8-KRegulation FD

AMERICAN EXPRESS CO 8-K Report, Regulation FD Disclosure (Jun 15, 2020)

Filed June 15, 2020For Securities:AXP

Summary

This 8-K filing from American Express (AXP) provides updated delinquency and write-off statistics for its U.S. Consumer and U.S. Small Business Card Member lending portfolios for the months ending March 31, April 30, and May 31, 2020. The data is being furnished to provide additional context beyond what is reported in securitized trusts. Notably, the company implemented a Customer Pandemic Relief Program in Q1 2020, which froze delinquency status for affected customers, impacting how delinquency is measured. Overall, the reported statistics show a relatively stable, albeit slightly elevated, trend in delinquencies and write-offs during the early months of the COVID-19 pandemic. While total loan balances decreased from March to May, likely due to reduced consumer spending and proactive portfolio management, the 30-day past due percentages remained largely consistent. The net write-off rates also showed some fluctuation, with a slight uptick in the U.S. Consumer portfolio in May. Investors should note the specific definitions and the impact of the relief program on these metrics.

Key Highlights

  • 1American Express is providing enhanced transparency into its U.S. Consumer and U.S. Small Business credit portfolios for March, April, and May 2020.
  • 2A Customer Pandemic Relief Program was implemented in Q1 2020, temporarily freezing delinquency aging for impacted customers.
  • 3Total U.S. Consumer and Small Business Card Member loans decreased from $69.0 billion in March to $62.5 billion in May 2020.
  • 430-day past due rates for U.S. Consumer loans remained stable at 1.6%-1.7% during the period.
  • 530-day past due rates for U.S. Small Business loans were 1.4%-1.6%.
  • 6Net write-off rates for U.S. Consumer loans increased slightly to 3.0% in May 2020 from 2.7% in April.
  • 7Net write-off rates for U.S. Small Business loans increased to 2.5% in May 2020 from 2.0% in prior months.

Frequently Asked Questions

The primary purpose is to furnish updated delinquency and write-off statistics for American Express's U.S. Consumer and U.S. Small Business Card Member lending portfolios for the months of March, April, and May 2020. This information is provided in addition to data reported for securitized trusts, offering a more comprehensive view of credit performance during the early stages of the COVID-19 pandemic.

The Customer Pandemic Relief Program, introduced in Q1 2020, temporarily freezes the delinquency status of customers enrolled in the program. This means that loans that were current at the time of enrollment do not age further into delinquency, regardless of payment status, until they exit the program. This could potentially mask a worsening delinquency trend for some customers.

The decrease in total loan balances suggests potential impacts from reduced consumer spending and proactive portfolio management. While 30-day delinquency rates remained relatively stable, the net write-off rates showed a slight increase, particularly in the U.S. Consumer portfolio, by May 2020. This indicates a cautious outlook and potential early signs of increased credit risk, although the overall reported credit metrics appear manageable given the economic environment at the time.

The filing notes that the loan characteristics in the securitized trusts may differ from the total U.S. Consumer and Small Business portfolios (which include both securitized and non-securitized loans). Consequently, the credit performance reported for the securitized trust (American Express Credit Account Master Trust) may vary month-to-month compared to the broader portfolio data presented in this 8-K due to differences in loan mix, vintage, aging, and calculation methodologies.