管理層發言
Welcome to the American Express Q2 2026 Earnings Call. As a reminder, today's call is being recorded. I will now turn the call over to Kartik Ramachandran, Head of Investor Relations. Please go ahead.
Thank you, and thank you all for joining today's call. Today's discussion contains forward-looking statements about the company's future business and financial performance. These are based on management's current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these statements are included in today's presentation slides and in our reports on file with the SEC. Today's discussion also contains non-GAAP financial measures. Comparable GAAP financial measures are included in this quarter's earnings materials as well as the prior period earnings materials discussed today. All of these are posted on our website at ir.americanexpress.com. We will begin today with Steve Squeri, Chairman and CEO; followed by Christophe Le Caillec, Chief Financial Officer. After their remarks, we'll move to Q&A. With that, I'll turn it over to Steve.
Thank you, Kartik. Good morning, and thanks for joining us today. We delivered another excellent quarter with 10% revenue growth and EPS of $4.53. Our results continue the momentum we've seen over the last few quarters and reinforce the confidence that we have in our strategy for sustaining long-term growth. Based on our better-than-expected performance year-to-date, we are raising our full year revenue growth guidance to 10%, and we plan to reinvest this outperformance in growth initiatives across our business. We continue to expect full year EPS of $17.30 to $17.90. I'm sure the question on your minds right now is if you're outperforming your expectations, and you are raising your revenue guidance, why aren't you also raising EPS guidance? I'll answer it. We have a choice. We can either drop the overperformance to the bottom line and buy back more shares or we can invest to grow the business further through the wide range of attractive growth opportunities we have across our business, both in the U.S. and international. We've chosen the latter. Because in the long run, it is the one that creates the most value for our shareholders as demonstrated by our high ROE. That is what we have consistently done over the past several years. As we're at the halfway point of the year, let me take a step back and walk you through how we approach this year and how our results reflect the strength of our business model and the strategic decisions we've made to position the company for long-term success. Over a year ago, consistent with our strategic focus on strengthening our leadership in the premium space, we made the decision to make a significant investment in enhancing our flagship Platinum products in the U.S. While I've said this before, it's worth repeating. When we invest in a product refresh, we expect to realize the full benefits of a year or two after launch. First, we anticipate increased customer engagement as well as strong demand and spend growth. Then as we lap the investments and as the new fees kick in over time, we expect fee revenues to increase and VCE expense growth to moderate. And by focusing on bringing in high credit quality premium customers, we expect to see consistently strong credit performance, which supports strong earnings growth. With that in mind, as we enter 2026, our plan was as follows: make the upfront investments in the Platinum value propositions, which we anticipated would continue to drive the high pace of revenue growth; maintain strong credit risk management; and drive operating leverage across our marketing and operating expenses. The combination of high revenue growth, strong credit performance and disciplined expense management were key elements of our plan for driving mid-teens EPS growth for the fourth consecutive year. Six months into the year, we're seeing stronger momentum than we expected. The investments we made in our value propositions have driven accelerated spend and revenue growth, and our Platinum portfolio is now the fastest growing in our U.S. consumer business. Our credit performance is also better than we expected. Retention rates remain very high, and we continue to attract a large number of high creditworthy customers with 65% of new consumer accounts coming from Millennials and Gen-Zs. Importantly, we've continued to deliver strong revenue and earnings growth while at the same time being able to invest more in customer acquisition and technology over the course of the year as we capitalize on the growth opportunities that position the company for long-term success. In looking to the second half of the year, we have great momentum. We expect card fee growth to accelerate, credit to continue to be very strong, and variable card member engagement growth to decelerate as we lap the Platinum refresh of last year. As we lap the Platinum refresh, the key to our growth momentum over the past several years has been our focus on investing in and innovating our membership-based value propositions to attract and engage premium customers across generations and geographies. Creating compelling premium value propositions that are competitively differentiated is not just