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

American Express has released delinquency and write-off statistics for its U.S. Consumer and Small Business Card Member lending portfolios for the months ended November 30, October 31, and September 30, 2024.

Summary

• American Express has provided delinquency and write-off statistics for its U.S. Consumer and Small Business Card Member loan portfolios.
• For U.S. Consumer Card Member loans, total loans were $89.3 billion in November, $88.0 billion in October, and $86.8 billion in September.
• The 30-day past due loan rate for U.S. Consumer Card Member loans remained constant at 1.4% across all three months.
• The net write-off rate for U.S. Consumer Card Member loans was 2.0% in November, 2.4% in October, and 1.9% in September.
• For U.S. Small Business Card Member loans, total loans were $30.7 billion in November, $30.5 billion in October, and $29.9 billion in September.
• The 30-day past due loan rate for U.S. Small Business Card Member loans was consistent at 1.5% across all three months.
• The net write-off rate for U.S. Small Business Card Member loans was 2.3% in November, 2.2% in October, and 2.1% in September.
• Total Card Member loans for both U.S. Consumer and U.S. Small Business were $120.0 billion in November, $118.5 billion in October, and $116.7 billion in September.
• The report also includes credit performance data for the American Express Credit Account Master Trust, showing an annualized default rate of 1.3% in November, 1.5% in October, and 1.3% in September.

Sentiment

Score: 4

Explanation: The sentiment is slightly negative due to the increase in write-off rates, which suggests a potential deterioration in credit quality. However, the stable delinquency rates provide some offset.

Positives

• The 30-day past due loan rates for both U.S. Consumer and Small Business Card Member loans remained stable across the three months.

Negatives

• The net write-off rate for U.S. Consumer Card Member loans increased from 1.9% in September to 2.4% in October before decreasing to 2.0% in November.
• The net write-off rate for U.S. Small Business Card Member loans increased from 2.1% in September to 2.3% in November.

Risks

• The write-off rates for both consumer and small business loans have increased over the three month period.
• The credit performance of the Lending Trust may vary from the total loan portfolios due to differences in loan characteristics and calculation methods.

Industry Context

This report provides insight into the credit health of American Express's loan portfolio, which is a key indicator for the financial services industry. The data is relevant for investors and analysts tracking consumer spending and credit trends.

Comparison to Industry Standards

• Comparing American Express's write-off rates to competitors like Capital One and Discover would provide a more comprehensive view of its performance.
• The delinquency rates are relatively stable, but the write-off rates show some volatility, which could be compared to industry averages to assess the company's risk management.
• The performance of the Lending Trust is also important to compare to similar securitization vehicles used by other financial institutions.

Stakeholder Impact

• Shareholders may be concerned about the increasing write-off rates, which could impact profitability.
• Creditors will monitor these trends to assess the credit risk associated with American Express's loan portfolio.
• Customers may be indirectly affected by changes in credit policies or interest rates.

Key Dates

Keywords

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