focus on sustaining margin expansion and operating leverage.
- Premiumization and product refreshes to drive card fee acceleration
- Digital and AI initiatives to further reduce cost-to-serve and enhance engagement
Takeaways
American Express’s strategic focus on premium customers, disciplined investment, and technology modernization is delivering sustainable growth and margin resilience.
- Premium Card Momentum: The pivot to platinum and gold products is deepening engagement, driving record card fee revenue, and positioning Amex for long-term share gains.
- Technology as a Differentiator: Cloud-based analytics and digital experiences are reducing costs and enabling personalized engagement at scale.
- Competitive and Regulatory Vigilance: Investors should monitor industry consolidation and regulatory developments, as well as the cadence of commercial product rollouts and AI platform benefits.
Conclusion
American Express is executing a clear strategy to win in the premium segment, leveraging product innovation and digital transformation to drive durable growth. While industry risks persist, the company’s investment discipline and capital return capacity support a compelling long-term outlook for shareholders.
Industry Read-Through
The acceleration in premium card engagement and fee revenue at Amex signals a broader shift in the payments industry toward high-value customer monetization and digital-first experiences. Competitors will likely intensify their focus on affluent segments and technology-driven engagement, raising the bar for product innovation and operating efficiency. Regulatory threats, such as rate caps, could reshape credit economics across issuers, favoring those with diversified fee income and robust customer loyalty platforms. The SMB and commercial card space is set for heightened competition as banks and fintechs race to integrate expense management and software-driven value propositions.