01—Abstract
Summary
Summary of the 8-K filed February 15, 2024. Cited figures are marked; the original filing is the authoritative source.
This 8-K filing from American Express (AXP) provides updated credit performance statistics for its U.S. Consumer and U.S. Small Business card member lending portfolios, as well as for the American Express Credit Account Master Trust.
The data covers the periods ending January 31, 2024, December 31, 2023, and November 30, 2023. Investors should focus on the delinquency and write-off rates, as these are key indicators of loan portfolio health and potential future credit losses. The report indicates that while total loan balances fluctuated slightly, the 30-day delinquency rates for both consumer and small business portfolios remained stable and relatively low at 1.4%a-1.5%.
The net write-off rate for the U.S. Consumer portfolio saw an increase in December 2023 to 2.5%b before decreasing in January 2024 to 2.1%, with the Small Business portfolio showing a more stable write-off rate around 2.0%-2.2%. The data for the securitized Lending Trust shows low annualized default rates, generally below 1.5%.
02—Key points
Key Highlights
- U.S. Consumer and U.S. Small Business 30-day past due loan rates remained stable, hovering around 1.4%-1.5% across the reported months.
- The net write-off rate for the U.S. Consumer portfolio increased to 2.5% in December 2023, potentially due to timing of debt settlements, but decreased to 2.1% by January 2024.
- The net write-off rate for U.S. Small Business loans was relatively consistent, ranging from 2.0% to 2.2%.
- Total U.S. Consumer and Small Business card member loans stood at $107.3 billion as of January 31, 2024.
- The American Express Credit Account Master Trust reported low annualized default rates, net of recoveries, at 1.3% for January 2024, up from 1.2% in November 2023.
- The filing clarifies that the Lending Trust's loan pool characteristics may differ from the total portfolio, potentially leading to variations in reported credit performance metrics.
03—Questions
Frequently Asked Questions
What are the key credit quality metrics being reported?
The filing reports on 30-day past due loan percentages, net write-off rates (principal only), and annualized default rates (net of recoveries) for both the U.S. Consumer and U.S. Small Business card member portfolios, as well as for the American Express Credit Account Master Trust.
How are the write-off rates trending?
For U.S. Consumer loans, the net write-off rate saw a notable increase to 2.5% in December 2023, which the company attributes to the timing of debt settlements related to a holiday. However, it improved to 2.1% by January 2024. The U.S. Small Business write-off rate remained more stable, between 2.0% and 2.2%.
Are the delinquency rates a concern for investors?
The 30-day delinquency rates for both U.S. Consumer and Small Business portfolios remained relatively low and stable at 1.4%-1.5% for the periods reported. This indicates a consistent level of early-stage payment issues, which is generally a positive sign for credit portfolio health, especially in the current economic environment.
What is the difference between the reported U.S. Consumer/Small Business portfolio data and the Lending Trust data?
The U.S. Consumer and U.S. Small Business Card Member loan portfolios include both securitized and non-securitized loans, and the write-off rates are calculated using average loan balances. The American Express Credit Account Master Trust (Lending Trust) data pertains specifically to securitized loans and uses end-of-period balances for write-off calculations, and may have different loan characteristics. Therefore, the credit performance metrics can differ between the two datasets.
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