8-KRegulation FD

AMERICAN EXPRESS CO 8-K Report, Regulation FD Disclosure (Nov 15, 2023)

Filed November 15, 2023For Securities:AXP

Summary

This 8-K filing from American Express (AXP) provides investors with an update on the company's U.S. Consumer and U.S. Small Business Card Member lending portfolios for the months ending August 31, September 30, and October 31, 2023. The report focuses on key credit performance metrics, including delinquency rates and net write-off rates. These figures are furnished to supplement information already reported in the company's securitization trust filings (Form 10-D). For investors, the primary takeaway is the continued stability and resilience in American Express's credit portfolio, even as loan balances have shown a modest upward trend. While there's a slight increase in the net write-off rate for U.S. Consumer loans in October, both delinquency and write-off rates remain at generally low levels, suggesting effective credit risk management. The data also highlights a distinction between the company's overall portfolio and the securitized portion, which is important for understanding the nuances of credit performance reporting.

Key Highlights

  • 1American Express furnished updated delinquency and write-off statistics for its U.S. Consumer and U.S. Small Business card portfolios for August, September, and October 2023.
  • 2Total U.S. Card Member loans (Consumer and Small Business combined) increased from $102.2 billion in August to $104.6 billion in October 2023.
  • 3U.S. Consumer 30-day past due loans remained stable at 1.3% for September and October, with a slight uptick from 1.2% in August.
  • 4The net write-off rate for U.S. Consumer loans increased to 1.9% in October from 1.7% in September and August.
  • 5U.S. Small Business 30-day past due loans showed a slight increase from 1.2% in August and September to 1.3% in October.
  • 6The net write-off rate for U.S. Small Business loans was 2.0% in October, up from 1.7% in September and 1.8% in August.
  • 7Data for the American Express Credit Account Master Trust (securitized portfolio) shows a consistent annualized default rate, net of recoveries, around 1.1-1.2%.

Frequently Asked Questions

The main purpose of this 8-K filing is to provide investors with timely updates on the credit performance of American Express's U.S. Consumer and U.S. Small Business card portfolios, specifically focusing on delinquency and write-off rates for the months ending August 31, September 30, and October 31, 2023. This information supplements what is reported in the company's securitization trust filings.

The reported credit metrics appear to be generally stable and at historically low levels, suggesting resilient credit quality. While there was a modest increase in net write-off rates for both consumer and small business portfolios in October, the 30-day delinquency rates remain largely consistent. Investors should monitor these trends, but the data presented does not currently indicate significant cause for alarm, especially considering the overall growth in loan balances.

The data in this 8-K pertains to American Express's *entire* U.S. Consumer and U.S. Small Business card loan portfolios (both securitized and non-securitized). The Form 10-D filings report on the specific American Express Credit Account Master Trust, which is a subset of the company's overall loan portfolio. The loan characteristics, vintage, and aging within the securitized trust may differ from the total portfolio, leading to variations in reported credit performance metrics month-to-month.

The net write-off rate is based on principal only, meaning it excludes interest and/or fees. The statistics for the total U.S. Consumer and Small Business portfolios use average loan balances over the reporting period, while the securitized trust (reported in Form 10-D) may use end-of-period principal loan balances for its write-off calculations, which can lead to differences between the two reporting methods.