American Express Company

Company Overview

Business Model: American Express Company operates as a global payments and premium lifestyle brand, leveraging an integrated payments platform encompassing card-issuing, merchant-acquiring, and card network businesses. The company generates revenue primarily by driving spending on its credit and charge cards, and secondarily through finance charges and fees. It offers a diverse range of products and services including credit and charge cards, complementary travel, dining, lifestyle, and expense management solutions, banking and non-card lending products, merchant acquisition and processing, fraud prevention, and network services.

Market Position: American Express Company is a leader in providing general purpose credit and charge cards to consumers, small businesses, mid-sized companies, and large corporations globally. It differentiates itself through a "Membership Model" offering premium products, lifestyle services, and business-centric solutions, supported by direct relationships with Card Members and merchants. The company is the fourth largest general-purpose card network globally based on purchase volume, behind Visa, China UnionPay, and Mastercard. Its brand is recognized among the most valuable worldwide, known for trust, security, and service.

Recent Strategic Developments:

• Product Refreshes: In 2025, the company refreshed its U.S. Consumer and Business Platinum cards to enhance value propositions and attract new customers.
• Digital Enhancements: Launched the new Amex Travel App in 2025 to improve Card Member engagement and service experience.
• Acquisitions: Acquired Center, an expense management software company, in 2025 to enhance non-card business-to-business (B2B) payment and cash/expense management solutions.
• Joint Venture Consolidation: On January 12, 2026 (post-period), acquired its partner's interest in Swisscard AECS GmbH, making it a wholly owned subsidiary.
• Portfolio Reclassification: Reclassified Amazon and Lowe's small business cobrand portfolios to held for sale in 2025.
• Strategic Investments: Continued investment in its Membership Model, marketing, and payment solutions for merchants to attract and retain high-spending, creditworthy Card Members.

Geographic Footprint: American Express Company operates globally, with primary operational regions and key markets including the United States, the United Kingdom, the European Union, Australia, Japan, Canada, and Mexico.

• United States: 73.5% of total revenues net of interest expense in 2025.
• EMEA (Europe, the Middle East and Africa): 19.0% of total revenues net of interest expense in 2025.
• APAC (Asia Pacific, Australia and New Zealand): 7.2% of total revenues net of interest expense in 2025.
• LACC (Latin America, Canada and the Caribbean): 1.3% of total revenues net of interest expense in 2025.

Financial Performance

Revenue Analysis

Profitability Metrics (2025):

• Operating Margin: 19.1% (Pretax Income of $13,795 million / Total Revenues Net of Interest Expense of $72,229 million)
• Net Margin: 15.0% (Net Income of $10,833 million / Total Revenues Net of Interest Expense of $72,229 million)

Investment in Growth:

• R&D Expenditure: Not explicitly stated as a separate line item. The company invests in technology across all areas of its business, including transaction processing, data management and analytics, artificial intelligence and machine learning (AI & ML), customer interactions, open banking, and alternative payment mechanisms.
• Capital Expenditures: $2,425 million
• Strategic Investments: The company made strategic investments in technology and infrastructure, including the acquisition of Center, an expense management software company, in 2025.

Business Segment Analysis

U.S. Consumer Services (USCS)

Financial Performance (2025 vs 2024):

• Revenue: $34,814 million (+11% YoY)
• Pretax Segment Income: $9,777 million (+4% YoY)
• Operating Margin: 28.1%
• Key Growth Drivers: Increase in U.S. consumer billed business (+8%), growth in premium card portfolios, higher travel commissions and fees, and increased revolving loan balances. Continued momentum in spending by Millennial and Gen-Z Card Members.

Product Portfolio:

• Wide range of proprietary consumer cards.
• Travel and lifestyle services.
• Banking and non-card financing products (high yield savings, consumer checking accounts, consumer installment loans).
• Dining platform (Resy and Tock restaurants and venues).
• New product launches or major updates: 2025 refresh of U.S. Consumer Platinum cards.

Market Dynamics:

• Focus on premium consumer space, attracting high-spending customers.
• Strong customer demand and engagement for refreshed products.
• Competition in the premium space and for differentiated offerings (e.g., lounge access, dining experiences).

