American Express Co. (AXP) receives Old York Operational Quality (AA) Rating for fiscal year 2025
(AA) | Financial | Payments & Credit
By: Old York Financial
A Private Principal Research Report
the verdict
Old York Financial has assigned American Express (AXP) an Operational Quality (AA) Rating. While Mastercard and Visa are "Pure Toll Bridges," Amex is a "Vertical Monopoly." It owns the merchant relationship, the cardholder relationship, and the bank. Following a 2025 where Gen Z and Millennial spending grew by 15%, Amex has solidified its position as the lifestyle brand of the affluent. However, because Amex acts as the lender holding $150B+ in loans, it carries a level of credit risk that prevents it from reaching the "Sovereign AAA" status reserved for the capital-light networks.
the old york analysis
owner earnings: the premium spread At Old York, we bypass the complexities of banking provisions to find the "Spendable Cash" available to a principal.
2025 Reported Net Income: $10.80 Billion
(+) Depreciation & Amortization: $2.20 Billion
(–) Maintenance CapEx: ($1.10 Billion)
= OLD YORK OWNER EARNINGS: $11.90 Billion
Analyst Note: Amex’s owner earnings are robust, driven by "Card Member Winners"; people who pay their annual fees for the prestige and rewards. Unlike a bank that relies solely on interest, Amex earns 60% of its revenue from Discount Revenue (merchant fees) and Service Fees. This "Fee-First" model is far more durable than traditional lending.
growth & market dominance
Revenue Growth (2025): 10.0% ($67.50 Billion).
5-Year Revenue Avg: ~12.0%.
EPS Growth (2025): 14.0% ($15.25).
Analyst Note: Growth in 2025 was fueled by "Premium Card" acquisitions. Amex added over 3 million new proprietary cards this year, with 60% of those coming from the younger demographic. This ensures a multi-decade "LTV" (Lifetime Value) for the principal owner. Amex isn't just a card; it’s an entry ticket into an ecosystem.
operational efficiency (the "closed-loop" check)
ROIC (Return on Invested Capital): 18.5%
Old York Standard: Sovereign AAA typically requires >15%.
Analyst Note: While an 18.5% ROIC is excellent for a financial institution, it is a "Fortress" level rather than "Sovereign." Because Amex must hold capital against its loan book, its ROIC will never touch the 50% heights of Mastercard. However, its Return on Equity (ROE) remains a staggering 30%+, proving that management is highly efficient at compounding internal capital.
the fortress check
Pricing Power: HIGH. Amex charges merchants more than Visa/Mastercard because its cardholders spend 3x more on average. Merchants pay the premium to access the high-spending "Amex Member." This is a classic "Brand Moat."
The Membership Moat: Card Fee revenue grew to over $7.5B in 2025. This is "Subscription Revenue" the holy grail for a principal. It is high-margin, recurring, and paid upfront by the customer.
Solvency: While "Net Debt" is a banking metric, we look at Tier 1 Capital. At 10.7%, Amex is well-capitalized. However, the principal must remain aware of Provision for Credit Losses, which totaled ~$5.2B in 2025. This "drag" is why it sits one notch below the AAA giants.
final determination
Rating: Old York Fortress (AA)
Classification: The Vertical Lifestyle Network. American Express is a "Fortress" business. It owns the most valuable customer base in the world. For a principal, it represents a high-yield, high-prestige asset. It is the best "Bank" in the world because it is actually a "Club" that happens to offer credit. In our registry, it serves as the Gold Standard for Integrated Financials.
Disclaimer: Old York Financial operates privately as a principal and sells corporate advisory. Old York Financial is not an accountant, a financial advisor, a broker, an agent, a lawyer, or a portfolio manager. This report is for informational purposes only
