NEW YORK — American Express reported a 28% increase in third-quarter profit as affluent customers continued spending and higher annual card fees boosted revenue, but the financial services company also announced plans to eliminate approximately 3,500 jobs as part of a broader effort to reduce operating costs.
The company reported net income of $3.71 billion, or $5.42 per share, compared with approximately $2.9 billion a year earlier. Excluding a one-time gain from the sale of its stake in Global Business Travel Group, adjusted earnings were $4.68 per share, exceeding Wall Street expectations.
Despite the strong earnings, American Express said it plans to reduce its workforce by approximately 5%, marking its first major round of layoffs in roughly a decade.
Chief Executive Steve Squeri told investors the reductions are intended to improve operating efficiency rather than respond to weakening customer demand.
The announcement comes as American Express faces rising expenses associated with its premium credit card rewards programs and intensifying competition from JPMorgan Chase, Capital One and other financial institutions targeting higher-income consumers.
A major contributor to the company’s earnings growth was its decision to increase the annual fee on its flagship Platinum Card from $695 to $895.
The $200 increase accompanied an expansion of cardholder benefits, including additional travel, dining and lifestyle rewards designed to retain customers willing to pay for premium financial services.
The pricing change had raised questions among investors about whether even affluent customers would accept substantially higher annual fees.
American Express said nearly all Platinum Card customers transitioned to the higher annual fee have retained their cards, suggesting the additional benefits have helped offset concerns about the increased cost.
Net card fees rose by more than $400 million compared with the same quarter last year, providing a significant boost to revenue.
Spending by existing cardholders also continued to increase. The average American Express customer charged $6,735 during the quarter, equivalent to approximately $2,245 per month. That represented a 5% increase from the previous year.
The results suggest that higher-income consumers continue to maintain spending levels despite persistent inflation and broader concerns about the economy.
American Express has historically benefited from a customer base that includes affluent households, frequent travelers and business owners whose spending patterns can be less sensitive to changes in everyday consumer prices.
The company generates revenue from merchant fees on card transactions, annual cardholder fees and interest charged on certain outstanding balances.
Growth in both card spending and annual membership fees contributed to the latest earnings increase.
However, rising operating expenses have become a concern for investors as credit card issuers compete to attract and retain wealthy customers through increasingly expensive rewards programs.
Travel credits, airport lounge access, hotel benefits and other premium services can strengthen customer loyalty but also increase the cost of operating those programs.
American Express has sought to balance those expenses through higher annual fees and increased spending among its cardholders.
The planned workforce reductions reflect management’s efforts to control expenses while continuing to invest in digital services, customer benefits and technology.
American Express also raised the lower end of its full-year adjusted earnings forecast, signaling continued confidence in its financial performance.
The company now expects adjusted earnings of $17.60 to $17.90 per share for 2026, compared with its previous forecast of $17.30 to $17.90.
American Express also maintained its forecast for approximately 10% revenue growth for the full year.
Total third-quarter revenue, net of interest expense, climbed 9% to a record $20.06 billion, although the figure fell slightly short of analyst estimates.
Cardholder spending increased 8% to $454 billion, while travel and entertainment spending rose 10%. Airline ticket spending increased 13%, reflecting both travel demand and higher ticket prices.
Despite stronger earnings and improved guidance, American Express shares declined more than 3% Friday as investors weighed the company’s restructuring plans and rising operating expenses.
The results highlight a contrast in the U.S. consumer economy: American Express continues to benefit from spending by higher-income households even as the company looks to reduce costs and operate with a smaller workforce.