⚠ Ten and a Half Percent Leaves Little SlackLow threat

American Express (AXP) — threat to the moat

American Express returns nearly all it earns and holds its capital ratio near 10.5%, so a bad year would be felt first in the buyback.

American Express keeps just enough capital and returns the rest, and that policy leaves little room for a surprise. Its common equity tier 1 ratio was 10.5% at the end of 2025, as it was at the end of 2021, 2023 and 202412, and 10.4% in June 20263. The target range is 10 to 11 percent4.

Common equity tier 1 ratio (%)10.5%202110.3%202210.5%202310.5%202410.5%202510.4%Q2 2026American Express Forms 10-K FY2023 and FY2025; Q2 2026 supplement
Held in a narrow band for five years.

The payout shows how little is kept. In the first half of 2026 the company returned $5,202 million, including $3,905 million of share repurchases5. It returned $2,887 million in the second quarter alone6, against net income of $3,110 million7.

That is sensible while earnings are steady. A company earning about a third on equity has little use for extra capital, and holding it would only lower the return.

The risk is that the capital cushion is sized for normal years. A reserve build like 2020's, when the reserve rose from 2.7% to 7.3% of loans8, would come straight out of capital, and with the ratio near 10.5% there is limited room before buybacks would have to stop.

That is not a threat to the moat, but it is a threat to the shareholder's experience of it. Buybacks have been a large part of earnings-per-share growth.

The ratio itself is the thing to watch. At 10.4% in the second quarter of 20269, it sits a little above the bottom of the range; a reading below 10% would mean Amex had to choose between rebuilding capital and continuing to return it.

References
  1. ReportedIts common equity tier 1 ratio was 10.5% at the end of 2025, as it was at the end of 2021, 2023 and 2024, and 10.4% in June 2026.
    American Express Form 10-K for fiscal 2025 - capital, returns, funding, interest rate sensitivity, credit and share repurchases. — FY2025 · publ. 6 February 2026 · source ↗
  2. ReportedIts common equity tier 1 ratio was 10.5% at the end of 2025, as it was at the end of 2021, 2023 and 2024, and 10.4% in June 2026.
    American Express Form 10-K for fiscal 2023 - income statements for 2021-2023 on the current presentation, segment results for 2022, discount revenue as a share of billed business. — FY2023 · publ. February 2024 · source ↗
  3. ReportedIts common equity tier 1 ratio was 10.5% at the end of 2025, as it was at the end of 2021, 2023 and 2024, and 10.4% in June 2026.
    American Express second-quarter 2026 statistical supplement, Form 8-K exhibit 99.2 - segment results, card metrics, capital and credit - consolidated results, card metrics, capital and credit. — Q2 2026 · publ. 24 July 2026 · source ↗
  4. ReportedThe target range is 10 to 11 percent.
    American Express Form 10-K for fiscal 2025 - income statement, business description and management. — FY2025 · publ. 6 February 2026 · source ↗
  5. ReportedIn the first half of 2026 the company returned $5,202 million, including $3,905 million of share repurchases.
    American Express Form 10-Q for the quarter ended 30 June 2026 - capital return, held-for-sale cobrand portfolios, discount revenue drivers and the Millennial and Gen-Z cohort. — Q2 2026 · publ. 24 July 2026 · source ↗
  6. ReportedIt returned $2,887 million in the second quarter alone, against net income of $3,110 million.
    American Express Form 10-Q for the quarter ended 30 June 2026 - capital return, held-for-sale cobrand portfolios, discount revenue drivers and the Millennial and Gen-Z cohort. — Q2 2026 · publ. 24 July 2026 · source ↗
  7. ReportedIt returned $2,887 million in the second quarter alone, against net income of $3,110 million.
    American Express second-quarter 2026 earnings release, Form 8-K exhibit 99.1. — Q2 2026 · publ. 24 July 2026 · source ↗
  8. ReportedA reserve build like 2020's, when the reserve rose from 2.7% to 7.3% of loans, would come straight out of capital, and with the ratio near 10.5% there is limited room before buybacks would have to stop.
    American Express Form 10-K for fiscal 2021 - billed business 2019-2021, average discount rate, net write-off rates, the 2021 reserve release and Delta shares. — FY2021 · publ. February 2022 · source ↗
  9. ReportedAt 10.4% in the second quarter of 2026, it sits a little above the bottom of the range; a reading below 10% would mean Amex had to choose between rebuilding capital and continuing to return it.
    American Express second-quarter 2026 statistical supplement, Form 8-K exhibit 99.2 - segment results, card metrics, capital and credit - consolidated results, card metrics, capital and credit. — Q2 2026 · publ. 24 July 2026 · source ↗
Sources
Generated September 28, 2026