“We expect the transaction to close in the second half of the year and will provide more detail there.”

In context

“Christophe Le Caillec : Thanks, Steve, and good morning, everyone. We had another strong quarter with revenue growth of 10% EPS up 11% year-over-year. Pretax income was up 15%, while net income was up 8% due to prior year tax discretes. The strength of our premium customer base combined with the success of our product strategy has driven accelerated momentum in the first half of the year. Spend growth stepped up to the highest level we've seen in 3 years, up 9% FX adjusted, in both Q1 and Q2, and balanced growth continued to keep pace with spending. Demand for our premium products remain strong with over 70% of new accounts acquired on fee-based products this year. And card fees have now grown at a double-digit rate with 32 consecutive quarters. Importantly, our focus on premium products continues to drive improvements in credit performance. The strengthening we have seen in our credit performance is a deliberate outcome of our strategy to invest in value propositions that attract customers with high credit quality. As a result of that strategy, both delinquency and write-off rates remain below 2019 levels and delinquency rates have been between 1.2% and 1.3% for over 3 years. The combination of top line momentum, excellent credit and disciplined expense management have together supported 11% revenue growth and 14% EPS growth through the first half of the year even as we have invested in our U.S. Platinum value propositions. These results demonstrate the strength of our model and give us confidence in our ability to drive sustainable growth in line with our long-term aspiration. Turning to Billed Business trends for the quarter on Slide 4. Overall spend was up 9.4% FX adjusted, almost 1 point higher than Q1 and Growth was broad-based across categories with goods and services spending up 9% and T&E up 10%. Retail spending continued to be very strong, up 13% FX adjusted in the quarter. Restaurant spending, our largest T&E category, was up 10%. And line spending picked up further from the strong growth we saw in Q1 also up 10% year-over-year. Our customers are showing strong demand for travel with global MX travel bookings up 22% year-over-year in the quarter. U.S. consumer spending was up 11%, the highest level of growth since Q1 2018, excluding periods impacted by the pandemic. And we continue to see good engagement from our younger customers. Millennial and Gen-Z, which make up the larger share of U.S. consumer spending remained our fastest-growing cohorts this quarter. Commercial spending picked up to 5% with both U.S. SME and large global customers growing at the same pace. We are still in the early stages of our commercial product road map but we are encouraged by recent trends. At the same time, we do expect to see impacts from the sale of the small business co-brand portfolios in the balance of the year, which I will get to a bit later when I discuss our outlook. International also delivered another strong quarter. We spent up 12% FX adjusted. Growth remains broad-based across consumer and business customers and across geographies with 4 of our tough 5 countries growing at a double-digit rate. Turning to new card acquisitions. We acquired 3 million new cards in the quarter with continued momentum in acquiring younger customers and attracting new customers onto our fee-paying products. Looking at balance growth and credit. Total balance increased 9% year-over-year FX adjusted, in line with Billed Business. We have now lapped the roughly 1 percentage point impact on balance growth from when the small business co-brand portfolios were classified as held for sale over a year ago. As a reminder, although these 2 portfolios were classified as held for sale, we continue to earn economics until the transfer of the portfolios to the new issuers. One portfolio transfer happened in April this year and the second one is expected in Q3. Credit performance continues to be very strong. The Q2 write-off rate was flat versus last quarter while the delinquency rate declined. Provision expense of $1.1 billion included a reserve release of $191 million, mostly reflecting further strengthening of portfolio credit performance. The strength of our model also holds in a stressed environment as demonstrated by the Fed's recently released CCAR results, which show that under a severely adverse scenario, we have the lowest projected credit card loss rate across all banks and a pretax ROE of 3.8% over 9 quarters. Turning to revenue on Slide 13. The Revenue was up 10%, marking our fourth consecutive quarter of double-digit revenue growth. Net card fees reached record levels, and once again our fastest-growing line, up 15.4%. We continue to see good momentum in attracting customers on to our premium products with 75% of new accounts acquired on fee-paying products in the quarter, the highest level we have seen since we increased our focus on premium products. Net interest income was up 11% this quarter. We saw around a 1 percentage point impact to year-over-year NII growth from the sale of one of the small business co-brand portfolios. We continue to grow balances largely in line with spending while driving higher NII growth by expanding the margin earned on balances. We are also seeing demand for our deposit products with balances from our U.S. consumer and small business banking deposit products, up 9% year-over-year. The majority of deposits come from our card members, deepening their engagement with our membership model. And with around 10% of our U.S. card members currently holding a deposit account with us, we see a long runway for growth. Turning to expenses on Slide 18. Marketing and OpEx each grew 6% in the quarter. And the VCE to revenue ratio was 44.6%. The step-up versus the first half of last year reflects the investment we made in the value propositions of our U.S. Platinum cards when we refreshed these products in September last year. As we discussed at the start of the year, the VCE to revenue ratio is linked to the level of car member spending. Through the first half of the year, we have seen stronger spend than we expected coming into the year, including in categories like airlines, where customers earn and use rewards. These factors are contributing to a slightly higher VCE ratio than we originally expected. Moving on to capital. We returned $2.9 billion of capital to our shareholders, including $0.6 billion of dividends and $2.2 billion of share repurchases. Our business continues to generate very strong returns with an ROE of 36% this quarter. Our strong ROE enables us to return high levels of earnings to our shareholders over 75% over the past 3 years. Turning to our 2026 outlook. Let me spend a few minutes on how we're thinking about the balance of year. Starting with billings and revenue. We expect to see impacts from the sale of the 2 small business core brand portfolios. The transfer of the portfolios are staggered across Q2 and Q3, building to the food impact by Q4. Starting in Q4, a we expect a quarterly impact of around 1 percentage point to spend growth at around 2.5 percentage point impact to net interest income until we lap the portfolio sales. Put together, the impact of revenue to total revenue is about 1 percentage point. I would note that the portfolio sales will have a negligible impact to pretax income, and these impacts were incorporated in the guidance we provided for the year. On card fees, we expect growth to accelerate in Q3 and to exit the year in the high teens, and we continue to expect credit metrics to be generally stable throughout the year. Turning to expenses. We expect marketing to be up by around 10% year-over-year in the second half of the year, driven by increased investments in customer acquisition. We continue to expect operating expenses to grow in the mid-single digits for the full year. including the additional investment in technology we previously discussed. On the VCE ratio, given the higher level of spendings we have seen this year, we now expect the ratio to be between 44% and 45% for the full year. We will lap the impacts of the Platinum refresh starting in Q4, resulting in lower growth in VCE expenses. We feel really good about our momentum and our results halfway through the year, having delivered 11% revenue growth and 14% EPS growth as well as the opportunities for continued growth ahead. Given the momentum in the business, we are raising our revenue guidance and now expect full year revenue growth of 10%. And as we increase investments in new customer acquisition and technology development, we are maintaining our full year EPS guidance of $17.30 to $17.90. The guidance does not include the potential impact from the sale of our equity interest in Global Business Travel Group that we previously announced. We expect the transaction to close in the second half of the year and will provide more detail there. With that, I'll turn the call back over to Kartik, and we'll take your questions.”