American Express (AXP) Q2 2026: Benefit Costs Jump 50%, Provision Drop Drives 62% of Pretax Gain
American Express refreshed its U.S. Platinum card last year, raised the fee, and loaded the card with new benefits. One year on, both lines are growing — but the cost line is growing faster than the fee line. Net card fees rose 15 percent to $2,862 million in the second quarter, an increase of $382 million. Card Member services expense — the cost of actually delivering those benefits — rose 50 percent to $1,949 million, an increase of $648 million. The gap is where the refresh either pays for itself or does not, and this quarter the incremental benefit cost outran the incremental fee by $266 million. Underneath a headline of 14.7 percent pretax growth, the operating engine grew 4 percent; the rest came from releasing credit reserves.
1. Balance Sheet: Cash Rotates Into Card Balances
1-1. Principal asset and funding items
| Item | Jun 30, 2025 ($M) | Jun 30, 2026 ($M) | Change % |
|---|---|---|---|
| Cash and cash equivalents | 57,937 | 45,243 | -21.9 |
| Card balances | 201,873 | 218,054 | +8.0 |
| Total Card balances and Other loans | 211,976 | 229,481 | +8.3 |
| Credit loss reserves | 5,960 | 5,866 | -1.6 |
| Total assets | 295,556 | 308,203 | +4.3 |
| Customer deposits | 149,386 | 156,973 | +5.1 |
| Long-term debt | 58,202 | 57,017 | -2.0 |
| Total shareholders' equity | 32,311 | 34,280 | +6.1 |
Total assets and shareholders' equity are from the company's XBRL submission to the SEC; the remaining lines appear in Table 1 and Table 7 of the filing.
The dominant balance sheet movement is a rotation, not growth. Total assets grew only 4.3 percent. Inside that, cash fell from 19.6 percent of assets to 14.7 percent, while card balances rose from 68.3 percent to 70.8 percent. Amex spent down a cash pile and put the money into lending. The payoff shows up in net interest yield — net interest income divided by average card and other balances — which widened to 8.1 percent from 7.9 percent.
