AmEx investors question growth costs

Washington, Jan 31 (IANS) Investors on Friday pressed American Express executives on slowing net card additions, rising growth costs, and signs of middle-market softness, even as the payments company defended its push into premium cardholders and heavy investment.

The questions came after the company reported record results for 2025 and forecast another year of near-double-digit growth, but analysts on the fourth-quarter earnings call probed whether the strategy is becoming more expensive to sustain.

“Net cards acquired” was “a big talking point with investors before the call began,” UBS said, asking whether the shift toward fee-paying premium products could weigh on future momentum.

American Express stock fell 3.5 per cent on Friday. Overrall AmEx shares are down 3.1 per cent this year.

Chief Executive Stephen Squeri said card counts were not the right metric. “We don’t really focus so much on acquiring cards as much as we focus on acquiring revenue,” he said, adding that the company is meeting its revenue and return targets.

For 2025, American Express Company reported revenue up 10 per cent to a record $72 billion and earnings per share of $15.38, up 15 per cent excluding the Accertify gain. Squeri said card fee growth remained in double digits and credit quality stayed strong.

Still, skepticism persisted. Truist said investors are concerned “the cost to grow is getting too high,” pointing to elevated spending on rewards, marketing and benefits needed to attract affluent customers.

Squeri rejected the idea that the business is overheating. “I don’t look at the cost to grow as all that expensive right now,” he said, adding that American Express avoids portfolios it considers “non-economical.”

Chief Financial Officer Christophe Le Caillec said the economics are improving as the portfolio becomes more premium. “The overall portfolio is slowly getting more premium,” he said, noting that annual card fee revenue reached $10 billion and that delinquency and write-off rates remain “best-in-class” and below 2019 levels.

American Express forecast 2026 revenue growth of 9 per cent to 10 per cent and earnings per share of $17.30 to $17.90, and said it plans to raise its quarterly dividend by 16 per cent to $0.95. Squeri said the outlook reflects “the strength and stability in our premium customer base” and flexibility in the business model.

Some analysts questioned whether engagement from the revamped U.S. Platinum Card could fade as the initial launch effect wears off. Financial Technology Partners asked whether fourth-quarter spending benefited from a “new car smell” effect.

Squeri said engagement has largely stabilized. “Not every Card Member uses every single benefit,” he said, adding that spending patterns tend to settle once customers decide how they use the product.

Questions also focused on commercial services. Keefe, Bruyette & Woods said small and medium enterprise spending “still remains pretty weak,” particularly in the middle market.

Squeri acknowledged the divergence. “Small business is really, really strong,” he said, while “middle market is where you see a little bit of the slowdown.” He also cited intensifying competition, calling the space “highly competitive” as rivals expand through acquisitions and software-driven offerings.

Regulatory risk was another pressure point. Morgan Stanley asked about proposals to cap credit card interest rates at 10 per cent. Squeri warned such a move would have broad consequences. “I don’t think a 10 per cent credit card cap is the answer,” he said, arguing it would reduce card availability, shrink credit lines, and “impact small businesses.”

Le Caillec said spending trends remain solid heading into 2026. “We continue to see good momentum in spend trends,” he said, noting that international billed business rose 12 per cent on a foreign-exchange adjusted basis in the fourth quarter.

Technology spending also drew attention. Squeri said the company spends about $5 billion a year on technology and highlighted a new cloud-based data and analytics platform that is “already reducing the time for key processes in marketing and fraud by 90 per cent,” with full migration targeted by 2027.