American Express reports July card loan delinquency and write-off rates

American Express (AXP) recently disclosed mixed July 2025 loan performance data, with U.S. Consumer loan delinquencies and write-offs stable or slightly improving, while U.S. Small Business loans showed a modest uptick in both metrics. This follows AXP's strong second-quarter earnings, which surpassed analyst expectations for EPS and revenue. Analyst reactions were varied, with Truist Securities raising its price target, while UBS and Monness, Crespi, Hardt maintained Neutral ratings, citing concerns over potential slowing travel expenditure. Concurrently, AXP strengthened its market position through an expanded global partnership with AEG and bolstered governance with two new board appointments.

Analysis

American Express (AXP) demonstrated strong fundamental performance in its recent reporting, highlighted by a second-quarter earnings beat with an EPS of $4.08 against a $3.90 consensus estimate. This financial outperformance is supported by newly released July 2025 credit data, which reveals a resilient U.S. consumer segment. The consumer loan portfolio of $93.7 billion showed stable delinquencies at 1.3% and an improved net write-off rate of 2.0%, down from 2.1% in the prior two months. However, this stability is contrasted by emerging softness in the U.S. Small Business segment, where the $30.5 billion loan book saw its net write-off rate increase to 2.7%. Despite this pocket of weakness, the company's overall loan book grew to $124.2 billion, and its securitized trust default rate declined to 1.1%, indicating overall portfolio health. Analyst sentiment remains divided; while Truist Securities raised its price target to $348 on the positive results, UBS and Monness, Crespi, Hardt maintained Neutral ratings, citing concerns over a potential slowdown in travel expenditures. Strategically, AXP is reinforcing its market position through an expanded global partnership with AEG and strengthening its governance by appointing two new members to its board.

Key Decisions for Investors

• Given the strong Q2 earnings beat and stable consumer credit quality, investors may view the current operational performance as a positive signal for holding existing positions.
• It is crucial to monitor the diverging credit trends between the consumer and small business loan books, as continued deterioration in the small business segment could be a leading indicator of risk for future earnings.
• Investors should pay close attention to forward-looking indicators for travel and entertainment spending, as analyst concerns about a slowdown in this key revenue driver represent the primary risk to the company's growth outlook.
• The significant divergence in analyst price targets, ranging from $285 to $348, suggests valuation uncertainty, warranting a thorough risk/reward analysis before initiating or increasing a position.