8-K: American Express Discloses July 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 U.S. Small Business Card Member lending portfolios for May, June, and July 2024, showing a slight decrease in write-off rates.

Summary

• American Express has provided delinquency and write-off statistics for its U.S. Consumer and U.S. Small Business Card Member loan portfolios for the months of May, June, and July 2024.
• For U.S. Consumer Card Member loans, total loans increased from $84.0 billion in May to $85.9 billion in July.
• The 30-day past due loan rate for U.S. Consumer Card Member loans remained constant at 1.3% across all three months.
• The net write-off rate for U.S. Consumer Card Member loans decreased from 2.4% in May to 2.1% in July.
• For U.S. Small Business Card Member loans, total loans increased from $28.2 billion in May to $29.2 billion in July.
• The 30-day past due loan rate for U.S. Small Business Card Member loans remained constant at 1.4% across all three months.
• The net write-off rate for U.S. Small Business Card Member loans decreased from 2.5% in May to 2.3% in July.
• Total Card Member loans for both U.S. Consumer and U.S. Small Business segments increased from $112.2 billion in May to $115.1 billion in July.
• The report also includes credit performance data for the American Express Credit Account Master Trust, showing an annualized default rate of 1.2% for July, down from 1.5% in June.

Sentiment

Score: 7

Explanation: The document shows a positive trend with decreasing write-off rates and a lower default rate in the Lending Trust, but the constant delinquency rates and still relatively high write-off rates prevent a higher score.

Positives

• The net write-off rates for both U.S. Consumer and U.S. Small Business Card Member loans decreased from May to July.
• The annualized default rate for the American Express Credit Account Master Trust decreased from 1.5% in June to 1.2% in July.

Negatives

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

Risks

• The 30-day past due loan rates remaining constant could indicate potential future credit quality issues if not addressed.
• The write-off rates, while decreasing, are still at relatively high levels, indicating ongoing credit losses.

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 trends in delinquency and write-off rates are closely watched by investors and analysts to assess the overall health of the consumer credit market.

Comparison to Industry Standards

• Comparing American Express's write-off rates to other major credit card issuers like Visa and Mastercard is difficult without their specific data for the same period.
• However, the reported rates are within the range of what is typically seen in the credit card industry, but the slight decrease in write-offs is a positive sign.
• The Lending Trust's default rate of 1.2% is relatively low compared to some other securitized credit card portfolios, suggesting a higher quality of assets within the trust.

Stakeholder Impact

• Shareholders may view the decreasing write-off rates positively, as it indicates improved credit quality and potentially lower losses.
• Creditors may also see the lower default rates in the Lending Trust as a positive sign of the company's credit risk management.
• 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, write-off, credit, loans, American Express, consumer, small business, card member, default rate