American Express EPS Jumps 31%: How Much Of The Gain Can Last?

American Express's third quarter results, released Friday, showed revenue growth of 9% and a 31% jump in earnings per share. Spending, membership fees and lending income all increased. An investment sale gave profit an extra lift.

There was growth beyond that sale: earnings per share rose 13% after the company's adjustments for the gain and a restructuring charge. The question is how much of the improvement can last. Amex is earning more from its customers, but it is also spending more to attract them and provide benefits that make its cards worth keeping.

The quarterly results cover the three months ended September 30, 2026. Comparisons below are with the same quarter last year, and dollar amounts are in U.S. dollars. Amex's headline revenue measure is revenue net of interest expense, meaning the interest it pays to fund its business has already been deducted.

Start with spending. Amex earns merchant fees when customers use its cards. Billed business, a measure of customer spending, reached $454 billion, up 8%. That is customer spending, not Amex's revenue. The related merchant revenue, which Amex calls discount revenue, rose 8% to $10.169 billion.

Then come membership fees. Customers pay for premium cards and their packages of benefits. Net card fees rose 16% to $2.969 billion. Amex attributes that growth to higher average fees on refreshed premium products and growth in its premium card portfolios.

Finally, there is lending. Amex earns interest when customers borrow and pays interest on the deposits and debt that fund its business. Net interest income, which includes lending income after funding costs, rose 10% to $4.940 billion. Growing revolving card balances helped, as did lower interest rates paid on customer deposits.

Together with other revenue, these activities produced $20.062 billion of revenue net of interest expense. Credit loss provisions, rewards and other operating costs still have to come out of that amount before we get to profit.

Reported diluted earnings per share, or EPS, were $5.42, up 31%. That result follows generally accepted accounting principles, usually shortened to GAAP.

It includes a gain from a previously announced sale of an equity investment. In its earnings reconciliation, Amex removes that gain, worth $1.11 per share after tax, and adds back a restructuring charge of $0.37 per share. The resulting company defined adjusted EPS, a non GAAP measure, was $4.68, up 13%.

It is worth looking at what remains in the adjusted number. It includes a legal reserve expense of $0.51 per share, a tax benefit of $0.29 per share and a benefit of $0.24 per share from changes to models that estimate credit losses. Management said these three items had no meaningful combined effect on adjusted EPS. A fair reading includes the legal expense alongside the favorable items. Adjusted earnings reflect a specific set of exclusions, rather than the removal of every unusual item.

The path from profit to EPS also matters. Adjusted profit before tax grew 2%. Adjusted net income, after tax, grew 11%. Adjusted EPS grew 13%. Taxes and fewer diluted shares help explain why the growth rate gets stronger at each step. The 13% adjusted EPS increase is useful, but the 2% increase gives a more restrained view of profit growth before taxes.

A richer card package can encourage customers to pay a higher fee, keep their card and use it more often. One customer relationship can then generate membership fees, spending revenue and lending income.

Providing that package is getting more expensive. Card Member rewards expense rose 10% to $5.090 billion. Card Member services expense rose 36% to $2.006 billion, which Amex links primarily to new U.S. Platinum benefits and greater use of member benefits. Marketing expense also rose 11% as the company spent more on customer acquisition and other growth initiatives.

Greater use of benefits can be a good sign: customers are finding value in what they bought. For Amex, the test is whether the additional fees, spending and lending profits more than cover the cost of attracting and serving those customers.

This quarter shows growth on both sides of that equation. Strong card fee growth is encouraging. Whether each refreshed card earns enough extra profit to justify its extra benefits remains an open question.

Amex's provision for credit losses fell 23% to $985 million. A provision is an expense reflecting credit costs, including changes in expected future losses. It can change because the outlook for future losses changes, as well as because of what borrowers are doing now.

A reserve release helped reduce that expense. Amex attributed the release mainly to changes in its models for estimating future credit losses. That distinction matters: a lower estimate of future losses can improve today's earnings without representing the same improvement in actual customer repayments.

The next results offer a few practical tests. Continued spending and fee growth would support the membership strategy. Stronger profit growth before tax would show more of that business reaching earnings. Stable delinquency and loss rates, without repeated favorable model changes, would make the lending contribution more convincing.

Amex is generating more business from its customers. The question is how much of that growth becomes lasting profit after paying for the membership they want and the credit risk that comes with lending to them.