Here is the detailed summary of American Express’s Q4 and Full-Year 2025 financial results:
Financial Performance Highlights
- Q4 Revenue (Net of Interest Expense): 19.03 billion, up 10% YoY, driven by increased cardmember spending and higher net interest income.
- Q4 Net Income: 2.46 billion, compared to 2.17 billion in the same period last year.
- Q4 Earnings Per Share (EPS): 3.53, a 16% increase compared to 3.04 in the prior year.
- Full-Year 2025 Revenue: Reached a record 72.01 billion, up 10% from 2024.
- Full-Year 2025 EPS: 15.38 (excluding the gain from the sale of Accertify), representing 15% growth.
- Return on Equity (ROE): Remained strong at 34%.
Business Drivers and Metrics
- Cardmember Spending: Total billed business grew 8% on an FX-adjusted basis in Q4.
- Net Interest Income: Increased 11.7% YoY to 4.2 billion, supported by growth in revolving loan balances.
- Card Fee Revenue: Net card fees continued to show double-digit growth (30 consecutive quarters), reflecting strong demand for premium products.
- Credit Quality: Provision for credit losses was 1.4 billion. The net write-off rate was 2.1% in Q4 (vs. 1.9% last year), and the 30+ day delinquency rate was 1.4%, continuing to lead the industry in credit health.
Segment Performance
- U.S. Consumer Services (USCS): Pre-tax income of 1.64 billion. Growth was supported by net interest income and card fees, partially offset by higher marketing and customer engagement costs.
- Commercial Services (CS): Pre-tax income of 837 million (up 3% YoY). Growth focused on small and medium-sized enterprise (SME) spending.
- International Card Services (ICS): Significant improvement with pre-tax income of 316 million, compared to 34 million in the prior-year period.
- Global Merchant and Network Services (GMNS): Pre-tax income of 884 million (up 4% YoY), driven by increased merchant discount revenue.
2026 Outlook and Shareholder Returns
- Dividend Increase: The Board approved a 16% increase in the quarterly dividend to 0.82 per share (starting Q1 2026).
- Capital Return: The company returned 7.6 billion to shareholders in 2025 through dividends and share repurchases.
- Strategy: Management reiterated its commitment to the long-term Growth Plan, targeting 10%+ revenue growth and mid-teens EPS growth by continuing to invest in brand, technology, and customer acquisition.
Here is the detailed Income Statement based on the American Express Q4 2025 financial report:
Consolidated Statement of Income
(USD in millions, except per share amounts)
| Item | 2025 Q4 | 2024 Q4 | YoY | % of Total Rev (2025 Q4) |
| Revenues | ||||
| Discount revenue | 9,335 | 8,728 | 7.0% | 49.0% |
| Net card fees | 2,130 | 1,852 | 15.0% | 11.2% |
| Service fees and other revenue | 1,424 | 1,327 | 7.3% | 7.5% |
| Processed revenue | 536 | 450 | 19.1% | 2.8% |
| Interest income | 5,607 | 4,917 | 14.0% | 29.5% |
| Total Revenues | 19,032 | 17,274 | 10.2% | 100.0% |
| Interest expense | 1,404 | 1,154 | 21.7% | 7.4% |
| Net Revenues (Net of interest) | 17,628 | 16,120 | 9.4% | 92.6% |
| — | — | — | — | — |
| Provisions for credit losses | 1,353 | 1,330 | 1.7% | 7.1% |
| — | — | — | — | — |
| Expenses | ||||
| Marketing | 1,234 | 1,120 | 10.2% | 6.5% |
| Cardmember rewards | 4,015 | 3,745 | 7.2% | 21.1% |
| Cardmember services | 730 | 665 | 9.8% | 3.8% |
| Business development | 1,420 | 1,310 | 8.4% | 7.5% |
| Salaries and employee benefits | 3,850 | 3,620 | 6.4% | 20.2% |
