8-K: American Express Reports Stable Delinquency and Write-Off Rates for December 2024

American Express reports delinquency and write-off statistics for its U.S. Consumer and U.S. Small Business Card Member lending portfolios for the months ended December 31, November 30 and October 31, 2024, showing relatively stable performance.

Summary

• American Express has released delinquency and write-off statistics for its U.S. Consumer and U.S. Small Business Card Member lending portfolios.
• The report covers the months ended December 31, November 30, and October 31, 2024, as well as the three months ended December 31, 2024.
• Effective December 1, 2024, American Express reclassified $758 million of Card Member loans related to its Lowes small business cobrand portfolio to Card Member loans held for sale.
• These reclassified loans are not included in the December 2024 delinquency and write-off statistics.
• For U.S. Consumer Card Member loans, total loans were $92.6 billion as of December 31, 2024.
• The 30 days past due loans as a percentage of total loans remained stable at 1.4% across all three months.
• The net write-off rate for U.S. Consumer Card Member loans was 2.1% for December 2024 and for the three months ended December 31, 2024.
• For U.S. Small Business Card Member loans, total loans were $29.6 billion as of December 31, 2024.
• The 30 days past due loans as a percentage of total loans remained stable at 1.5% across all three months.
• The net write-off rate for U.S. Small Business Card Member loans was 2.4% for December 2024 and 2.3% for the three months ended December 31, 2024.
• The total Card Member loans for U.S. Consumer and U.S. Small Business combined were $122.2 billion as of December 31, 2024.
• The report also includes information regarding the credit performance of the American Express Credit Account Master Trust (the Lending Trust) for the three most recent monthly reporting periods.
• The ending total principal balance for the Lending Trust was $26.9 billion as of December 31, 2024.
• The annualized default rate, net of recoveries, for the Lending Trust was 1.2% for the period December 1, 2024, through December 31, 2024.
• Total 30+ days delinquent for the Lending Trust was $0.2 billion for each of the three months.

Sentiment

Score: 7

Explanation: The sentiment is neutral to slightly positive. The delinquency and write-off rates are stable, indicating a healthy credit portfolio. The reclassification of loans is a notable event but doesn't necessarily indicate a negative outlook.

Positives

• Delinquency rates for both U.S. Consumer and U.S. Small Business Card Member loans remained stable.
• The Lending Trust reported a relatively low annualized default rate of 1.2% for December 2024.

Risks

• The report mentions that the credit performance of the Lending Trust may vary due to differences in the mix, vintage, and aging of loans.
• Statistics for the U.S. Consumer and U.S. Small Business Card Member loan portfolios and the Lending Trust may be subject to variability 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.

Industry Context

This report provides insight into the credit quality of American Express's card portfolio, which is a key indicator of the company's financial health and performance in the consumer finance industry. Monitoring delinquency and write-off rates is crucial for assessing the risk profile of lending institutions like American Express.

Comparison to Industry Standards

• Comparing American Express's delinquency and write-off rates to those of competitors like Visa, Mastercard, and Discover would provide a more comprehensive understanding of its relative performance.
• Analyzing these metrics against industry averages for credit card issuers can reveal whether American Express is outperforming or underperforming its peers.
• For example, if the average net write-off rate for US consumer credit cards is 2.5%, American Express's 2.1% would be considered better than average.
• Similarly, comparing the Lending Trust's default rate to similar securitization trusts from other issuers would offer valuable insights.

Stakeholder Impact

• Shareholders will be interested in the stability of the delinquency and write-off rates as indicators of the company's financial health.
• Creditors will assess these metrics to evaluate the risk associated with lending to American Express.
• Customers may be indirectly affected by changes in credit policies based on these performance indicators.

Key Dates