about reward points. It's about enabling spending power, providing access to highly desirable travel, dining, entertainment and exclusive experiences, forging relationships with world-class partners who provide additional value, and having talented dedicated colleagues who back our customers and merchant partners when issues arise. In essence, a great premium value proposition is not just a product. It's a multifaceted relationship between the brand and the customer. This is what our membership model delivers, and it is very difficult to replicate on a global scale. To build deep, enduring relationships with our premium customers, we've leaned into adding benefits they value and where they spend like travel, which is why we continue to expand our lounge and luxury hotel networks. And dining, which is why we acquired Resy and Tock and our proposed acquisition of TheFork, a leading online restaurant booking platform, which Resy would add 50,000 restaurants to our dining network across 11 European countries. It's also why we've added new sports sponsorships like the NFL and Fanatics and why we provide access to a wide variety of exclusive membership experiences around the world. Deepening the engagement with our premium customers is also why we continue to introduce new digital payment capabilities such as the recent announcement that card members can redeem membership reward points directly within Apple Pay, giving them greater flexibility to use their points on everyday purchases. A core element in designing our value propositions is working with world-class partners who value the opportunity to reach our high-spending premium card members. We're expanding partnerships with many of the premier companies in the world across a range of industries that further enrich the value of membership and drive customer engagement. In fact, just a few days ago, we announced a new global partnership with ALL - Accor Live Limitless, the booking and loyalty platform for Accor's portfolio of 45 worldwide hotel brands, which include Raffles, Fairmont and Sofitel. Importantly, our approach to creating value propositions is not a one-size-fits-all exercise. It is tailored to meet the needs and preferences of different customers and in different locations. For example, the Platinum Card is designed for customers who value premium travel and lifestyle perks like airport lounge access, luxury hotel benefits and one-of-a-kind experiences. The Gold Card on the other hand, is designed for those who do some traveling but prioritize their spending on dining, grocery and other everyday benefits. Likewise, our co-brand cards each have their own value propositions with benefits that appeal to their specific customer bases. And our value propositions for small- and medium-sized business customers are designed to fit the different payment and financial management needs of their businesses. For example, in the second quarter, we introduced the $300 ChatGPT business annual statement credit for our U.S. Business Platinum and Gold Card members, and we launched a pilot of our new expense management platform to an initial group of middle market customers. We've been executing the same strategy internationally, creating premium value propositions with benefits, partnerships and experiences that are tailored to the customer needs and local dynamics in each geography at price points that are typically higher than in the U.S. Since 2003, we've refreshed our Platinum Card in approximately 80% of the countries where these cards are issued, which has helped to drive 20% FX-adjusted growth in international Platinum card spending this year. Furthermore, around 70% of new consumer Platinum Card accounts outside the U.S. are coming from Millennials and Gen-Zs. This approach to innovating our premium value propositions has served us well, and we plan to continue implementing this successful playbook across our business. As a result, we have built a business that compounds earnings more durably and at a faster pace than in the past. When compared to our historical performance, we now have more momentum in both the top and bottom lines, a more premium fee-paying customer base with strong loyalty, less credit risk, including when it's under stress, and more younger customers who represent greater lifetime value. In sum, we are competing from a position of strength. We are tracking ahead of the expectations we set at the beginning of the year, generating momentum that enables us to invest more in 2026 than we initially planned and in opportunities that drive long-term growth. In fact, our proposed acquisition of TheFork is one of those great opportunities. We did not have it originally in our plan at the beginning of the year and it will require investment in the second half of the year. As our strong performance has shown, we are winning with the next generation of premium customers and we have significant growth opportunities across our businesses and around the world. Taken together, this gives us confidence in our long runway for sustainable growth and our ability to continue delivering attractive returns for our shareholders. I'll now turn it over to Christophe for details on the quarter.