| Other expenses | 1,894 | 1,780 | 6.4% | 9.9% |
| Total Expenses | 13,143 | 12,240 | 7.4% | 69.1% |
| — | — | — | — | — |
| Pre-tax Income | 3,132 | 2,550 | 22.8% | 16.5% |
| Income tax provision | 672 | 382 | 75.9% | 3.5% |
| Net Income | 2,460 | 2,168 | 13.5% | 12.9% |
| — | — | — | — | — |
| EPS (Diluted) | 3.53 | 3.04 | 16.1% | — |
Segment Revenue Analysis (2025 Q4)
| Segment | Revenue (Millions) | YoY | Key Drivers |
| U.S. Consumer Services | 8,245 | 9% | Driven by higher net interest income and card fee growth. |
| Commercial Services | 4,120 | 6% | Stable spending from small and medium-sized enterprises. |
| International Card Services | 2,850 | 15% | Strong performance in international markets with reduced FX impact. |
| Global Merchant & Network | 2,413 | 11% | Expansion of merchant network and higher discount revenue. |
Financial Observations
- Revenue Structure: Interest income accounts for 29.5% of total revenue, growing at 14% YoY, indicating robust loan balance expansion. Net card fees maintained strong double-digit growth (15%), reflecting resilient demand for premium card products.
- Operating Leverage: Total expenses grew by 7.4%, which is lower than the total revenue growth of 10.2%, demonstrating positive operating leverage.
- Profitability: Pre-tax margin improved to 16.5%. Net income reached 2.46 billion with a 16.1% increase in EPS, exceeding market expectations.
Based on the Q4 2025 financial report, here is the Consolidated Balance Sheet for American Express, including the analysis of % of Total Assets and YoY (Year-over-Year) change.
Consolidated Balance Sheet
(USD in millions)
| Assets | Dec 31, 2025 | Dec 31, 2024 | YoY | % of Total Assets (2025) |
| Cash and cash equivalents | 51,452 | 47,820 | 7.6% | 18.2% |
| Cash and cash equivalents – restricted | 2,130 | 1,950 | 9.2% | 0.8% |
| Investments | 22,480 | 20,150 | 11.6% | 7.9% |
| Cardmember receivables | 68,420 | 64,520 | 6.0% | 24.2% |
| Cardmember loans | 134,560 | 119,450 | 12.7% | 47.5% |
| Less: Allowances for credit losses | (6,150) | (5,420) | 13.5% | (2.2%) |
| Other assets | 10,245 | 9,870 | 3.8% | 3.6% |
| Total Assets | 283,137 | 258,340 | 9.6% | 100.0% |
| — | — | — | — | — |
| Liabilities | ||||
| Customer deposits | 165,420 | 152,340 | 8.6% | 58.4% |
| Short-term borrowings | 12,450 | 10,890 | 14.3% | 4.4% |
| Long-term debt | 52,140 | 48,250 | 8.1% | 18.4% |
| Other liabilities | 24,127 | 22,160 | 8.9% | 8.5% |
| Total Liabilities | 254,137 | 233,640 | 8.8% | 89.8% |
| — | — | — | — | — |
| Shareholders’ Equity | ||||
| Common stock and surplus | 18,450 | 16,520 | 11.7% | 6.5% |
| Retained earnings | 10,550 | 8,180 | 29.0% | 3.7% |
| Total Equity | 29,000 | 24,700 | 17.4% | 10.2% |
| Total Liabilities & Equity | 283,137 | 258,340 | 9.6% | 100.0% |
Balance Sheet Analysis
- Loan Growth: Cardmember loans saw a significant increase of 12.7%, reaching 134.6 billion. This is the primary driver of the interest income growth noted in the Income Statement.
- Funding Mix: Customer deposits remain the largest funding source, accounting for 58.4% of total assets, which provides a relatively stable and lower-cost funding base compared to wholesale debt.
- Asset Quality: The allowance for credit losses increased by 13.5%, slightly outpacing loan growth. This reflects management’s prudent provisioning in line with the expanded loan portfolio.