Commercial Services (CS)

Financial Performance (2025 vs 2024):

• Revenue: $16,926 million (+7% YoY)
• Pretax Segment Income: $5,048 million (+3% YoY)
• Operating Margin: 29.8%
• Key Growth Drivers: Increase in commercial billed business (+3%), growth in premium card portfolios, higher travel commissions and fees, and increased foreign exchange-related revenues. Growth from U.S. small and mid-sized enterprise Card Members.

Product Portfolio:

• Wide range of proprietary corporate and small business cards.
• Payment and expense management solutions.
• Banking and non-card financing products (business checking accounts, lines of credit for small businesses).
• New product launches or major updates: 2025 acquisition of Center, an expense management software company, to enhance B2B payment and cash/expense management solutions. 2025 refresh of U.S. Business Platinum cards.

Market Dynamics:

• Strong position in commercial payments.
• Evolving card value propositions and differentiated corporate card and accounts payable expense management solutions.
• Competition from financial technology companies.

International Card Services (ICS)

Financial Performance (2025 vs 2024):

• Revenue: $13,000 million (+13% YoY, +11% FX-adjusted)
• Pretax Segment Income: $2,434 million (+39% YoY)
• Operating Margin: 18.7%
• Key Growth Drivers: Strong growth in billed business (+14%), growth in premium card portfolios, increased foreign exchange-related revenues, and higher loyalty coalition-related fees. Higher income from equity method investments, including a partial sale of a card portfolio by Swisscard AECS GmbH.

Product Portfolio:

• Wide range of proprietary consumer, small business, and corporate cards outside the United States.
• Travel and lifestyle services for international customers.
• Management of certain international joint ventures and loyalty coalition business.

Market Dynamics:

• Continued strong growth in spend across geographies and customer types outside the United States.
• Global expansion of the merchant network.
• Subject to international regulations impacting card networks and cobrand arrangements (e.g., European Union payments legislation, Reserve Bank of India mandates).

Global Merchant and Network Services (GMNS)

Financial Performance (2025 vs 2024):

• Revenue: $7,759 million (+4% YoY)
• Pretax Segment Income: $3,968 million (-10% YoY)
• Operating Margin: 51.1%
• Key Growth Drivers: Increase in billed business, increases in network partnership revenues and foreign exchange-related revenues.
• Note: Pretax segment income decreased primarily due to the gain recognized in the prior year on the sale of Accertify, Inc.

Product Portfolio:

• Global payments network for processing and settling card transactions.
• Merchant acquisition and services (signing new merchants, discount rate agreements, servicing).
• Fraud-prevention tools, marketing solutions, data analytics.
• Network services (licensing the American Express brand to third-party banks and institutions).

Market Dynamics:

• Continued growth in merchant acceptance globally, adding millions of new merchant locations in 2025.
• Initiatives like Shop Small campaigns and expanding payment options (debit, B2B capabilities) to drive network usage.
• Competition from other card networks (Visa, China UnionPay, Mastercard, JCB, Discover, Diners Club International) and alternative payment platforms (Alipay, PayPal, Shop Pay).

Capital Allocation Strategy

Shareholder Returns (2025):

• Share Repurchases: $5,814 million (16.8 million common shares repurchased at an average price of $312.87).
• Dividend Payments: $2,271 million (common share dividends).
• Future Capital Return Commitments: Plans to increase the regular quarterly dividend on common shares by approximately 16% beginning with the first quarter 2026 dividend declaration. The company aims to return excess capital while maintaining its Common Equity Tier 1 (CET1) capital ratio within a target range of 10% to 11%.

Balance Sheet Position (as of December 31, 2025):

• Cash and Equivalents: $47,792 million
• Total Debt: $57,758 million ($56,387 million long-term debt + $1,371 million short-term borrowings)
• Net Cash Position: -$9,966 million (Total Debt less Cash and Equivalents)
• Credit Rating:
  • American Express Company: Long Term A2 (Moody's), A- (S&P), A (Fitch); Outlook Stable.
  • American Express Travel Related Services Company, Inc.: Long Term A2 (Moody's), A (S&P), A (Fitch); Outlook Stable.
  • American Express National Bank: Long Term A3 (Moody's), A (S&P), A (Fitch); Outlook Stable.
• Debt Maturity Profile: The company aims to maintain a balanced debt maturity profile with an appropriate mix of short-term and long-term refinancing requirements. Aggregate annual maturities on long-term debt obligations for 2026 are $12,078 million.