Thanks, Steve, and good morning, everyone. We had another strong quarter with revenue growth of 10% and EPS up 11% year-over-year. Pretax income was up 15%, while net income was up 8% due to prior year tax discretes. The strength of our premium customer base combined with the success of our product strategy has driven accelerated momentum in the first half of the year. Spend growth stepped up to the highest level we've seen in three years, up 9% FX-adjusted, in both Q1 and Q2, and balanced growth continued to keep pace with spending. Demand for our premium products remains strong with over 70% of new accounts acquired on fee-based products this year. And card fees have now grown at a double-digit rate for 32 consecutive quarters. Importantly, our focus on premium products continues to drive improvements in credit performance. The strengthening we have seen in our credit performance is a deliberate outcome of our strategy to invest in value propositions that attract customers with high credit quality. As a result of that strategy, both delinquency and write-off rates remain below 2019 levels and delinquency rates have been between 1.2% and 1.3% for over three years. The combination of top-line momentum, excellent credit and disciplined expense management have together supported 11% revenue growth and 14% EPS growth through the first half of the year even as we have invested in our U.S. Platinum value propositions. These results demonstrate the strength of our model and give us confidence in our ability to drive sustainable growth in line with our long-term aspiration. Turning to Billed Business trends for the quarter. Overall spend was up 9.4% FX-adjusted, almost one point higher than Q1. Growth was broad-based across categories with goods and services spending up 9% and T&E up 10%. Retail spending continued to be very strong, up 13% FX-adjusted in the quarter. Restaurant spending, our largest T&E category, was up 10%. And line spending picked up further from the strong growth we saw in Q1 also up 10% year-over-year. Our customers are showing strong demand for travel with global MX travel bookings up 22% year-over-year in the quarter. U.S. consumer spending was up 11%, the highest level of growth since Q1 2018, excluding periods impacted by the pandemic. And we continue to see good engagement from our younger customers. Millennials and Gen-Z, which make up the larger share of U.S. consumer spending, remained our fastest-growing cohorts this quarter. Commercial spending picked up to 5% with both U.S. SME and large global customers growing at the same pace. We are still in the early stages of our commercial product roadmap but we are encouraged by recent trends. At the same time, we do expect to see impacts from the sale of the small business co-brand portfolios in the balance of the year, which I will get to a bit later when I discuss our outlook. International also delivered another strong quarter. Spend was up 12% FX-adjusted. Growth remains broad-based across consumer and business customers and across geographies with four of our top five countries growing at a double-digit rate. Turning to new card acquisitions. We acquired three million new cards in the quarter with continued momentum in acquiring younger customers and attracting new customers onto our fee-paying products. Looking at balance growth and credit. Total balances increased 9% year-over-year FX-adjusted, in line with Billed Business. We have now lapped the roughly one percentage point impact on balance growth from when the small business co-brand portfolios were classified as held for sale over a year ago. As a reminder, although these two portfolios were classified as held for sale, we continued to earn economics until the transfer of the portfolios to the new issuers. One portfolio transfer happened in April this year and the second one is expected in Q3. Credit performance continues to be very strong. The Q2 write-off rate was flat versus last quarter while the delinquency rate declined. Provision expense of $1.1 billion included a reserve release of $191 million, mostly reflecting further strengthening of portfolio credit performance. The strength of our model also holds in a stressed environment as demonstrated by the Fed's recently released CCAR results, which show that under a severely adverse scenario, we have the lowest projected credit card loss rate across all banks and a pretax ROE of 3.8% over nine quarters. Turning to revenue. Revenue was up 10%, marking our fourth consecutive quarter of double-digit revenue growth. Net card fees reached record levels, and once again our fastest-growing line, up 15.4%. We continue to see good momentum in attracting customers onto our premium products with 75% of new accounts acquired on fee-paying products in the quarter, the highest level we have seen since we increased our focus on premium products. Net interest income was up 11% this quarter. We saw around a one percentage point impact to year-over-year NII growth from the sale of one of the small business co-brand portfolios. We continue to grow balances largely in line with spending while driving higher NII growth by expanding the margin earned on balances. We are also seeing demand for our deposit products with balances from our U.S. consumer and small business banking deposit products up 9% year-over-year. The majority of deposits come from our card members, deepening their engagement with our membership model. And with around 10% of our U.S. card members currently holding a deposit account with us, we see a long runway for growth. Turning to expenses. Marketing and OpEx each grew 6% in the quarter. And the VCE to revenue ratio was 44.6%. The step-up versus the first half of last year reflects the