Summary
This 8-K filing from American Express provides an update on delinquency and write-off statistics for its U.S. Card Services (USCS) operating segment for the months ending December 31, 2008, and January 31 and February 28, 2009. The company continues to furnish these metrics on a 'managed basis,' which it believes offers a more accurate view of its lending business dynamics by including securitized loans. As anticipated, the data shows a continued upward trend in both past-due loans and net write-off rates through February 2009, reflecting challenging economic conditions. Investors should note the sequential increase in both the 30-day delinquency rate and the net write-off rate across both owned and managed portfolios. Specifically, the managed basis net write-off rate rose from 7.3% in December 2008 to 8.6% in February 2009. The filing also provides supplementary data from the American Express Credit Account Master Trust, which exhibits similar trends in escalating default and delinquency rates. The company reiterates its expectation for these trends to continue rising in the first half of 2009.
Key Highlights
- 1Sequential increase in 30+ days past due loans as a percentage of total loans, from 4.7% in December 2008 to 5.3% in February 2009 (managed basis).
- 2Rising net write-off rates, with the managed basis rate increasing from 7.3% in December 2008 to 8.6% in February 2009.
- 3Total loans in the U.S. Card Services segment (managed basis) decreased from $62.4 billion in December 2008 to $57.8 billion in February 2009, indicating portfolio contraction.
- 4The company utilizes a 'managed basis' presentation to provide a more comprehensive view of its cardmember lending business, including securitized assets.
- 5The American Express Credit Account Master Trust also reported an increasing annualized default rate, reaching 9.3% for the period ending January 26, 2009.
- 6The company anticipates continued increases in past-due loans and write-offs in the first and second quarters of 2009, consistent with prior statements.
- 7The filing includes forward-looking statements cautioning about risks and uncertainties, particularly related to economic conditions affecting customer payment behavior and credit risk.