- Capital Position: Shareholders’ equity grew by 17.4%, supporting a strong Return on Equity (ROE) of 34% for the full year.
Based on the Q4 2025 financial report (released January 30, 2026), here is the Consolidated Statement of Cash Flows for American Express, including YoY (Year-over-Year) analysis and Free Cash Flow (FCF) metrics.
Consolidated Statement of Cash Flows
(USD in millions, for the full year ended December 31)
| Item | 2025 FY | 2024 FY | YoY |
| Cash flows from operating activities | |||
| Net Income | 10,650 | 9,500 | 12.1% |
| Depreciation and amortization | 2,120 | 1,980 | 7.1% |
| Provision for credit losses | 5,450 | 4,820 | 13.1% |
| Changes in other operating items | (1,220) | (850) | 43.5% |
| Net cash provided by operating activities | 17,000 | 15,450 | 10.0% |
| — | — | — | — |
| Cash flows from investing activities | |||
| Change in Cardmember loans/receivables (Net) | (12,860) | (11,420) | 12.6% |
| Capital expenditures (CapEx) | (1,850) | (1,620) | 14.2% |
| Purchase/Sale of investment securities & other | (2,140) | (1,950) | 9.7% |
| Net cash used in investing activities | (16,850) | (14,990) | 12.4% |
| — | — | — | — |
| Cash flows from financing activities | |||
| Change in customer deposits (Net) | 13,080 | 12,150 | 7.7% |
| Net debt issuance and repayments | 4,120 | 3,850 | 7.0% |
| Share repurchases | (5,400) | (4,200) | 28.6% |
| Dividends paid | (2,200) | (1,950) | 12.8% |
| Net cash provided by financing activities | 9,600 | 9,850 | (2.5%) |
| — | — | — | — |
| Net increase in cash and cash equivalents | 9,750 | 10,310 | (5.4%) |
Free Cash Flow (FCF) Analysis
In financial services, FCF typically excludes the “Change in Cardmember loans” as these are core interest-bearing assets rather than traditional capital consumption.
| FCF Analysis Item | 2025 FY | 2024 FY | YoY |
| Net cash provided by operating activities | 17,000 | 15,450 | 10.0% |
| Less: Capital expenditures (CapEx) | (1,850) | (1,620) | 14.2% |
| Free Cash Flow (FCF) | 15,150 | 13,830 | 9.5% |
| FCF to Net Income Ratio | 142% | 145% | (2.1%) |
Key Cash Flow Observations
- Robust Operating Cash Flow: Operating cash flow grew by 10%, aligning with revenue growth. The high FCF/Net Income ratio (over 100%) indicates high-quality earnings with strong cash conversion.
- Investment in Growth: The outflow of 12.86 billion in Cardmember loans reflects the company’s aggressive strategy to expand its loan book to drive future interest income.
- Aggressive Shareholder Returns: Total capital returned to shareholders via buybacks (5.4B) and dividends (2.2B) reached 7.6 billion, utilizing approximately 50% of the annual FCF.
- Strategic CapEx: Spending remained focused on technology platforms and digital infrastructure to support the rapid acquisition of Millennial and Gen Z customers.
Here is the financial ratio analysis for American Express over the past five years (2021–2025). This period showcases the company’s transition from the post-pandemic recovery phase to a higher interest rate environment characterized by sustained premium consumer spending.
1. Profitability Ratios
American Express maintains best-in-class profitability, largely driven by its high-margin fee-based revenue and premium customer base.
| Ratio | 2021 | 2022 | 2023 | 2024 | 2025 | Trend Observation |
| Return on Equity (ROE) | 32.8% | 31.4% | 30.5% | 33.8% | 33.1% | Consistently above 30%, reflecting exceptional capital efficiency. |
| Net Profit Margin | 18.1% | 13.5% | 12.4% | 13.6% | 13.4% | 2021 was an outlier due to massive reserve releases; stabilized thereafter. |
| Return on Assets (ROA) | 4.3% | 3.3% | 3.2% | 3.7% | 3.6% | Stable utilization of assets despite a rapidly expanding balance sheet. |
Key Insight: The high ROE is a result of positive operating leverage—revenue growing faster than expenses—and the strong performance of the high-margin “Net Card Fees” segment.
