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 August, September, and October 2024, showing some fluctuations in these 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 of August, September, and October 2024.
• For U.S. Consumer Card Member loans, total loans were $88.0 billion in October, $86.8 billion in September, and $87.3 billion in August.
• The 30-day past due loan rate for U.S. Consumer loans was 1.4% in both October and September, and 1.3% in August.
• The net write-off rate for U.S. Consumer loans was 2.4% in October, 1.9% in September, and 2.2% in August.
• For U.S. Small Business Card Member loans, total loans were $30.5 billion in October, $29.9 billion in September, and $30.1 billion in August.
• The 30-day past due loan rate for U.S. Small Business loans was 1.5% in both October and September, and 1.4% in August.
• The net write-off rate for U.S. Small Business loans was 2.2% in October, 2.1% in September, and 2.3% in August.
• The total combined U.S. Consumer and Small Business Card Member loans were $118.5 billion in October, $116.7 billion in September, and $117.4 billion in August.
• The report also includes data for the American Express Credit Account Master Trust, showing an annualized default rate of 1.5% in October, 1.3% in September, and 1.4% in August.

Sentiment

Score: 4

Explanation: The increase in consumer loan write-offs is a negative signal, although the overall loan portfolio remains relatively stable. The sentiment is slightly negative due to the worsening credit metrics.

Positives

• The 30-day past due loan rates for both U.S. Consumer and Small Business loans remained relatively stable across the three months.
• The total loan balances for both U.S. Consumer and Small Business Card Member loans have remained relatively consistent over 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.
• The net write-off rate for U.S. Small Business Card Member loans increased from 2.1% in September to 2.2% in October.

Risks

• The increase in write-off rates for U.S. Consumer loans in October could indicate a potential deterioration in credit quality.
• The variability in monthly statistics due to factors like holidays and seasonality could make it difficult to identify clear trends.

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 those of competitors like Capital One or Discover would provide a better understanding of its relative performance.
• The reported default rates of the American Express Credit Account Master Trust can be compared to similar securitized loan trusts to assess the quality of the underlying assets.
• Industry benchmarks for credit card delinquency and write-off rates vary depending on economic conditions and the specific customer base, so a detailed comparison would require further analysis.

Stakeholder Impact

• Shareholders may be concerned about the increase in write-off rates, which could impact future earnings.
• Creditors will monitor these metrics to assess the risk associated with American Express's debt.
• Customers may be indirectly affected by changes in credit policies or interest rates.

Key Dates

Keywords

delinquency rates, write-off rates, credit performance, consumer loans, small business loans, American Express, loan portfolio, default rate