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 December 31, November 30, and October 31, 2023, and the three months ended December 31, 2023.

Summary

• American Express has provided delinquency and write-off data for its U.S. Consumer and Small Business Card Member loan portfolios.
• For U.S. Consumer Card Member loans, total loans were $83.2 billion as of December 31, 2023, with a 1.4% delinquency rate for loans 30 days past due.
• The net write-off rate for U.S. Consumer Card Member loans was 2.5% for December 2023, 1.7% for November 2023, and 1.9% for October 2023, with a three-month average of 2.1%.
• U.S. Small Business Card Member loans totaled $25.8 billion as of December 31, 2023, with a 1.4% delinquency rate for loans 30 days past due.
• The net write-off rate for U.S. Small Business Card Member loans was 2.2% for December 2023, 2.0% for both November and October 2023, with a three-month average of 2.1%.
• The total combined U.S. Consumer and Small Business Card Member loans were $109.0 billion as of December 31, 2023.
• The report also includes data for the American Express Credit Account Master Trust, showing an annualized default rate of 1.5% for December 2023.

Sentiment

Score: 4

Explanation: The document presents mixed signals with stable delinquency rates but increased write-off rates, suggesting a slightly negative outlook.

Positives

• The delinquency rates for both U.S. Consumer and Small Business Card Member loans remained relatively stable at 1.4% for December 2023.
• The total loan amounts for both U.S. Consumer and Small Business Card Member loans have shown a slight increase over the three months.

Negatives

• The net write-off rate for U.S. Consumer Card Member loans increased to 2.5% in December 2023, up from 1.7% in November 2023.
• The net write-off rate for U.S. Small Business Card Member loans increased to 2.2% in December 2023, up from 2.0% in November 2023.

Risks

• The increase in write-off rates for both consumer and small business loans in December could indicate a potential deterioration in credit quality.
• The timing of debt settlements in November, due to the Thanksgiving holiday, may have skewed the December write-off figures.

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 peers like Capital One and Discover would provide a more comprehensive view of its performance.
• The delinquency rates are within the expected range for the industry, but the increase in write-offs warrants further scrutiny.
• The performance of the American Express Credit Account Master Trust is similar to other securitized loan portfolios, but the differences in calculation methods make direct comparisons challenging.

Stakeholder Impact

• Shareholders may be concerned about the increase in write-off rates, which could impact profitability.
• Creditors will monitor these trends 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, consumer loans, small business loans, credit performance, American Express, loan portfolio