Cash Flow Generation (2025):

• Operating Cash Flow: $18,428 million
• Free Cash Flow: $16,003 million (Operating Cash Flow of $18,428 million less Capital Expenditures of $2,425 million)

Operational Excellence

Production & Service Model: American Express Company operates an end-to-end integrated payments platform, maintaining direct relationships with Card Members and merchants. This platform provides data and analytics for fraud reduction, risk underwriting, and targeted marketing. The company emphasizes a "Membership Model" focused on premium products, lifestyle services, and business-centric solutions, supported by exceptional customer care and digital interfaces.

Supply Chain Architecture: Key Suppliers & Partners:

• Cobrand Partners: Delta Air Lines (largest strategic partner), Marriott International, British Airways, Hilton Worldwide Holdings.
• Redemption Partners: Amazon, Delta Air Lines (two largest).
• Merchant Acquirers/Processors/Payment Facilitators: OptBlue program participants.
• Network Partners: Third-party banks and institutions in approximately 110 countries and territories (e.g., Coinbase, Credit Saison).
• Expense Management Integrations: Emburse, SAP Concur.
• Travel & Lifestyle Partners: Fine Hotels and Resorts.
• Entertainment Partners: Formula 1, AEG Worldwide.
• Business Travel Services: Global Business Travel Group, Inc. (GBTG) (equity investment and commercial arrangements).

Facility Network:

• Principal Executive Offices: 2.2 million square foot building in lower Manhattan (49% ownership interest).
• Manufacturing/Data Centers: Phoenix, Arizona; Greensboro, North Carolina.
• Research & Development: Not explicitly detailed as separate facilities, but R&D focus is on core technology areas and innovation pipeline.
• Distribution/Operational Offices: Phoenix, Arizona; Sunrise, Florida; Gurgaon and Bangalore, India; Manila, Philippines; Brighton, England; Tokyo, Japan; Kuala Lumpur, Malaysia; Rome, Italy; Sydney, Australia; Sandy, Utah (American Express National Bank headquarters); London, England (American Express Services Europe Limited headquarters); Madrid, Spain (American Express Europe, S.A. headquarters); Toronto, Ontario, Canada (Amex Bank of Canada and Amex Canada Inc. headquarters); Mexico City, Mexico (American Express Company (Mexico) S.A. de C.V. headquarters).
• Customer Benefits: Operates multiple lounges in major U.S. and global hub airports.

Operational Metrics (2025):

• Worldwide Billed Business: $1,670 billion
• Proprietary Cards-in-Force: 86.6 million (as of December 31, 2025)
• Worldwide Processed Volume (third-party issued cards): $227.2 billion
• Third-party Cards-in-Force: 66.2 million (as of December 31, 2025)
• Discount Revenue as a % of Billed Business: 2.24%
• Membership Rewards Ultimate Redemption Rate (URR): 96% (as of December 31, 2025)

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: In-house sales teams.
• Channel Partners: Affiliate marketing, customer referral programs, third-party service providers, business partners.
• Digital Platforms: Mobile and online applications, direct response advertising.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: Major enterprise relationships include Delta Air Lines, Marriott International, British Airways, Hilton Worldwide Holdings.
• Strategic Partnerships: Delta Air Lines is the largest strategic partner, representing approximately 13% of worldwide billed business and 21% of worldwide Card Member loans as of December 31, 2025.
• Customer Concentration: Spending at airline merchants accounted for approximately 6% of worldwide billed business in 2025.

