8-KRegulation FD

AMERICAN EXPRESS CO 8-K Report, Regulation FD Disclosure (Jan 15, 2019)

Filed January 15, 2019For Securities:AXP

Summary

This 8-K filing from American Express (AXP) provides an update on credit performance metrics for its U.S. Consumer and U.S. Small Business Card Member lending portfolios as of and for the months ending October 31, November 30, and December 31, 2018. The report offers preliminary data for December 2018 and the fourth quarter of 2018. Investors are provided with key figures such as total loans, delinquency rates (30 days past due), and net write-off rates. The data indicates stable credit performance across both segments. The U.S. Consumer Card Member loans saw total loans grow to $59.9 billion by December 31, 2018, with a consistent 30-day delinquency rate of 1.4% and a net write-off rate of 2.2% for the quarter. The U.S. Small Business segment also showed steady performance, with total loans at $12.1 billion and a 30-day delinquency rate of 1.3%, and a net write-off rate of 1.6% for the quarter. The filing also includes supplementary data from the American Express Credit Account Master Trust, which generally reflects consistent, low annualized default rates.

Key Highlights

  • 1Preliminary U.S. Consumer Card Member loan balances reached $59.9 billion by December 31, 2018, showing growth from prior months.
  • 2U.S. Consumer segment maintained a consistent 1.4% 30-day past due rate across the reported periods.
  • 3Net write-off rate for U.S. Consumer loans was 2.2% for the three months ended December 31, 2018.
  • 4U.S. Small Business Card Member loan balances remained stable around $12.1 billion.
  • 5U.S. Small Business segment experienced a 30-day past due rate of 1.3% for the fourth quarter of 2018.
  • 6Net write-off rate for U.S. Small Business loans was 1.6% for the three months ended December 31, 2018.
  • 7The American Express Credit Account Master Trust reported consistent annualized default rates, generally around 1.0-1.1%.

Frequently Asked Questions

This filing reports on total loan balances, the percentage of loans that are 30 days past due, and the net write-off rate (principal only) for both the U.S. Consumer and U.S. Small Business Card Member lending portfolios. It also includes data on the American Express Credit Account Master Trust's annualized default rate.

The data presented suggests stable to slightly improving credit performance. Delinquency rates remain consistent, and net write-off rates are within expected ranges, indicating no significant deterioration in the credit quality of the loan portfolios for the periods presented.

Yes, the filing notes that the Card Member loans securitized through the Lending Trust may not have identical characteristics to the total U.S. Consumer or U.S. Small Business portfolios. Differences in loan mix, vintage, aging, and calculation methodologies (e.g., using end-of-period balances for write-offs in the trust vs. average balances for the overall portfolio) can lead to variations in reported credit performance metrics between the two datasets.

'Net write-off rate – principal only' refers to the rate at which loans are deemed unrecoverable, calculated after accounting for any recoveries, and it specifically excludes any accrued interest or fees from the calculation. This provides a clearer view of the principal loss experienced by the company.