American Express June writedowns hit lowest rate since crisis began; late payments also down
By APThursday, July 15, 2010
American Express writeoffs drop to post-crisis low
NEW YORK — American Express Co. on Thursday said the rate at which it wrote off uncollectable card balances in June fell to its lowest level since the economic crisis began. The rate its customers paid monthly bills late dropped to an 18-month low, too.
The New York company, which caters to a more affluent customer base than other credit card issuers, said in a regulatory filing its net write-off rate dropped to 5.7 percent in June, from 6.3 percent in May.
Card companies typically write off loans after they’re 180 days past due, the point at which it’s assumed the balances won’t be collected.
In the past year, banks have written off a record amount of loans as customers struggled to pay. By the first three months of this year, the charge-off rate was just short of 10 percent of balances. That compares with a rate of 3.8 percent in the second quarter of 2007, before the recession began.
American Express charge-offs peaked in April 2009 at 10.1 percent.
Reflecting a trend across the industry, Amex also said its rate of late payments fell to 2.7 percent in June, from 2.9 percent in May. Delinquencies topped out in March 2009 at 5.1 percent.
American Express shares dipped 85 cents, or 2 percent, to $42.85 in afternoon trading.