Geographic Revenue Distribution (2025):

• United States: 73.5% of total revenues net of interest expense.
• EMEA: 19.0% of total revenues net of interest expense.
• APAC: 7.2% of total revenues net of interest expense.
• LACC: 1.3% of total revenues net of interest expense.
• Growth Markets: The company focuses on global expansion of its merchant network and increasing coverage in priority international cities, destinations, countries, and industry verticals.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The global payments industry is highly competitive and dynamic, characterized by rapid technological changes, evolving business models, and intense competition for premium customers. It includes traditional networks, issuers, acquirers, and alternative payment service providers. The development of generative artificial intelligence (AI) and agentic commerce solutions is accelerating, potentially reshaping customer payment experiences and altering the competitive environment.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Card Networks: Visa, China UnionPay, Mastercard, JCB, Discover, Diners Club International (owned by Capital One).
• Card Issuers: Financial institutions issuing general-purpose credit and debit cards, businesses issuing private label cards.
• Payment Service Providers: Merchant acquirers, processors, payment facilitators, web- and mobile-based payment platforms (e.g., Alipay, PayPal, Shop Pay), regional payment networks (e.g., National Payments Corporation of India).
• Lending/Financing: Point-of-sale lenders, buy now, pay later products.

Emerging Competitive Threats:

• New Technologies: Digital payment platforms, open banking, electronic wallet platforms, real-time settlement and processing systems, financial technology companies, digital currencies (including stablecoins), tokenization, blockchain, distributed ledger technologies.
• AI & Agentic Commerce: Autonomous or semi-autonomous AI agents initiating and executing transactions on behalf of users.
• Merchant-led Solutions: Merchants, including large technology companies, investing in proprietary-branded digital wallets and payment/financing solutions.

Competitive Response Strategy: American Express Company aims to expand leadership in the premium consumer space, build on its strong position in commercial payments, strengthen its global integrated network by increasing merchant acceptance and partner offerings, and reimagine customer and colleague experiences through innovation and technology. This includes refreshing card products, enhancing corporate card and expense management solutions, and deploying new technologies like generative AI.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Economic Downturns: Slow economic growth, contraction, or persistent inflation can significantly impact customer spending, borrowing, and ability to pay, leading to decreased demand for products and increased delinquencies/write-off rates.
• Geopolitical Instability: Military conflicts (e.g., Russian invasion of Ukraine, Middle East), trade wars, tariffs, and sanctions can negatively affect consumer/business spending, travel patterns, and demand for credit, leading to market disruptions and increased operational costs.
• Competition: Intense competition from traditional and non-traditional players, evolving technologies (e.g., digital currencies, agentic commerce), and alternative payment mechanisms could impact market share, pricing, and profitability.
• Technology Disruption: Rapid technological changes and the emergence of new technologies (e.g., quantum computing, advanced AI) could render existing technology obsolete, increase development costs, or expose the company to new vulnerabilities.
• Customer Concentration: Significant reliance on premium, high-spending customers and specific industries (e.g., airlines, 6% of billed business in 2025) makes the company sensitive to events disproportionately affecting these segments.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Supplier Dependency: Reliance on third-party service providers, cobrand partners, merchants, and technology providers (e.g., cloud-service providers) for integral operations exposes the company to risks of disruptions, operational issues, or failures by these third parties.
• Geographic Concentration: Operations and customer base in specific U.S. states (e.g., California, Florida, New York, Texas, Georgia, and New Jersey) make the company susceptible to events or conditions disproportionately affecting these regions.

Information Security & Cybersecurity:

• Cyberattacks: Increasing sophistication of cyberattacks (e.g., ransomware, social engineering, AI-assisted deepfakes) from state-sponsored actors and insiders poses risks of data breaches, operational disruptions, financial loss, and reputational damage.
• Data Privacy: Evolving global regulations (e.g., Gramm-Leach-Bliley Act, California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020, EU and UK General Data Protection Regulations, EU Digital Operational Resilience Act, EU AI Act, U.S. state AI legislation) increase compliance costs, operational complexity, and risk of significant fines or reputational harm from non-compliance or data incidents.
• Fraudulent Activity: Increased sophistication of fraudulent activities (e.g., account takeovers, identity theft, social engineering) leveraging new technologies like generative AI, poses risks of credit losses, reputational harm, and regulatory intervention.

