8-K: American Express Reports Delinquency and Write-Off Rates for U.S. Consumer and Small Business Card Loans

American Express discloses delinquency and write-off statistics for its U.S. Consumer and U.S. Small Business Card Member lending portfolios for December 2024, January 2025, and February 2025.

Summary

• American Express has furnished delinquency and write-off statistics for its U.S. Consumer and U.S. Small Business Card Member lending portfolios.
• The data covers the months ended December 31, 2024, January 31, 2025, and February 28, 2025.
• Effective December 1, 2024, $758 million of Card Member loans related to the Lowes small business cobrand portfolio were reclassified to Card Member loans held for sale.
• These loans are not included in the delinquency and write-off rate statistics provided.
• For U.S. Consumer Card Member loans, total loans were $87.8 billion in February 2025, $89.4 billion in January 2025, and $92.6 billion in December 2024.
• The 30 days past due loans as a percentage of total loans remained constant at 1.4% for all three months.
• The net write-off rate for U.S. Consumer Card Member loans was 2.5% in February 2025, 2.3% in January 2025, and 2.1% in December 2024.
• For U.S. Small Business Card Member loans, total loans were $30.2 billion in February 2025, $30.1 billion in January 2025, and $29.6 billion in December 2024.
• The 30 days past due loans as a percentage of total loans were 1.6% in February and January 2025, and 1.5% in December 2024.
• The net write-off rate for U.S. Small Business Card Member loans was 2.6% in February 2025, 2.5% in January 2025, and 2.4% in December 2024.
• The total Card Member loans for U.S. Consumer and U.S. Small Business were $118.0 billion in February 2025, $119.5 billion in January 2025, and $122.2 billion in December 2024.
• The report also includes credit performance data for the American Express Credit Account Master Trust (the Lending Trust).

Sentiment

Score: 4

Explanation: The sentiment is slightly negative due to the increase in net write-off rates, indicating a potential deterioration in credit quality. However, delinquency rates remain stable, providing some offset.

Positives

• Delinquency rates for U.S. Consumer Card Member loans remained stable at 1.4% for the three months reported.
• Total loans for U.S. Small Business Card Members increased slightly from $29.6 billion in December 2024 to $30.2 billion in February 2025.

Negatives

• The net write-off rate for U.S. Consumer Card Member loans increased from 2.1% in December 2024 to 2.5% in February 2025.
• The net write-off rate for U.S. Small Business Card Member loans increased from 2.4% in December 2024 to 2.6% in February 2025.
• Total loans for U.S. Consumer Card Members decreased from $92.6 billion in December 2024 to $87.8 billion in February 2025.

Risks

• Variability in credit performance 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.
• Differences in loan characteristics between the total U.S. Consumer/Small Business Card Member loan portfolios and the Lending Trust can lead to differing credit performance results.

Industry Context

This announcement provides insight into the credit quality of American Express's card loan portfolio, which is a key indicator of the company's financial health and performance in the consumer and small business lending sectors. Monitoring these metrics is crucial for investors to assess the risk profile of American Express compared to other financial institutions like Capital One, Discover, and JPMorgan Chase, which also have significant credit card operations.

Comparison to Industry Standards

• Comparing American Express's net write-off rates to those of competitors like Capital One and Discover Financial Services would provide a benchmark for assessing its credit risk management.
• Analyzing the delinquency rates against industry averages reported by credit rating agencies like Moody's or Standard & Poor's can indicate whether American Express is performing better or worse than its peers.
• The securitization practices of American Express through the Lending Trust can be compared to similar trusts established by other credit card issuers to evaluate the efficiency and risk transfer effectiveness of its securitization program.

Stakeholder Impact

• Shareholders will be interested in these metrics as they reflect the credit quality of American Express's loan portfolio and its potential impact on profitability.
• Creditors will monitor these statistics to assess the risk associated with lending to American Express.
• Customers may be affected by changes in credit policies or interest rates based on the company's assessment of credit risk.

Key Dates