8-K: American Express Discloses Delinquency and Write-Off Rates for U.S. Card Member Loans

American Express has released delinquency and write-off statistics for its U.S. Consumer and Small Business Card Member loan portfolios for June, July, and August 2024.

Summary

• American Express has provided delinquency and write-off data for its U.S. Consumer and Small Business Card Member loan portfolios for the months ending June 30, July 31, and August 31, 2024.
• Total U.S. Consumer Card Member loans were $87.3 billion as of August 31, 2024, up from $85.0 billion at the end of June 2024.
• The 30-day past due loan rate for U.S. Consumer Card Members remained steady at 1.3% across all three months.
• The net write-off rate for U.S. Consumer Card Member loans was 2.2% in August, down from 2.3% in June.
• Total U.S. Small Business Card Member loans were $30.1 billion as of August 31, 2024, up from $28.6 billion at the end of June 2024.
• The 30-day past due loan rate for U.S. Small Business Card Members was consistent at 1.4% across all three months.
• The net write-off rate for U.S. Small Business Card Member loans was 2.3% in August, down from 2.4% in June.
• Total combined U.S. Consumer and Small Business Card Member loans reached $117.4 billion as of August 31, 2024.
• The report also includes data for the American Express Credit Account Master Trust, showing an annualized default rate of 1.4% for August, 1.2% for July, and 1.5% for June.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the write-off rates are still significant, the stability in delinquency rates and the decrease in write-off rates are positive signs. There are no major red flags, but the results are not overwhelmingly positive.

Positives

• The 30-day past due rates for both U.S. Consumer and Small Business loans remained consistent across the three months, indicating stable credit quality.
• The net write-off rates for both U.S. Consumer and Small Business loans decreased from June to August, suggesting an improvement in loan performance.
• Total loan balances for both U.S. Consumer and Small Business Card Members increased over the three months, indicating growth in lending activity.

Negatives

• The net write-off rates for both U.S. Consumer and Small Business loans remain relatively high, indicating a significant amount of unrecoverable debt.
• The annualized default rate for the American Express Credit Account Master Trust fluctuated slightly over the three months, suggesting some volatility in credit performance.

Risks

• The relatively high net write-off rates could indicate potential credit quality issues within the loan portfolios.
• Fluctuations in the default rate of the Lending Trust could signal potential future credit risks.
• Changes in economic conditions could impact the delinquency and write-off rates in the future.

Industry Context

This report provides insight into the credit health of American Express's lending portfolio, which is a key indicator of the company's financial performance and risk management. The data is relevant to investors and analysts monitoring the consumer credit market and the performance of financial institutions.

Comparison to Industry Standards

• Comparing American Express's write-off rates to other major credit card issuers like Capital One and Discover would provide a more comprehensive view of its performance.
• The delinquency rates can be benchmarked against industry averages to assess whether American Express is performing better or worse than its peers.
• The performance of the American Express Credit Account Master Trust can be compared to similar securitization trusts to evaluate its relative risk and return profile.

Stakeholder Impact

• Shareholders will be interested in the credit performance data as it impacts the company's profitability and risk profile.
• Creditors will monitor the delinquency and write-off rates to assess the creditworthiness of American Express.
• Customers may be indirectly affected by changes in lending policies based on these performance metrics.

Key Dates

Keywords

delinquency, write-off, credit, loans, American Express, consumer, small business, card member, default rate, lending trust