8-K: American Express Reports Mixed Loan Performance in January, Consumer Write-Offs Decline

American Express's January 2024 loan portfolio data reveals a decrease in consumer write-off rates but stable delinquency rates across both consumer and small business sectors.

Summary

• American Express has released delinquency and write-off statistics for its U.S. Consumer and U.S. Small Business Card Member lending portfolios for January 31, 2024, and comparative data for December 31 and November 30, 2023.
• Total U.S. Consumer loans decreased from $83.2 billion in December to $81.1 billion in January, while U.S. Small Business loans increased slightly from $25.8 billion to $26.2 billion.
• The 30-day past due loan rate for U.S. Consumer loans remained stable at 1.5% in January, consistent with the previous two months.
• The net write-off rate for U.S. Consumer loans decreased to 2.1% in January from 2.5% in December, which was impacted by the timing of debt settlements.
• The 30-day past due loan rate for U.S. Small Business loans increased slightly to 1.5% in January from 1.4% in December.
• The net write-off rate for U.S. Small Business loans decreased to 2.1% in January from 2.2% in December.
• The total combined U.S. Consumer and U.S. Small Business loans decreased from $109.0 billion in December to $107.3 billion in January.
• The report also includes data for the American Express Credit Account Master Trust, showing an annualized default rate of 1.3% for January, down from 1.5% in December.

Sentiment

Score: 6

Explanation: The document presents mixed results with some positive trends in write-off rates but stable delinquency rates. The overall sentiment is neutral to slightly positive.

Positives

• The net write-off rate for U.S. Consumer loans decreased from 2.5% in December to 2.1% in January.
• The net write-off rate for U.S. Small Business loans decreased from 2.2% in December to 2.1% in January.
• The annualized default rate for the American Express Credit Account Master Trust decreased from 1.5% in December to 1.3% in January.

Negatives

• Total U.S. Consumer loans decreased from $83.2 billion in December to $81.1 billion in January.
• The 30-day past due rate for U.S. Small Business loans increased slightly from 1.4% in December to 1.5% in January.

Risks

• The 30-day past due rate for both U.S. Consumer and U.S. Small Business loans remains at 1.5%, indicating a potential for future write-offs.
• The total loan balances for both U.S. Consumer and U.S. Small Business are still significant, representing a substantial risk if economic conditions worsen.

Industry Context

This report provides insight into the credit health of American Express's lending portfolio, which is a key indicator of consumer spending and economic conditions. The data is relevant to the broader financial services industry and provides a benchmark for other credit card issuers.

Comparison to Industry Standards

• While specific competitor data is not provided in this document, the reported delinquency and write-off rates can be compared to industry averages for credit card issuers.
• Companies like Capital One, Discover, and JPMorgan Chase also report similar metrics, and a comparison would provide a more comprehensive view of American Express's performance relative to its peers.
• The Lending Trust data can be compared to other securitized credit card portfolios to assess the relative risk and performance of American Express's securitization program.

Stakeholder Impact

• Shareholders will be interested in the credit performance data as it impacts the company's profitability and risk profile.
• Creditors will monitor the delinquency and write-off rates to assess the creditworthiness of American Express's loan portfolio.
• Customers may be indirectly affected by changes in credit policies based on these performance metrics.

Key Dates

Keywords

American Express, credit card, loans, delinquency, write-off, consumer, small business, default rate, securitization