8-KRegulation FD

AMERICAN EXPRESS CO 8-K Report, Regulation FD Disclosure (Jan 16, 2024)

Filed January 16, 2024For Securities:AXP

Summary

This 8-K filing from American Express provides an update on key credit performance metrics for its U.S. Consumer and U.S. Small Business card member lending portfolios as of December 31, 2023, and for the three months then ended. Investors should note the preliminary nature of the data. The report details delinquency and write-off rates, offering insights into the credit quality of Amex's loan book during a period of evolving economic conditions. The provided statistics show a slight uptick in the 30-day delinquency rate for both consumer and small business portfolios to 1.4% by the end of December 2023, from 1.3% in prior months. The net write-off rate for U.S. Consumer loans increased to 2.5% for December, primarily due to a timing issue related to holiday settlement agreements, while the overall three-month average remained at 2.1%. For U.S. Small Business loans, the net write-off rate was stable at 2.1% for the three-month period. The filing also includes data for the American Express Credit Account Master Trust, showing a consistent annualized default rate. Investors should monitor these trends to assess the company's risk management and its ability to navigate potential economic headwinds.

Key Highlights

  • 1American Express provided preliminary credit performance data for its U.S. Consumer and U.S. Small Business card member portfolios as of December 31, 2023.
  • 2The 30-day past due delinquency rate for U.S. Consumer loans increased slightly to 1.4% as of December 31, 2023.
  • 3The U.S. Small Business 30-day past due delinquency rate also stood at 1.4% as of December 31, 2023.
  • 4The net write-off rate for U.S. Consumer loans was 2.5% for December 2023, with a note attributing a higher rate to holiday settlement timing, leading to a three-month average of 2.1%.
  • 5The net write-off rate for U.S. Small Business loans was 2.2% for December 2023 and averaged 2.1% for the three months ended December 31, 2023.
  • 6Total outstanding card member loans for the U.S. Consumer and Small Business segments reached $109.0 billion as of December 31, 2023.
  • 7The American Express Credit Account Master Trust reported an annualized default rate (net of recoveries) of 1.5% for December 2023, with consistent prior month rates.

Frequently Asked Questions

The data is preliminary, meaning it may be subject to change as final accounting is completed. It provides investors with timely insights into credit performance trends ahead of the company's official quarterly earnings release, allowing for early assessment of portfolio health.

The net write-off rate represents the portion of loans that the company deems uncollectible (written off) after accounting for any recoveries. It's a key indicator of credit risk and the effectiveness of the company's credit policies and collections efforts. A rising write-off rate can signal deteriorating credit quality among borrowers.

No, the filing explicitly states that the American Express Credit Account Master Trust (Lending Trust) does not possess identical characteristics to the total U.S. Consumer or U.S. Small Business Card Member loan portfolios. The reported credit performance of the Lending Trust may differ due to variations in loan mix, vintage, aging, and calculation methodologies, such as the use of end-of-period versus average loan balances for write-off calculations.

The filing notes that the higher net write-off rate for U.S. Consumer loans in December 2023 was influenced by the timing of the Thanksgiving holiday. Certain debt settlement agreements were processed later, leading to write-offs being recorded in December in the ordinary course of business. Despite this monthly fluctuation, the three-month average write-off rate provides a more normalized view.