investment we made in the value propositions of our U.S. Platinum cards when we refreshed these products in September last year. As we discussed at the start of the year, the VCE to revenue ratio is linked to the level of card member spending. Through the first half of the year, we have seen stronger spend than we expected coming into the year, including in categories like airlines, where customers earn and use rewards. These factors are contributing to a slightly higher VCE ratio than we originally expected. Moving on to capital. We returned $2.9 billion of capital to our shareholders, including $0.6 billion of dividends and $2.2 billion of share repurchases. Our business continues to generate very strong returns with an ROE of 36% this quarter. Our strong ROE enables us to return high levels of earnings to our shareholders over 75% over the past three years. Turning to our 2026 outlook. Let me spend a few minutes on how we're thinking about the balance of the year. Starting with billings and revenue. We expect to see impacts from the sale of the two small business co-brand portfolios. The transfer of the portfolios are staggered across Q2 and Q3, building to the full impact by Q4. Starting in Q4, we expect a quarterly impact of around one percentage point to spend growth and around a 2.5 percentage point impact to net interest income until we lap the portfolio sales. Put together, the impact to total revenue is about one percentage point. I would note that the portfolio sales will have a negligible impact to pretax income, and these impacts were incorporated in the guidance we provided for the year. On card fees, we expect growth to accelerate in Q3 and to exit the year in the high teens, and we continue to expect credit metrics to be generally stable throughout the year. Turning to expenses. We expect marketing to be up by around 10% year-over-year in the second half of the year, driven by increased investments in customer acquisition. We continue to expect operating expenses to grow in the mid-single digits for the full year, including the additional investment in technology we previously discussed. On the VCE ratio, given the higher level of spending we have seen this year, we now expect the ratio to be between 44% and 45% for the full year. We will lap the impacts of the Platinum refresh starting in Q4, resulting in lower growth in VCE expenses. We feel really good about our momentum and our results halfway through the year, having delivered 11% revenue growth and 14% EPS growth as well as the opportunities for continued growth ahead. Given the momentum in the business, we are raising our revenue guidance and now expect full year revenue growth of 10%. And as we increase investments in new customer acquisition and technology development, we are maintaining our full year EPS guidance of $17.30 to $17.90. The guidance does not include the potential impact from the sale of our equity interest in Global Business Travel Group that we previously announced. We expect the transaction to close in the second half of the year and will provide more detail there. With that, I'll turn the call back over to Kartik, and we'll take your questions.
Thank you, Christophe. We will now start the Q&A session. We ask that you please limit yourself to just one question. Thank you for your cooperation. Operator?
分析師問答
Our first question today is coming from Sanjay Sakhrani of KBW.
So the 11-plus percent growth in U.S. Consumer Services is truly impressive. I'm curious if there's a way to parse apart how much is coming as a result of the strong account acquisitions you've seen of late versus your core mature customers spending more on the card. I'm just trying to think about the sustainability of that outperformance. And then also, it's really impressive this is happening amid the geopolitical impacts and obviously, the contagion to the economy. I'm just curious if you're seeing anything on that front, whether it's in U.S. Consumer Services or in other areas.
Sanjay, so on U.S. Consumer billing, you're absolutely correct, it's up 11.4%. We went back in time to see when was the last time we saw such growth. If you strip out the discontinuity of COVID, you have to go back to Q1 2018. So it's truly an impressive performance. One of the biggest contributors to the acceleration is the Platinum refresh. It is, by far, the biggest product we have and it has the fastest growth rate. There's truly a lot of momentum. We see that momentum coming from new card member acquisition as well as tenured card members that are increasing their spend and people who are either replacing another card in their wallet or upgrading to a Platinum card. Platinum is definitely pulling a lot here in the acceleration. If you go back to Q1, we quantified that acceleration, and I talked about it was in a Q1 number, but we talked about a 600 basis point acceleration across the entire Platinum portfolio in U.S. consumer. So it's truly coming from a lot of tenured card members that are consolidating their spend because they enjoy the new value proposition.
Yes, Sanjay, let me just add a couple of points. I think with the refresh, engagement has been really accelerated, and that's driving a lot of the spend. And when you start to dig into the numbers, we saw a 22% increase in travel bookings. We put that into the value proposition. Restaurant spend was up 10%. But when you look at Resy restaurant spend, it's double that. So again, I think what we've hit on well with the Platinum refresh is we're stepping up engagement. So I think as Christophe said, it's a combination of new acquisition, but it's also the engagement that we're getting with the existing card members, and it is very impressive to be at 11% at this stage of the game.
