American Express Q2 2025: Strong Revenue Growth Meets Rising Expenses

Let's dive into the numbers from American Express's (AXP) latest quarterly report to see how the financial services giant is faring. For Q2 2025, the company delivered robust top-line growth, but a significant rise in expenses and credit provisions kept profits from following suit. Let's break down what the income statement tells us.

Revenue Growth Fired Up by Fees and Lending

American Express reported total revenues of $17.9 billion for the quarter, a solid 9% increase from the same period last year. This growth was fueled by strength across its primary income streams:

• Discount Revenue, the fee AmEx collects from merchants for each transaction, remains its largest income source. It grew 6% to $9.4 billion, reflecting higher overall spending by card members.
• Net Card Fees were a standout performer, jumping 20% to $2.5 billion. This surge underscores the company's successful strategy of attracting and retaining customers for its premium products, like the Platinum and Gold cards, which carry significant annual fees.
• Net Interest Income, the profit AmEx makes from its lending activities, rose 12% to $4.2 billion, driven by an increase in card member loan balances.

To see how these revenue and cost components flow from the top line to the bottom line, here is a visual breakdown of the income statement:

The Rising Cost of Doing Business

While revenue climbed, net income dipped slightly to $2.9 billion, compared to $3.0 billion in Q2 2024. The primary cause was a significant 14% increase in total expenses, which reached $12.9 billion for the quarter.

Two key areas drove this spending increase:

1. Card Member Rewards: As AmEx's largest single expense, this grew 9% to $4.6 billion. As customers spend more, the company pays out more in rewards—a direct cost tied to its value proposition.
2. Operating Expenses: The costs to run the business, including marketing, business development, and salaries, collectively rose. Marketing and business development expenses alone topped $3.1 billion, signaling heavy investment in customer acquisition and partner programs.

Additionally, the company increased its provisions for credit losses by 11% to $1.4 billion. This is an accounting measure where the company sets aside funds to cover potential future loan defaults, suggesting a cautious outlook on the credit environment.

Segment Snapshot

A look at AmEx's business divisions reveals where the growth is coming from:

• U.S. Consumer Services (USCS): The company's largest segment, which includes consumer cards in the U.S., saw revenues increase by 11% to $8.6 billion.
• International Card Services (ICS): This segment was the fastest-growing, with a 15% revenue jump to $3.2 billion, showing strong momentum outside the U.S.
• Commercial Services (CS): Serving businesses of all sizes, this division grew revenues by 7% to $4.2 billion.

The Bottom Line

American Express's Q2 2025 results paint a picture of a company successfully executing its growth strategy by attracting high-value customers who spend more and pay premium fees. However, this growth comes at a cost, with rising expenses for rewards, marketing, and prudent credit provisioning currently outpacing revenue gains. The story is one of strategic investment: AmEx is spending heavily today to secure its market position for tomorrow. The key will be watching whether this top-line momentum can eventually lead to improved profitability.