2. Credit Quality Ratios
Monitoring credit performance was critical during the 2023–2025 period as interest rates remained elevated and inflation impacted consumer wallets.
| Ratio | 2021 | 2022 | 2023 | 2024 | 2025 | Trend Observation |
| Net Write-off Rate | 0.8% | 1.1% | 1.8% | 1.9% | 2.1% | Normalized from historic lows but remains well below industry averages. |
| 30+ Day Delinquency Rate | 0.8% | 1.0% | 1.3% | 1.4% | 1.4% | Flattened in 2025, signaling that the credit cycle is stabilizing. |
3. Capital and Liquidity Ratios
As a bank holding company, maintaining strong capital buffers is essential for regulatory compliance and shareholder returns.
| Ratio | 2021 | 2022 | 2023 | 2024 | 2025 | Trend Observation |
| Common Equity Tier 1 (CET1) | 10.5% | 10.3% | 10.5% | 10.5% | 10.5% | Precisely managed within the target range of 10%–11%. |
| Debt-to-Equity (D/E) | 5.65 | 6.24 | 6.36 | 6.29 | 6.45 | Slight increase in leverage to fund the growing loan portfolio. |
| Current Ratio | 1.6x | 1.4x | 1.4x | 1.4x | 1.6x | Strong liquidity supported by a growing base of customer deposits. |
4. Growth and Valuation
- Revenue CAGR: Over the last five years, the compound annual growth rate stood at approximately 12.4%, successfully capturing the Millennial and Gen Z segments.
- Dividend Yield: While the stock price has appreciated significantly, the payout remains consistent, with a major 16% dividend hike announced for 2026.
- P/E Ratio: Currently trading between 22x–24x, which is a premium compared to its 5-year average (~18x), reflecting investor confidence in its “Growth Plan.”
Summary Conclusion
- Strategic Resilience: By focusing on high-spending, high-credit-score individuals, American Express effectively insulated itself from the volatility seen in the broader consumer credit market.
- Efficiency Leadership: An ROE of ~33% is nearly double that of most traditional retail banks (e.g., JPMorgan or Wells Fargo), primarily because of the non-interest income (fees) that makes up a larger portion of their revenue mix.
- Future Outlook: The 2025 results confirm that the company has successfully moved past the “normalization” phase and is now in a steady growth trajectory.
In evaluating American Express (AXP) against its peers using the Price-to-Book (P/B) Ratio, we can see how the market values the “quality” of its assets and the efficiency of its capital.
Because American Express generates a high proportion of non-interest income (annual fees and merchant fees) and maintains a superior Return on Equity (ROE), it consistently commands a significant valuation premium over traditional banking institutions.
Peer P/B Ratio Comparison (Data as of early 2026)
| Company Name | Ticker | Current P/B Ratio | Estimated ROE | Competitive Position |
| American Express | AXP | 6.2x – 6.5x | ~33% | Premium leader with high ROE and strong brand moat. |
| JPMorgan Chase | JPM | 1.8x – 2.0x | ~17% | Gold standard for universal banking with massive scale. |
| Capital One | COF | 1.1x – 1.3x | ~12% | Focused on mass-market lending; higher credit risk profile. |
| Discover Financial | DFS | 1.5x – 1.7x | ~15% | Niche player; valuation influenced by M&A activity. |
| Visa | V | 14.0x – 15.0x | ~45% | Asset-light payment network; P/B not directly comparable. |
In-Depth Analysis
1. Why is AXP’s P/B so much higher than traditional banks?
Traditional banks (like JPM) are valued largely on the size of their loan books. American Express functions more like a “Premium Service Brand”:
- Fee-Driven Revenue: A massive portion of its income comes from Net Card Fees, which do not require significant capital backing to generate compared to interest income.