And to the second part of your question about the geopolitical events out there. When you look at granular data, you do see gas spend increasing significantly. Now it's around 2% of total billings, so it's not meaningful in terms of impact to the overall numbers. You do see as well travel to or through the Middle East having an impact, as you would expect. But travel globally is up 10%. Airlines are up 10%, and this is the highest number we've seen in the last six quarters. So there are impacts, but there is no evidence of a general slowdown and people are offsetting these transactions with transactions in other categories. So it's not really visible at a macro level.
The next question is coming from Ryan Nash of Goldman Sachs.
So Steve, you noted the decision to reinvest the upside in revenue growth. Maybe just talk a little bit more about the areas that you're investing in. I know you referenced customer acquisition and technology and maybe just talk a little bit about what you think this will do in terms of your ability to sustain these types of top line growth levels into 2027?
Okay. Thanks for the question. I think we've gotten to a point where the company is quite large and to continue the revenue growth, it requires us to continue to invest. Those investments come across a wide range. The one thing I did call out was, obviously, we're intending to acquire TheFork, all things working out the way we hope. There will be deal costs and integration costs. We're investing in technology. When you think about our company, we've got international business, U.S. business, corporate card business, small business, we operate in many different countries. We have a merchant acquiring business and a network business. There is no shortage of technology investments or enhancements or refreshes that need to occur. Across a wide range of technology platforms, we're able to pull some of those investments into the second half of the year to get to things quicker, which is a huge advantage because we're going to have to make these investments over time. The other thing that is still out there is card acquisition opportunities. To sustain growth, you need to continue to invest in acquiring high revenue-generating and high-spending cardholders. That's where these investments occur: in technology, a little bit in TheFork, and also in card acquisition. You've seen we've announced a number of things we're participating in from an agentic commerce perspective, and that requires investment as well. Those things weren't on the docket at the beginning of the year. So it's not a stagnant business, and it's not a business that you don't need to put fuel into. That's what we're doing. I think it's a strategy we've employed for years and it has served us well. We've been consistently growing the last four years with double-digit revenue growth and mid-teens EPS growth. We don't look at just a year, we look at the medium to long term, and we think this is the best strategy for us and our shareholders.
The next question is coming from Don Fandetti of Wells Fargo.
Steve, it sounds like you're feeling a little bit better about SME, you launched a pilot on the expense management software. I guess I'm trying to understand, is this more of a discussion around the pace of billed business growth? Or could we see some type of middle market customers moving away to the fintechs where there could be some lumpiness? And then my follow-up is just to touch on the advantage of the closed loop around agentic commerce.
Thanks for the question, Don. We announced a very aggressive commercial card roadmap earlier in the year and you're seeing a little bit of a bounce back. We were at 5% from an SME perspective and 5% from a large and global perspective. From a middle market space, ramping in Center, which is our expense management system that we just launched, will help us not only retain business but win new business as well. Middle market is where we had seen softness. Small business has been very strong and large and global corporate has been moving along nicely. So we've seen an uptick in SME billings over the last two quarters and the road map and launch of the middle market expense management software will certainly help. As far as agentic commerce, the closed loop—we've talked about the closed loop for many years in physical and e-commerce spaces. I think we're even more advantaged from an e-commerce perspective, both from a fraud and data perspective. When you think about agentic commerce and how broad it is, not only from fraud but also from hallucinations that can occur, by understanding what a card member truly wants and intent, and having that data, being able to go out and match that purchase data will enable us to provide and back our customers a lot better. That's why we announced months ago the agentic insurance product, where I think we'll have a huge advantage from a trust, service and security perspective over our competitors because we have data on both sides. We know what the customer wanted to do, and we'll also know what the merchant delivered. I think people are in the pre-season here. We hope because of our knowledge of both sides of the equation that as this begins to take off, customers will choose us because of our ability and our historical track record of backing our customers. We've seen our closed-loop advantage play out in the physical world and in e-commerce. I think it will play out even more over time, but again, we're not even in the early innings yet.
The next question is coming from Craig Maurer of FT Partners.
