Forecast Of The Day: American Express Consumer Card Provisions As % of Loan Portfolio

-7.94%
Downside
222
Market
205
Trefis
AXP: American Express Company logo
AXP
American Express Company

What?

American Express (NYSE:AXP) continues to see consumer card delinquency rates – which refers to the fraction of customers who have fallen behind on required monthly payments – improve in the month of April. U.S. consumer card delinquency rate improved to 0.8%, from 0.9% in March and 1.7% in April 2020. The net write-off rate also declined from 1.1% in March and 2.7% in April 2020 to 1.0%.

Why?

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The economy is opening up post the Covid-19 related lockdowns and consumers are also benefiting from the federal government’s stimulus checks. This means that fewer people are delaying their credit card payments.

So What?

The improving credit environment should mean that AmEx will need to set aside less cash to cover future potential losses, potentially helping profitability. That said, AmEx is less dependent on credit card loans versus peers, as a bulk of the company’s revenue comes from discount fees, which are the fees charged to merchants for transactions AmEx cardholders make.

See Our Complete Analysis For American Express

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