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 for March, April, and May 2024, showing some fluctuations in these key credit metrics.

Summary

• American Express has provided delinquency and write-off statistics for its U.S. Consumer and Small Business card member loan portfolios for the months ending March 31, April 30, and May 31, 2024.
• For U.S. Consumer Card Member loans, total loans increased from $82.3 billion in March to $84.0 billion in May.
• The 30-day past due loan rate for U.S. Consumer loans was 1.4% in March and April, decreasing slightly to 1.3% in May.
• The net write-off rate for U.S. Consumer loans was 2.3% in March, increased to 2.5% in April, and decreased to 2.4% in May.
• For U.S. Small Business Card Member loans, total loans increased from $27.6 billion in March to $28.2 billion in May.
• The 30-day past due loan rate for U.S. Small Business loans was 1.5% in March, decreasing to 1.4% in April and May.
• The net write-off rate for U.S. Small Business loans was 2.4% in March, decreased to 2.2% in April, and increased to 2.5% in May.
• Total card member loans for both U.S. Consumer and Small Business segments increased from $109.9 billion in March to $112.2 billion in May.
• The report also includes credit performance data for the American Express Credit Account Master Trust, showing an annualized default rate of 1.4% in May, 1.6% in April, and 1.4% in March.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While there are some increases in write-off rates, the overall trend is stable, and the company is providing transparency with these disclosures. The slight increase in write-offs is a concern but not unexpected in the current economic environment.

Positives

• The 30-day past due rate for U.S. Consumer loans decreased slightly to 1.3% in May.
• The net write-off rate for U.S. Consumer loans decreased to 2.4% in May.
• Total card member loans for both U.S. Consumer and Small Business segments increased from $109.9 billion in March to $112.2 billion in May.

Negatives

• The net write-off rate for U.S. Small Business loans increased to 2.5% in May.
• The net write-off rate for U.S. Consumer loans was 2.5% in April, which is higher than the 2.3% in March and 2.4% in May.

Risks

• Fluctuations in write-off rates could indicate potential credit quality issues.
• The differences in loan characteristics between the total portfolio and the securitized loans in the Lending Trust could make it difficult to compare performance directly.
• Changes in the mix, vintage, and aging of loans can impact the reported credit performance.

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 stability and performance in the credit card industry. These metrics are closely watched by investors and analysts to assess the risk associated with the company's lending activities.

Comparison to Industry Standards

• Comparing American Express's delinquency and write-off rates to those of competitors like Visa, Mastercard, and Discover would provide a more comprehensive view of its performance.
• For example, Discover Financial Services, which also has a significant lending business, reports similar metrics in their quarterly and monthly reports.
• The annualized default rate of 1.4% for the American Express Credit Account Master Trust is within the range of other securitized credit card portfolios, but a detailed comparison would require access to specific data from other trusts.
• It is important to note that the Lending Trust data is not directly comparable to the total portfolio data due to differences in loan characteristics and calculation methods.

Stakeholder Impact

• Shareholders will use this information to assess the credit risk associated with American Express's lending portfolio.
• Creditors will monitor these metrics to evaluate the company's ability to repay its debts.
• Customers may be indirectly affected by changes in credit policies based on these performance metrics.

Key Dates

Keywords

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