User 183867

American Express: False Sense of Security?

<1. American Express, (for the most part) requires monthly payoff and does not allow debt carryforward.

2. American Express caters to the "Baby Boomers" who are minimally affected by the credit crisis, expecially the "sub-prime" crisis.>

58% of the company's card assets are revolving loans.

Also, you don't get a national credit problem without involving the country's largest generation. The Baby Boomers are, most assuredly, in the thick of the subprime crisis. "Subprime" doesn't necessarily mean someone who has no means. Subprime means someone who has stretched themselves to far. In any case, this isn't just a subprime crisis. There are plenty of people who are not subprime but who are stretched and who have structured their balance sheets poorly.

A better argument would involve the 12% of card receivables and loans that are backed by corporations, where the risk of default is minimal.

American Express: False Sense of Security?

Amex's Q1 provision for losses on the charge card went up 65% YoY while net charge-offs went up 32%. Charge card receivables increased 7% YoY.

For cardmember loans (revolving credit), provisions for credit losses increased 43% YoY and net charge-offs were up 58% while loans increased 17% YoY. The coverage of loan loss allowances to delinquencies increased YoY to 101% from 100% last year.

I don't know where your numbers are coming from, but those are the numbers as I see them.