Wanted to ask about the adjustment in the URR and how material the benefit was in the quarter? And that helps us gauge the rest of the year and when you lap it next year. Additionally, you talked about higher client incentives and business development expense. Can you talk about those trends considering the big wins you've had recently with the NFL, Fanatics and so on?
I'll take the URR question. The URR, for those not familiar, is part of the key element of our Membership Rewards program; we evaluate and quantify the ultimate rate of redemption. From an accounting standpoint, we expense the cost of those rewards when they are earned and we make an assumption about how many of those points ultimately are going to be redeemed. It's a fairly complex calculation. On a regular basis, we update the models and improve the data that feeds the model to be more accurate. As you can imagine, there's a lot of review and work that goes into any revision of that assumption. When we did that, we came up with a slightly lower ultimate rate of redemption, but it really hasn't changed much. We report externally the ultimate rate of redemption is around 96%, and it really hasn't changed much. So it has a small benefit in the quarter in terms of MR cost. But at the full year level, it's going to be de minimis. It's more hygiene and making sure we have the right accounting process than anything else.
Thanks for the question, Craig. When we think about the NFL, Fanatics and the other sponsorships like NBA, Formula 1, the USGA, Wimbledon and U.S. Open tennis—sponsorships are all about access for our card members and experiences, special things we can do. That's also why we have our event and stadium benefits in different locations around the world. We're trying to package a group of experiences that our card members really value, from music to artist access and special events. Specifically with the NFL and Fanatics, it gives us global access for our card members to events and venues they want to go to. Fanatics ties it together not only from an experience perspective when they have Fanatics Fest but also for things we will do with Fanatics at the NFL Draft, All-Star Games, Super Bowl, etc. From a collectibles perspective and trading cards, it ties together as well. From a cost perspective, our entire marketing budget is very small relative to the business, and these are in the plan and in the run rate. So when we talk about increased investments, these are not new unexpected items outside the plan. We like the assets we have and how they work together and how our card members enjoy them.
The next question is coming from Rick Shane of JPMorgan.
Look, you guys have talked a lot about customer acquisition. Can we talk a little bit about attrition, both quantitatively and qualitatively? Can we sort of think through what the 1- to 2-year retention rates are on new customers versus what you've seen historically? And also, to the extent you get feedback when customers don't renew the card, what are the reasons that a customer might walk away?
The executive summary is we're not seeing anything meaningful on attrition. We showed a detailed slide in Q1 on the Platinum card where we raised the fee by $200. By the end of Q1, we had repriced about one quarter of the U.S. Platinum portfolio. The retention rates were through the roof and flat year-over-year. Last year there was no price increase, so we're not seeing attrition; retention rates remain very high. In terms of why people downgrade or leave, sometimes people say, 'I've just retired; I just don't need that kind of benefit anymore,' and they downgrade. Conversely, we've seen a lot of card members upgrading as a result of the new value proposition. In general, attrition levels remain very consistent with what we've seen in the past and have been very low for the past few years.
The next question is coming from Mark DeVries of Deutsche Bank.
Steve, how should we think about the longer-term return on investment in platforms like Resy and TheFork? There are benefits like the lift to spend in the category, but less obvious benefits we may not see like revenues from the platforms and higher loyalty, both with merchants and with customers from engaging. And then also, any longer-term plans to integrate those platforms and maybe rebrand?
Thanks for the questions, Mark. What we've tried to do with Resy, Tock and TheFork is create many closed loops within our closed loop. We're connecting our card members and merchants, and importantly, Resy, Tock and TheFork are open platforms—they're open to non-card members, which is useful from an acquisition perspective because within those platforms we'll offer special offers and table access for card members. It's an opportunity to acquire card members more cheaply and for them to experience potential benefits of being a card member. We don't manage Resy and Tock and TheFork as standalone P&Ls because they're part of the value proposition. When a restaurant looks at Resy, Tock or TheFork, they see access to high-spending customers. The proof is in the pudding: it's roughly two times the spending at Resy restaurants, and our ticket prices are higher for card members versus non-card members in all restaurants. Resy and Tock will come together from a user experience perspective, especially on the front end, giving us a broader, more integrated restaurant experience for card members. TheFork, being European focused, will stay as a stand-alone entity for now, and that works. Our travel representatives will have access to both, so when you book travel—hotel and airline—our reps will be able to book restaurants for you. Dining in Europe is one of the highest demand areas we have. We don't look at the P&L of Resy, Tock or TheFork in isolation; we manage them aggressively but as part of the overall value proposition. What they do is help card member retention, customer acquisition, merchant satisfaction and drive spend, and they integrate very well with our travel business by giving travel reps restaurant booking capabilities at their fingertips.
