American Express Co. (NYSE:AXP) disclosed on Tuesday an increase in delinquency rates for its U.S. Consumer and U.S. Small Business Card Member loans for September 2024. According to the financial services giant's recent 8-K filing with the Securities and Exchange Commission, the 30-day past due loans as a percentage of total loans rose to 1.4% for U.S. Consumer Card Member loans, up from 1.3% in the preceding two months.
Similarly, the U.S. Small Business Card Member loans saw a rise in delinquencies to 1.5% in September, from 1.4% in both July and August.
The report indicates that the total loans for U.S. Consumer Card Members stood at $86.8 billion at the end of September, consistent with the amount at the end of the previous month and up from $85.9 billion at the end of July. U.S. Small Business Card Member loans totaled $29.9 billion, remaining relatively stable over the three-month period.
Furthermore, the net write-off rate, which represents losses due to bad debts as a percentage of total loans, showed a slight decrease for U.S. Consumer Card Member loans from 2.2% in August to 1.9% in September. U.S. Small Business Card Member loans also experienced a marginal decline in net write-offs, from 2.3% in August to 2.1% in September.
The 8-K filing also compares these statistics with those of the American Express Credit Account Master Trust (Lending Trust), which reports on securitized Card Member loans. The Lending Trust's data for September 2024 showed an annualized default rate, net of recoveries, of 1.3%, with a total of $0.2 billion in loans being 30+ days delinquent.
The information from American Express provides investors with a snapshot of the credit performance of the company's lending portfolios. It is important to note that the characteristics of the loans in the Lending Trust may differ from those in the total U.S. Consumer and U.S. Small Business Card Member loan portfolios, which can result in variations in reported credit performance. The filing underscores that the presented statistics are based on preliminary data and are subject to change.
This news is based on American Express's regulatory disclosure and is intended to provide investors with an update on the company's loan performance as of September 2024.
In other recent news, American Express has been the subject of several updates and adjustments. Earnings and revenue results have shown positivity, with a significant 44% year-over-year earnings growth in the second quarter. This marked a record high in revenue, leading the company to adjust its full-year earnings per share (EPS) guidance to $13.30 - $13.80.
In terms of mergers, the Central Bank of Russia revoked the banking license of the Russian subsidiary of American Express, marking the end of the company's direct banking presence in Russia. Analyst upgrades and downgrades have also been noted, with Monness, Crespi, Hardt maintaining a Buy rating and JPMorgan downgrading the stock from Overweight to Neutral, citing limited upside potential.
Other company news includes American Express amending its bylaws to provide additional clarity on shareholder voting processes. The company's U.S. consumer card loan portfolio saw a year-over-year increase of 12.4% to $87.3 billion, and its small business loan portfolio increased by 22.9% year-over-year to $30.1 billion. These recent developments have been shaping the narrative around American Express, indicating continued stability in spend volumes.
InvestingPro Insights
To complement the article's focus on American Express's loan performance and delinquency rates, InvestingPro data offers additional financial context. American Express currently boasts a market capitalization of $198.24 billion, reflecting its significant position in the financial services industry. The company's P/E ratio stands at 20.77, indicating investors' willingness to pay a premium for its earnings.
InvestingPro Tips highlight that American Express has maintained dividend payments for 54 consecutive years, demonstrating a strong commitment to shareholder returns. This consistency in dividend payments could be particularly appealing to investors concerned about the slight increase in delinquency rates reported in the article.
Moreover, American Express is trading near its 52-week high, with a robust year-to-date price total return of 49.37%. This performance suggests that investors remain confident in the company's overall financial health and growth prospects, despite the minor uptick in delinquencies.
For readers interested in a more comprehensive analysis, InvestingPro offers 13 additional tips that could provide deeper insights into American Express's financial position and market performance.
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