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 loan portfolios for the months ended February 29, January 31, and December 31, 2023.

Summary

• American Express has provided delinquency and write-off data for its U.S. Consumer and U.S. Small Business Card Member loan portfolios.
• For U.S. Consumer Card Member loans, total loans were $80.4 billion as of February 29, 2024, down from $83.2 billion at the end of December 2023.
• The 30-day past due loan rate for U.S. Consumer Card Member loans was 1.5% for both January and February 2024, up from 1.4% in December 2023.
• The net write-off rate for U.S. Consumer Card Member loans was 2.4% in February 2024, up from 2.1% in January 2024 and down from 2.5% in December 2023.
• For U.S. Small Business Card Member loans, total loans were $26.5 billion as of February 29, 2024, up from $25.8 billion at the end of December 2023.
• The 30-day past due loan rate for U.S. Small Business Card Member loans was 1.5% for both January and February 2024, up from 1.4% in December 2023.
• The net write-off rate for U.S. Small Business Card Member loans was 2.3% in February 2024, up from 2.1% in January 2024 and 2.2% in December 2023.
• Total combined U.S. Consumer and U.S. Small Business Card Member loans were $107.0 billion as of February 29, 2024, down from $109.0 billion at the end of December 2023.
• The report also includes data for the American Express Credit Account Master Trust, showing an annualized default rate of 1.7% for the period from February 1, 2024, through February 29, 2024.

Sentiment

Score: 4

Explanation: The document reveals a deterioration in credit metrics, specifically an increase in write-off rates and default rates, which is a negative signal for investors.

Positives

• The total loan balances for both U.S. Consumer and U.S. Small Business Card Member loans have remained relatively stable over the three months reported.
• The 30-day past due loan rates for both U.S. Consumer and U.S. Small Business Card Member loans are consistent at 1.5% for both January and February 2024.

Negatives

• The net write-off rate for U.S. Consumer Card Member loans increased from 2.1% in January 2024 to 2.4% in February 2024.
• The net write-off rate for U.S. Small Business Card Member loans increased from 2.1% in January 2024 to 2.3% in February 2024.
• The annualized default rate for the American Express Credit Account Master Trust increased from 1.3% in January 2024 to 1.7% in February 2024.

Risks

• The increase in net write-off rates for both U.S. Consumer and U.S. Small Business Card Member loans could indicate a potential increase in credit risk.
• The increase in the annualized default rate for the American Express Credit Account Master Trust could signal a deterioration in the credit quality of the securitized loans.

Industry Context

This report provides insight into the credit health of American Express's loan 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 other major credit card issuers like Capital One or Discover would provide a more comprehensive view of its performance.
• The delinquency rates can be compared to industry averages to assess whether American Express is experiencing higher or lower credit risk than its peers.
• The performance of the American Express Credit Account Master Trust can be benchmarked against similar securitization trusts to evaluate the quality of the underlying assets.

Stakeholder Impact

• Shareholders may be concerned about the increase in write-off and default rates, which could negatively impact profitability.
• Creditors may view the increased credit risk as a potential concern.
• Customers may not be directly impacted by this report, but it reflects the overall health of the company's lending business.

Key Dates

Keywords

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