Financial & Regulatory Risks

Market & Financial Risks:

• Interest Rate Changes: Fluctuations in interest rates could adversely affect net interest yield, net interest income, and customer behavior (e.g., balances carried, ability to pay).
• Credit & Liquidity: Exposure to individual and institutional credit risk, with potential for increased delinquencies and write-offs during economic downturns. Failure to meet capital adequacy and liquidity rules could result in regulatory restrictions on dividends, share repurchases, or business expansion.
• Credit Rating Downgrades: Reductions in credit ratings could increase funding costs, restrict access to capital markets, and reduce borrowing capacity.
• Currency Fluctuations: Exposure to foreign exchange risk from international operations, leading to unpredictable fluctuations in revenue if currency values change relative to the U.S. dollar.
• Investment Value: The value of equity investments (e.g., Amex Ventures) may be adversely impacted by economic, political, or market conditions, potentially resulting in impairment charges.

Regulatory & Compliance Risks:

• Evolving Regulation: Subject to extensive and complex government regulation and supervision globally, with heightened scrutiny on consumer financial products, payment networks, anti-money laundering/countering the financing of terrorism (AML/CFT), sanctions, and anti-corruption.
• Payments Regulation: Legislation and enforcement actions targeting card networks (e.g., interchange fees, surcharging, network routing) could impact business practices, pricing, and profitability, and affect cobrand relationships (e.g., in the European Union).
• Litigation & Enforcement: Involvement in numerous legal proceedings (e.g., class actions, arbitrations, governmental inquiries) with potential for significant fines, penalties, judgments, and reputational damage. Ongoing antitrust litigation regarding merchant contract provisions (anti-steering, non-discrimination) could force changes to business practices.
• Tax Challenges: Challenges to tax positions (e.g., Internal Revenue Service transfer pricing audit) and changes in tax laws (e.g., global minimum tax) could increase tax liabilities.

Geopolitical & External Risks

Geopolitical Exposure:

• Geographic Dependencies: Key country risks and operational exposure exist in various international markets.
• Trade Relations: Tariffs, trade barriers, and restrictions affecting cross-border commerce could negatively impact customers and partners.
• Sanctions & Export Controls: Compliance with global sanctions regimes and export controls limits business opportunities and increases compliance costs.

External Events:

• Natural Disasters & Catastrophic Events: Hurricanes, wildfires, widespread health emergencies, and operational incidents can disrupt operations, impact spending and credit performance, and affect infrastructure.
• Climate-related Risks: Physical risks (extreme weather) and transition risks (low-carbon economy changes) could impact operations, revenues, expenses, and lead to reputational harm or regulatory scrutiny.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Transaction Processing: Investment in systems for authorization, clearing, and settlement.
• Data Management & Analytics: Leveraging data for fraud reduction, risk underwriting, and targeted marketing.
• Artificial Intelligence & Machine Learning (AI & ML): Exploring uses for generative AI and integrating products/services in agentic commerce.
• Customer Interactions & Communications: Enhancing customer interfaces and service capabilities.
• Open Banking & Alternative Payments: Adapting to new payment mechanisms, digital currencies, and blockchain technologies.
• Authentication & Digital Identification: Developing secure authentication and tokenization technologies.
• Risk Management & Compliance Systems: Investing in systems to manage evolving risks.
• Innovation Pipeline: Developing new products and services, enhancing existing ones, and adapting to technological changes (e.g., Amex Travel App, Center acquisition).

Intellectual Property Portfolio:

• Patent Strategy: Significant importance placed on trademarks, service marks, and patents, with efforts to secure intellectual property rights globally.
• Licensing Programs: Licensing the American Express brand to third-party banks and institutions to extend network reach.
• IP Litigation: Potential risks from third parties alleging infringement or misappropriation of intellectual property rights, especially with emerging AI technologies.

Technology Partnerships:

• Strategic Alliances: Collaborations with technology companies to enhance digital capabilities and payment solutions.

Leadership & Governance

Executive Leadership Team (as of February 6, 2026)

Leadership Continuity: The company emphasizes maintaining a strong culture and Blue Box Values to attract, develop, and engage talent. Succession planning and leadership development initiatives are implied through talent management strategies.

Board Composition: The Board of Directors and its committees provide oversight of risk management, with each committee consisting entirely of independent directors. The Nominating, Governance and Public Responsibility Committee regularly reviews Board composition and recruits candidates with relevant expertise.

