American Express Co. (NYSE:AXP) has disclosed its latest U.S. Consumer and Small Business Card Member loan delinquency and write-off statistics in a regulatory filing today. The data, which covers the months of August, July, and June 2024, shows a slight fluctuation in net write-off rates and consistent delinquency percentages.
The company's U.S. Consumer Card Member loans increased to $87.3 billion in August from $85.9 billion in July and $85.0 billion in June. The 30 days past due loans remained stable at 1.3% for all three months. Meanwhile, the net write-off rate for principal only saw a slight decrease from 2.3% in June to 2.1% in July, before rising to 2.2% in August.
For the U.S. Small Business Card Member loans, the total loans rose to $30.1 billion in August from $29.2 billion in July and $28.6 billion in June. Delinquency rates held steady at 1.4% across the three-month span. The net write-off rate for principal only was consistent at 2.3% for both August and July, after a slight dip from 2.4% in June.
In total, the combined U.S. Consumer and Small Business Card Member loans reached $117.4 billion in August, up from $115.1 billion in July and $113.6 billion in June.
The filing also includes data from the American Express Credit Account Master Trust (Lending Trust), which reports on securitized loans that differ in characteristics from the company's total loan portfolios. The Lending Trust's defaulted amount remained at $0.04 billion for all three months, with an annualized default rate net of recoveries at 1.4% for August, 1.2% for July, and 1.5% for June. The total 30+ days delinquent remained at $0.2 billion for the reported months.
American Express highlighted that the credit performance of the Lending Trust may vary monthly due to differences in loan mix, vintage, aging, and calculation methods compared to the company's broader loan portfolios.
American Express showcased a record high in revenue with a significant 44% year-over-year earnings growth in the second quarter and adjusted its full-year earnings per share (EPS) guidance to $13.30 - $13.80. The company also issued $3.4 billion in new debt securities, expected to be used for general corporate purposes.
On the downside, 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.
In terms of analyst perspectives, BMO Capital maintained its underperform rating on American Express shares, adjusting its near-term earnings forecasts upwards due to lower-than-expected expenses. Conversely, RBC Capital Markets retained an Outperform rating and increased the share price target to $267, acknowledging the company's steady revenue and well-managed expenses.
In the realm of consumer and small business lending, American Express reported stable delinquency rates and a slight decrease in net write-off rates. The total loans for both U.S. Consumer and Small Business Card Members combined reached $115.1 billion.
InvestingPro Insights
As American Express Co. (NYSE:AXP) reports on the stability of its loan delinquency and write-off rates, investors may find additional context in the company's broader financial performance. According to recent InvestingPro data, American Express boasts a market capitalization of $185.17 billion, reflecting its significant presence in the consumer finance industry—a factor underscored by one of the InvestingPro Tips highlighting the company as a prominent player in the sector.
The company's P/E ratio stands at a competitive 19.37, which, when paired with its PEG ratio of 0.52, suggests that American Express is trading at a low price-to-earnings ratio relative to near-term earnings growth potential. This is particularly relevant for investors considering the company's growth trajectory in relation to its earnings. Additionally, American Express has demonstrated strong return metrics, with a 60.3% one-year price total return, emphasizing its robust performance in the market.
For those interested in dividend reliability, American Express has not only maintained dividend payments but has done so for 54 consecutive years, accompanied by a recent dividend growth of 16.67%. This consistency is a testament to the company's financial stability and commitment to shareholder returns, aspects that may reassure investors in the context of credit quality and lending performance discussed in the article.
For more detailed analysis and additional InvestingPro Tips, which include insights on the company's liquidity, profitability, and stock performance, investors can visit: https://www.investing.com/pro/AXP. There are 11 more tips available on InvestingPro that can provide further guidance for those evaluating American Express's investment potential.
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