8-K: American Express Discloses Mixed Credit Performance with Rising Small Business Delinquencies

American Express Company has released preliminary credit performance statistics for its U.S. Consumer and U.S. Small Business Card Member loans for the second quarter of 2025, showing stable consumer metrics but increased delinquency and write-off rates in the small business segment.

Summary

• American Express Company furnished preliminary delinquency and write-off statistics for its U.S. Consumer and U.S. Small Business Card Member loans held for investment for the months ended June 30, May 31, and April 30, 2025, and the three months ended June 30, 2025.
• Effective June 1, 2025, $1.6 billion of Card Member loans related to the Amazon small business cobrand portfolio were reclassified to Card Member loans held for sale, and are not included in the June 2025 statistics for loans held for investment.
• U.S. Consumer Card Member loans held for investment totaled $92.6 billion as of June 30, 2025, with 30 days past due loans at 1.3% and a net write-off rate of 2.1% for the month.
• U.S. Small Business Card Member loans held for investment totaled $30.1 billion as of June 30, 2025, with 30 days past due loans at 1.6% and a net write-off rate of 2.6% for the month.
• Total Card Member loans held for investment (U.S. Consumer and U.S. Small Business) were $122.7 billion as of June 30, 2025.
• The American Express Credit Account Master Trust reported an ending total principal balance of $25.3 billion, an annualized default rate of 1.3% net of recoveries, and $0.2 billion in 30+ days delinquent amounts for June 2025.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative. While U.S. Consumer credit metrics remained stable, the U.S. Small Business segment showed a slight deterioration in both delinquency and write-off rates. The reclassification of a significant loan portfolio adds complexity to the analysis without further context.

Positives

• U.S. Consumer Card Member loan delinquency remained stable at 1.3% for June 2025, consistent with May and April 2025.
• The net write-off rate for U.S. Consumer Card Member loans remained stable at 2.1% for June 2025, consistent with May 2025.
• The American Express Credit Account Master Trust showed stable credit performance with an annualized default rate of 1.3% and 30+ days delinquent amounts of $0.2 billion across April, May, and June 2025.

Negatives

• The 30 days past due loans as a percentage of total for U.S. Small Business Card Member loans increased to 1.6% in June 2025 from 1.5% in May 2025.
• The net write-off rate for U.S. Small Business Card Member loans increased to 2.6% in June 2025 from 2.4% in May 2025.
• The reclassification of $1.6 billion in Amazon small business cobrand loans to held for sale impacts the comparability of U.S. Small Business Card Member loan figures for June 2025.

Risks

• Credit performance statistics for the American Express Credit Account Master Trust may differ from the total U.S. Consumer or U.S. Small Business Card Member loan portfolios due to differences in loan mix, vintage, and aging.
• The calculation mechanics for the Lending Trust's net write-off rate, which uses end-of-period principal balances, differ from the U.S. Consumer and U.S. Small Business portfolios, which use average loan balances, potentially leading to variations.
• Additions to the Lending Trust within a particular period can impact its reported credit performance.
• Variability in credit performance statistics for both the overall portfolios and the Lending Trust can occur due to factors such as the number of days in a month, timing of holidays and weekends, seasonality, and the timing of information received from third parties.

Future Outlook

The document does not provide any explicit forward-looking statements or guidance regarding future credit performance or business outlook.

Industry Context

This disclosure provides a routine update on American Express's credit portfolio health, a critical indicator for financial services companies. The slight deterioration in small business credit quality could reflect broader economic pressures on this segment, while the stability in consumer credit suggests resilience in that area. These trends are closely watched by investors to gauge the company's asset quality and potential for future loan losses, especially in the context of prevailing interest rates and economic growth forecasts.

Comparison to Industry Standards

• The document explicitly states that the Card Member loans securitized through the Lending Trust do not possess identical characteristics with the total U.S. Consumer or U.S. Small Business Card Member loan portfolios, making direct comparisons challenging.
• It also notes that the reported credit performance of the Lending Trust may be better or worse due to differences in mix, vintage, aging of loans, and calculation methodologies (end-of-period vs. average balances) compared to the overall portfolios.
• No specific comparable companies, projects, or global benchmarks are provided within the document to assess the results against industry standards.

Stakeholder Impact

• Shareholders: The credit quality metrics directly impact the perceived risk and profitability of the company's loan portfolio, influencing investor confidence and potentially share price.
• Customers (Card Members): Changes in credit performance could indirectly lead to adjustments in lending policies or product offerings, affecting access to credit or terms for consumers and small businesses.

Key Dates

Recommendation

Keywords

American Express, AXP, Credit Performance, Delinquency Rates, Write-off Rates, Card Member Loans, Consumer Loans, Small Business Loans, SEC Filing, 8-K, Financial Metrics, Credit Quality