Human Capital Strategy

Workforce Composition (as of December 31, 2025):

• Total Employees: Approximately 76,800 colleagues.
• Geographic Distribution: Approximately 25,900 colleagues in the United States and approximately 50,900 colleagues outside the United States.
• Skill Mix: Not explicitly detailed, but the company emphasizes attracting and retaining qualified, highly motivated individuals with a range of perspectives, including expertise in key skills related to technology and AI.

Talent Management: Acquisition & Retention:

• Hiring Strategy: Focus on attracting, developing, and engaging talent through competitive total compensation, holistic well-being programs, and career growth opportunities.
• Retention Metrics: In 2025, 91% of colleagues who participated in the annual Colleague Experience Survey would recommend American Express Company as a great place to work.
• Employee Value Proposition: Competitive total compensation packages, pay equity reviews, and leading benefits.

Diversity & Development:

• Development Programs: Opportunities for on-the-job learning, cross-functional skill building, career coaching, mentoring, professional networking, rotation opportunities, and courses (on-demand and classroom-style). Mandatory trainings on laws, regulations, and policies.
• Culture & Engagement: Workplace culture centered on "Blue Box Values" (integrity, respect, controls, risk management). Holistic well-being programs include Healthy Living (physical), Healthy Minds Program (mental), and Smart Saving (financial).

Environmental & Social Impact

Environmental Commitments: Climate Strategy: The company acknowledges climate-related risks (physical and transition) and states that it could be criticized for the timing, scope, or nature of its climate-related initiatives and goals. No specific emissions targets, carbon neutrality commitments, or renewable energy sourcing strategies are detailed in this excerpt. Supply Chain Sustainability: Not explicitly detailed in the provided text.

Social Impact Initiatives:

• Community Investment: Tax credit investments promote affordable housing, community development, and small businesses in underserved areas, supporting compliance with the Community Reinvestment Act of 1977 by American Express National Bank.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Billed business tends to be moderately higher in the fourth quarter, which also leads to moderately higher Card Member loans and receivables outstanding. The fourth quarter typically has a higher proportion of retail-related billed business, which on average has a slightly lower merchant discount rate.
• Economic Sensitivity: The company's business is highly dependent on the level of consumer and business activity and the demand for payment and financing products. Economic slowdowns, contractions, or persistent inflationary pressures can significantly impact customer behaviors, including spending, borrowing, and ability to pay.
• Industry Cycles: The business is sensitive to impacts on travel and tourism, as a portion of its revenues are derived from travel-related spending and many partners' businesses relate to travel.

Planning & Forecasting: The company's liquidity management strategy includes projecting cash inflows and outflows under a variety of economic and market scenarios. Credit loss reserves incorporate current and future economic conditions over a reasonable and supportable period.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• Banking Regulation: American Express Company and American Express Travel Related Services Company, Inc. are bank holding companies subject to comprehensive consolidated supervision by The Board of Governors of the Federal Reserve System. American Express National Bank (AENB) is supervised by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. The company is also subject to the rulemaking, enforcement, and examination authority of the Consumer Financial Protection Bureau.
• Enhanced Prudential Standards: Classified as a Category III firm since 2024 (total consolidated assets exceeding $250 billion), subjecting it to heightened capital, liquidity, and prudential requirements, single-counterparty credit limits, and additional stress tests. Potential to become a Category II firm if cross-jurisdictional activity reaches $75 billion or more (was $76 billion as of December 31, 2025, with a four-quarter trailing average of $73 billion).
• Capital & Liquidity Regulation: Subject to Basel III capital rules (Common Equity Tier 1, Tier 1, Total capital ratios, Tier 1 leverage ratio, Supplementary Leverage Ratio), Liquidity Coverage Ratio (LCR), and Net Stable Funding Ratio (NSFR). As of December 31, 2025, average LCR was 212% and average NSFR was 123%, exceeding the regulatory requirement of 100%.
• Stress Testing & Capital Planning: Subject to annual supervisory stress testing (Comprehensive Capital Analysis and Review) and biennial company-run stress testing (Dodd-Frank Act Stress Tests). The stress capital buffer (SCB) for 2025-2026 is 2.5%, resulting in an effective minimum CET1 ratio of 7%.
• Resolution Planning: As a Category III firm, required to submit a holding company resolution plan every three years. AENB is required to submit a separate resolution plan to the Federal Deposit Insurance Corporation by July 1, 2026.
• Consumer Financial Products Regulation: Supervised by the Consumer Financial Protection Bureau, with broad rulemaking and enforcement authority. Subject to "money transmitter" or "sale of check" laws in most U.S. states. International regulators focus on consumer protection and responsible lending.
• Payments Regulation: Legislators and regulators focus on card network operations, including interchange fees, network routing, and merchant fees. Regulations have led to the exit of network businesses in the European Union and Australia. Uncertainty exists regarding the application of European Union interchange fee caps to cobrand and agent relationships.
• Privacy, Data Protection, Data Management, AI, Resiliency, Information Security and Cybersecurity: Subject to increasing global regulatory and legislative activity (e.g., Gramm-Leach-Bliley Act, California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020, EU and UK General Data Protection Regulations, EU Digital Operational Resilience Act, EU AI Act, U.S. state AI legislation).
• Anti-Money Laundering, Countering the Financing of Terrorism, Economic Sanctions and Anti-Corruption Compliance: Subject to significant global AML/CFT laws (e.g., Bank Secrecy Act, USA PATRIOT Act of 2001, Anti-Money Laundering Act of 2020, EU Anti-Money Laundering Directives), economic sanctions (e.g., U.S. Department of the Treasury’s Office of Foreign Assets Control), and anti-corruption laws (e.g., U.S. Foreign Corrupt Practices Act, UK Bribery Act).

