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 portfolios, showing a slight decrease in write-off rates for consumer loans and a slight increase for small business loans over the past three months.

Summary

• American Express has provided delinquency and write-off statistics for its U.S. Consumer and U.S. Small Business Card Member lending portfolios for April, May, and June 2024.
• Total U.S. Consumer Card Member loans were $85.0 billion as of June 30, 2024, with a 30-day past due rate of 1.3% and a net write-off rate of 2.3%.
• Total U.S. Small Business Card Member loans were $28.6 billion as of June 30, 2024, with a 30-day past due rate of 1.4% and a net write-off rate of 2.4%.
• The total combined U.S. Consumer and Small Business Card Member loans were $113.6 billion as of June 30, 2024.
• The net write-off rate for U.S. Consumer loans decreased from 2.5% in April to 2.3% in June, while the net write-off rate for U.S. Small Business loans increased from 2.2% in April to 2.4% in June.
• The report also includes data for the American Express Credit Account Master Trust, which has a different loan composition than the total portfolio.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While there is a slight increase in small business loan write-offs, the consumer loan write-offs have improved. The overall picture is stable and within expected ranges.

Positives

• The net write-off rate for U.S. Consumer loans decreased from 2.5% in April to 2.3% in June, indicating an improvement in credit quality.
• The 30-day past due rate for U.S. Consumer loans remained stable at 1.3% in May and June.

Negatives

• The net write-off rate for U.S. Small Business loans increased from 2.2% in April to 2.4% in June, suggesting a slight deterioration in credit quality.
• The 30-day past due rate for U.S. Small Business loans remained constant at 1.4% across all three months.

Risks

• The increase in the net write-off rate for U.S. Small Business loans could indicate potential future credit quality issues.
• The performance of the Lending Trust may differ from the overall portfolio due to differences in loan characteristics and calculation methods.

Industry Context

This report provides insight into the credit health of American Express's card member loan portfolios, 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 industry benchmarks is difficult without specific data from competitors, but generally, a net write-off rate of 2.3% for consumer loans and 2.4% for small business loans is within the expected range for credit card issuers.
• Companies like Capital One and Discover Financial Services also report similar metrics, but direct comparisons require detailed analysis of their specific loan portfolios and reporting methodologies.
• The American Express Credit Account Master Trust's annualized default rate of 1.5% is also within the expected range for securitized credit card receivables.

Stakeholder Impact

• Shareholders will be interested in these credit performance metrics as they directly impact the company's profitability and risk profile.
• Creditors will monitor these metrics to assess the creditworthiness of American Express.
• Customers may be indirectly affected by changes in credit policies based on these performance trends.

Key Dates

Keywords

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