American Express (AXP) Financials

American Express (NYSE: AXP) showed solid top-line growth in Q1 2026, but the quarter also highlighted rising expenses and continued pressure on credit costs. Revenue improved year over year, earnings remained healthy, and operating cash flow was strong. At the same time, marketing and other operating costs stayed elevated, and the provision for credit losses remained meaningful.

Quarterly highlights versus Q1 2025:

• Total revenue rose to $18.9 billion from $17.0 billion, a strong year-over-year increase.
• Net income increased to $3.0 billion from $2.6 billion, showing continued profitability growth.
• Diluted EPS improved to $4.28 from $3.64.
• Operating cash flow jumped to $3.8 billion from $4.8 billion in Q1 2025? Actually, Q1 2026 operating cash flow was lower than the restated Q1 2025 level, but still remained comfortably positive at a healthy level.
• Retained earnings grew to $26.1 billion from $23.4 billion, reflecting ongoing earnings accumulation.
• Share count continued to trend down versus early 2025, which supports EPS growth.
• Cash and deposits remained large, with $53.5 billion in cash and interest-bearing deposits combined, supporting liquidity.
• The balance sheet stayed highly leveraged in the sense that deposits and other liabilities fund a very large asset base, which is normal for a financial company but worth monitoring.
• Provision for credit losses rose to $1.25 billion, indicating ongoing credit cost pressure.
• Marketing expense was still elevated at $3.1 billion, and other operating expenses were also substantial, keeping a lid on margin expansion.

Three-year trend analysis:

Over the last several years, American Express has delivered a fairly consistent earnings recovery and growth story. From Q1 2023 to Q1 2026, revenue climbed from $14.3 billion to $18.9 billion, while quarterly net income increased from $1.8 billion to $3.0 billion. That’s a strong sign that the company has been able to grow both spending and fee-related revenue while maintaining solid profitability.

The income statement also shows that non-interest income has become a major profit engine. In Q1 2026, non-interest income was $14.2 billion, far larger than net interest income of $4.7 billion. That suggests the brand, card fees, and transaction activity continue to be central to the business model. Net interest income has also trended upward over time, but the bigger story is the steady expansion in fee-driven revenue.

Cost discipline is more mixed. Salaries, marketing, and other operating expenses have all moved higher over time, and in some quarters marketing has risen sharply. Even so, American Express has generally grown revenue faster than costs, allowing pre-tax income and net income to improve. In Q1 2026, total non-interest expense reached $13.9 billion, which is still high, but not enough to prevent strong earnings.

Credit quality remains the main item to watch. The provision for credit losses has stayed elevated across the period, ranging from roughly $1.1 billion to $1.4 billion per quarter in recent periods. That doesn’t signal immediate distress, but it does suggest management is still being cautious about borrower performance and consumer credit conditions.

From a cash flow perspective, American Express has generally produced strong operating cash flow and used financing activity actively to support the balance sheet and capital returns. The company continues to pay dividends, repurchase shares, and manage debt and deposits dynamically. That gives it flexibility, but it also means investors should keep an eye on funding costs and leverage trends.

Bottom line: American Express appears to be in a healthy earnings and cash generation position, with good revenue momentum and strong profitability. The key risks are expense growth and credit loss provisioning, but the overall multi-year trend remains positive for long-term investors.