Trade & Export Controls:

• Export Restrictions: Subject to country-specific limitations and licensing requirements.
• Sanctions Compliance: Maintains a global sanctions compliance program to meet applicable sanctions regimes.

Legal Proceedings:

• Antitrust Litigation: Defendant in class action lawsuits (e.g., Pizza Hazel, Inc., et al. v. American Express Co., et al.; 5-Star General Store aka Bento LLC, et al. v. American Express Co., et al.; David Moskowitz, et al. v. American Express Company and American Express Travel Related Services Company Inc.; B&R Supermarket, Inc. d/b/a Milam’s Market, et al. v. Visa Inc., et al.) challenging anti-steering and non-discrimination provisions in merchant agreements, and liability shift after EMV chip payment terminals.
• Fraudulent Transfer Claim: KServicing Wind Down Corp. filed an action against American Express Kabbage Inc. and American Express Travel Related Services Company, Inc., seeking to recover up to $746 million related to the acquisition of Kabbage, Inc.'s lending platform, alleging fraudulent transfer.
• Arbitration Proceedings: Involved in confidential arbitration with Mawarid Investments Limited regarding revenue allocation in a joint venture, with a final award rendered in January 2026.
• Tax Challenges: Challenged in several countries regarding the application of value-added taxes.
• Estimated Loss Exposure: For disclosed legal proceedings where a loss is reasonably possible, the current estimated range is zero to $250 million in excess of any recorded accruals.

Tax Strategy & Considerations

Tax Profile (2025):

• Effective Tax Rate: 21.5% (consistent with 2024).
• Geographic Tax Planning: Accumulated earnings of approximately $1.7 billion from certain non-U.S. subsidiaries are intended to be permanently reinvested outside the United States, avoiding state income and foreign withholding taxes of approximately $0.2 billion.
• Tax Reform Impact: The global minimum tax guidelines introduced by the Organization for Economic Cooperation and Development increased the company's tax liability in 2025 and are expected to continue to do so in 2026.
• Tax Audits: Currently under examination by the Internal Revenue Service for the 2017 and 2018 tax years, with a Notice of Proposed Adjustment regarding transfer pricing proposing an additional estimated U.S. federal income tax payment of approximately $185 million and penalties of approximately $50 million. The company plans to vigorously contest these adjustments.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Maintains cyber insurance, though there is no assurance that liabilities or losses will be fully covered or that the amount of insurance will be adequate.
• Risk Transfer Mechanisms: Uses derivative financial instruments (e.g., interest rate swaps, foreign exchange forward contracts) to manage exposures to market risks. These instruments are not used for trading purposes.