The next question is coming from Terry Ma of Barclays.
Can you maybe give a little bit more color on your net card fee growth guidance in the back half of this year? What's contemplated in that, whether it's just from a step-up in annual fees in the back book or are you contemplating more acquisitions? And maybe taking a step back, historically you've seen more notable acceleration after a refresh, and you just haven't seen this thus far at Platinum?
Terry, let me explain what's happening. We're growing card fees at 15% and we expect that growth rate to accelerate in Q3 and to exit Q4 in the high teens. The key driver of that acceleration is the Platinum refresh. The reason why it takes a while to hit the P&L is because we started repricing card members from January only. When we move card members to the new price point, we amortize the upfront impact over 12 months, so it's a slow process and the impact is delayed. That's why you see a temporary decline in momentum in that line as earlier refreshes rolled through. It takes about two years to find its way fully into the P&L, so you have a cycle. But to be clear, we expect card fees to exit this year with a growth rate in the high teens.
The next question is coming from Rob Wildhack of Autonomous Research.
A question on NII growth. First, in the quarter, growth there slowed 150 basis points from Q1 to Q2. Is there anything to call out there? And then going forward, I know you said NII should grow faster than billings, but can you unpack that? You have the co-brand portfolio transfers that are drags, but on the positive side you have really strong credit outcomes which might be a reason to lean into NII growth. How does that all come together in terms of growth in that line and in the context of the higher revenue guide?
Let me clarify because there is a bit of noise in those numbers. First, on the balance sheet and growth of balances, we're reporting this quarter a growth rate of 9%, which is in line with billed business growth of 9%. Last quarter, balance growth was 7%, so the step-up is largely a function of the classification of the two small business co-brand portfolios that we reclassified as held for sale over a year ago; we've now lapped that reclassification which affects reported balance growth. From a P&L standpoint in NII, despite those portfolios being classified as held for sale, the economics flowed through our P&L. In April, we transferred one of those portfolios—the smaller one—to the new issuer. It impacted NII growth by about one percentage point. The decline you see in the growth rate from 12% to 11% is largely attributable to that transfer. There will be another transfer of the Amazon portfolio in Q3, and by Q4 both portfolios will be out of our system. The impact to NII will be about 2.5% until we lap the sales. Importantly, while this impacts NII, the impact to net income and earnings is negligible. This was known and incorporated in the guidance we gave at the beginning of the year. So no impact to guidance or earnings, but it does create some discontinuity in balance growth and NII growth rate.
The next question is coming from Darrin Peller of Wolfe Research.
I just wanted to touch on operating leverage. I know that you've said you're going to be reinvesting quite a bit of the top-line upside into customer acquisition. But for a minute, about deploying AI within both customer service and internal functions—there's considerable opportunity for operating leverage to offset some of the reinvestments. Where are you seeing progress now and when would you expect to see incremental benefits show up in a material way?
Let me start with our definition of operating leverage. We look at OpEx as a ratio of revenue. OpEx for us annualized is in the range of the mid-teens billions, and many things hit that line. Be careful looking at a single quarter OpEx number because there can be discrete one-offs. If you take a step back over many years, we've been effective in driving operating leverage and we are committed to doing that again. AI will play a critical role and it's part of why we're investing. For the balance of the year, we expect operating expenses to grow in the mid-single digits for the full year and we're tracking well against that. This quarter OpEx grew 6% and we expect to be in that mid-single-digit range by year-end. I'll let Steve talk about specific AI initiatives.