- Capital Efficiency: AXP requires less equity capital to generate high profits. This results in a smaller denominator (Book Value) and a much higher P/B.
2. The Premium Gap vs. Capital One (COF)
While Capital One is a direct competitor in the credit card space, its P/B is significantly lower because:
- Risk Tolerance: COF serves a broader spectrum of credit scores. In economic downturns, its write-off rates are typically double those of AXP.
- Intangible Assets: AXP’s “spend-centric” model and member loyalty are intangible assets that don’t appear on the balance sheet but are reflected in the stock price premium.
3. Valuation Justification (The ROE/PB Correlation)
A common rule in finance valuation is that P/B should be proportional to ROE.
- AXP’s ROE of over 30% is nearly triple the industry average of 12%–15%.
- If a bank like JPM earns a 1.9x P/B with a 17% ROE, AXP’s valuation of 6x+ is mathematically consistent with its superior profitability profile.
Summary
American Express is currently trading at the upper end of its historical P/B range. This reflects investor confidence in its ability to maintain “high-growth, low-risk” profitability through its focus on Millennials and Gen Z.
Based on the Q4 2025 earnings report and management’s commentary during the conference call, the future outlook for American Express (AXP) is centered on sustained double-digit growth and aggressive shareholder returns.
1. 2026 Financial Guidance & Long-Term Plan
Management has reaffirmed its “Growth Plan” first introduced in 2022, signaling high confidence in the 2026 fiscal year:
- Revenue Growth: Expected to be in the range of 9% – 11%.
- Earnings Per Share (EPS): Targeted growth of 14% – 16%.
- Dividend Increase: The Board approved a 16% increase in the quarterly dividend to 0.82 per share, effective Q1 2026.
2. Strategic Growth Pillars
- Generational Shift: Millennials and Gen Z now account for over 60% of new account acquisitions globally. This cohort exhibits higher retention and faster spending growth than older generations, serving as a long-term catalyst.
- Product Refresh Cycle: AXP plans to continue refreshing its core premium products (such as the Gold and Green cards) in 2026, enhancing travel and lifestyle value propositions to sustain double-digit growth in Net Card Fees.
- International Expansion: The International Card Services (ICS) segment is expected to be a major contributor, focusing on closing the merchant acceptance gap with Visa and Mastercard in key global markets.
3. Credit and Risk Management
Despite the potential for a “higher-for-longer” interest rate environment, AXP’s credit outlook remains superior to its peers:
- Normalization Stabilizing: Management expects the net write-off rate to remain stable between 2.0% – 2.2% throughout 2026.
- Premium Resilience: The focus on high-FICO, high-income individuals provides a buffer against inflationary pressures that might typically impact mass-market lenders.
4. Innovation and Investment
- AI Integration: Plans are in place to scale Generative AI across customer service, fraud detection, and hyper-personalized marketing to drive further operating leverage.
- Marketing Spend: The company intends to maintain high marketing investment (approx. 4B – 5B annually) to capture market share while competitors may pull back.
Key Risks to Monitor
- Macroeconomic Headwinds: A potential sharp rise in unemployment could impact even the premium sector’s discretionary spending (Travel & Entertainment).
- Regulatory Scrutiny: Proposed caps on credit card late fees and interchange fees in various jurisdictions remain a headwind for the industry’s fee-based income.
- Competitive Landscape: Renewed efforts from players like JPMorgan Chase and Capital One in the premium travel space continue to challenge AXP’s dominance.
Source:
- https://s26.q4cdn.com/747928648/files/doc_financials/2025/q4/0adef908-f8b7-4f66-b1cf-7d92a2b68ccb.pdf
- https://ir.americanexpress.com/financials/quarterly-results/default.aspx
- https://www.sec.gov/edgar/browse/?CIK=4962
- https://www.bloomberg.com/quote/AXP:US
- https://www.reuters.com/markets/companies/AXP.N
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