8-K: American Express Reports Stable Credit Performance for May 2025, Reclassifies $1.6 Billion in Amazon Co-brand Loans

American Express Company disclosed its U.S. consumer and small business card member loan delinquency and write-off statistics for the months ended May 31, 2025, alongside a significant reclassification of $1.6 billion in Amazon co-brand loans.

Summary

• American Express reported U.S. Consumer Card Member loans held for investment totaled $92.0 billion as of May 31, 2025, with a 30-day past due rate of 1.3% and a net write-off rate of 2.1%.
• U.S. Small Business Card Member loans held for investment reached $32.0 billion as of May 31, 2025, showing a 30-day past due rate of 1.5% and a net write-off rate of 2.4%.
• Total Card Member loans held for investment across U.S. Consumer and Small Business segments amounted to $124.0 billion as of May 31, 2025.
• Effective June 1, 2025, the company reclassified approximately $1.6 billion in Card Member loans from its Amazon small business cobrand portfolio to "Card Member loans held for sale" from "Card Member loans held for investment."
• The American Express Credit Account Master Trust reported an annualized default rate, net of recoveries, of 1.3% for the month ended May 31, 2025, with an ending total principal balance of $25.4 billion.

Sentiment

Score: 6

Explanation: The document presents generally stable to slightly improving credit performance metrics for American Express's loan portfolios. While there was a minor increase in consumer write-offs from April to May, overall delinquency and default rates showed positive trends or stability. The reclassification of $1.6 billion in loans is a notable operational adjustment rather than a direct positive or negative financial outcome in itself, contributing to a neutral-to-slightly positive sentiment regarding the company's asset quality management.

Positives

• U.S. Consumer 30 days past due loans as a % of total decreased from 1.4% in March and April 2025 to 1.3% in May 2025.
• U.S. Small Business 30 days past due loans as a % of total decreased from 1.6% in March and April 2025 to 1.5% in May 2025.
• U.S. Consumer net write-off rate improved from 2.4% in March 2025 to 2.1% in May 2025.
• U.S. Small Business net write-off rate improved from 2.6% in March 2025 to 2.4% in May 2025 and remained stable from April to May.
• The American Express Credit Account Master Trust's annualized default rate, net of recoveries, improved from 1.5% in March 2025 to 1.3% in April and May 2025.

Negatives

• U.S. Consumer net write-off rate slightly increased from 2.0% in April 2025 to 2.1% in May 2025.

Risks

• Credit performance statistics for both the U.S. Consumer and U.S. Small Business Card Member loan portfolios and the Lending Trust may vary month-to-month due to differences in loan mix, vintage, and aging.
• Variations in calculation methodologies, such as using end-of-period principal balances versus average loan balances, can impact reported write-off statistics.
• Additions to the Lending Trust within a particular period can affect its net write-off rate.
• Monthly variability in statistics can occur due to factors including the number of days in a month, timing of holidays and weekends, seasonality, and the timing of information received from third parties.

Future Outlook

Effective June 1, 2025, approximately $1.6 billion in Card Member loans related to the Amazon small business cobrand portfolio were reclassified to 'Card Member loans held for sale' and will therefore not be reflected in Card Member loans held for investment in future monthly reporting periods.

Industry Context

This filing provides specific credit performance metrics for American Express's U.S. consumer and small business loan portfolios, offering a granular view of asset quality within its core lending operations. The reclassification of a significant portion of the Amazon small business cobrand portfolio indicates a strategic adjustment in how these assets are managed, potentially reflecting changes in partnership agreements or capital management strategies. While the document does not provide broader industry comparisons, the reported delinquency and write-off rates offer insights into the credit health of American Express's customer base, which can be benchmarked against general trends in consumer and small business credit quality across the financial services sector.

Stakeholder Impact

• Shareholders: Provides transparency on the credit quality of the company's loan portfolios, which directly impacts financial performance and risk assessment.
• Investors: Offers key data points for evaluating the health of American Express's lending business and its ability to manage credit risk.

Next Steps

• Future monthly reporting periods will no longer reflect the reclassified $1.6 billion in Amazon small business cobrand portfolio loans within 'Card Member loans held for investment'.

Key Dates

Keywords

American Express, AXP, SEC Filing, 8-K, Credit Performance, Delinquency Rates, Write-off Rates, Card Member Loans, Consumer Loans, Small Business Loans, Amazon Cobrand Portfolio, Loan Reclassification, Credit Account Master Trust, Financial Reporting, Regulation FD