Darrin, thanks. Every company is engaging with AI. One of the first places we've deployed it is in technology where we're seeing anywhere from a 30% to 40% decrease in cycle time for coding. That's not immediate P&L savings because what it does is allow us to do more—we can get to more projects faster, reducing backlog. From a servicing perspective, both for travel and card servicing, we've equipped our customer service and travel agents with AI-powered tools. What we've seen is reduced need to accelerate hiring of more travel representatives and customer service reps even as the business grows. Over time, we'd expect those headcounts to decrease or grow more slowly due to productivity gains. From marketing, AI is streamlining campaigns so we get marketing to market faster. We've used AI in credit, risk and fraud for 15-16 years, but now we're incorporating unstructured data and agentic inputs to improve decisions. Integration matters: embed AI when you redo platforms or put a layer above to integrate systems. We recently launched a servicing portal for our card member service representatives with embedded AI that will reduce handle times and improve customer experience. There's a lot more to come. We're further along on AI in technology and servicing than in agentic commerce; agentic commerce is earlier. We expect AI to make us more efficient and productive and ultimately help drive top-line and earnings growth over time.
The next question is coming from Bill Carcache of Piper Sandler.
Good morning, Steve and Christophe.
Good morning, Bill, and welcome back.
You've both been with Amex for many years. As investors debate Amex's valuation versus history, it would be helpful to get your thoughts on, as you reflect on your years with the company, what has fundamentally changed about Amex's product flywheel that makes the growth algorithm more durable today than it was historically? And maybe if you could also touch on what gives you confidence that the rebuilt product flywheel can compound beyond the current refresh cycle rather than just requiring repeated reinvestment to sustain growth?
Thank you. I've been at the company many years and Christophe slightly fewer years, but a long time as well. I think what's changed is we've committed more to truly understanding customer needs and where customers are going. This business is all about the customer, and customer needs change constantly. That's why product refreshes are critically important. We've also expanded our aperture of who our customer is. We continue to believe our customer is a high-spending, high-creditworthy premium aspirational customer, but we no longer define that as a single cohort. Those customers exist across Boomers, Gen-X, Millennials and Gen-Z. We've created a product ecosystem that can adapt to the next cohort of customers rather than forcing one product across all. The Platinum product, for example, can play well across cohorts because we can add value with applicability across a wide set. We've also leaned into partnerships—co-brand and premium partners want access to our customers and are willing to provide benefits. Our international focus has changed too: we've leaned into coverage and premium in the U.K., Mexico, Canada, Australia and Japan, and that has played out well. So when you combine product refresh capability, partner access, international focus and the experience layer—lounges, dining, hotels—you've created a premium ecosystem our customers live in and that's durable. The durability is reinforced by partner willingness to participate and by our ability to access the customers we need on a global basis. We look medium to long term, and this is a machine that can go after different cohorts with matching offers and products, integrated experiences and scale.
I'll add a finance overlay. There's more momentum now than 10-15 years ago; you see it in product refresh pace and revenue momentum. When I look at the balance sheet, the resilience of the portfolio is much stronger now. One piece of evidence: the reserve rate has fallen from 2.9% at the end of 2019 to 2.7% today, an outcome of focusing on premium card members. Card fees have grown strongly—about 17% over the last several years—because more card members are paying fees. In Fed stress testing, through the cycle we exhibit a much lower peak write-off rate than competitors and remain profitable through the cycle. Finally, focusing on younger card members gives us confidence to sustain growth: they start with lower income but they grow with us, offering embedded growth over time.
Our final question today is coming from Mihir Bhatia of Bank of America.
I wanted to ask about billing trends a little bit more. In the prepared remarks you had mentioned billings were particularly strong early in 2Q and it seems like that continued into June. Anything you can share on July or quarter-to-date trends? More broadly, what is the billings growth assumption embedded in the raised 10% revenue guide? Are you underwriting billings to hold at this level or does it assume some deceleration? I know you have the co-brand headwind, of course.
Thanks, Mihir. We're not going to guide on billings going forward in detail, but we're a momentum business and you can expect much of the good momentum we've seen to continue for the balance of the year. The investments we're making and the increase in investments are intended to support that momentum. The transfers of the two small business portfolios will put about a one percentage point headwind to billed business growth because they contributed billed business, though they were not big contributors to earnings. So you may see a little slowdown as a result of that transfer. Our expectation is that the momentum will continue in the balance of the year.
With that, we will bring the call to an end. Thank you for joining us and for your interest in American Express.
Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.