by Calculated Risk on 4/23/2009 07:10:00 PM

From Brian on AmEx Conference Call:

They expect to see writeoff rates climb from 8.5% to 10.5-11.0% in Q2 and up another 50 BP in Q3 and flattening out in Q4. Part of the driver of writeoff rates is their denominator is falling fairly quickly as charge volumes decline (denominator for CC cos will drop faster than for mortgages and other loan categories). They are assuming 9.7% unemployment in December 09.

They are seeing some improvement in early stage DQ and roll rates. There is probably some seasonality involved, but they also think that there is some non seasonal improvement. 30DQ increase for last 4 Q’s (starting with Q2 08) are +10BP, +60BP, +80BP, +40BP – so it isn’t going down, it’s just another second derivative thing.

And some CC comments:

Analyst: American Express has more exposure as we all know in California and Florida and some of the housing states where you have higher income as well and I think credit maybe started to go bad in the fourth quarter of '07, maybe a little bit ahead of the competition because of your exposure in some of those states, and as you looked closely and I think tightened sooner than others did because of that, when you're looking at your roll rates improving and understanding there's seasonality and it's too early to get too constructive on that, but are you seeing signs of improvement in more so in states that went bad earlier because of the tightening? You know, where are you seeing that improvement?

AmEx: I would say that early in the cycle I think that housing was a significant driver of higher delinquencies and writeoff rates and we certainly did see that in states that had larger drops in housing. However, at this juncture, I really think that unemployment has taken over as the primary driver of delinquency and writeoff rates, so I think that's what we will need to see for a real turn. I think stabilization in the housing market will be important. I think consumer confidence will be critically important, people have to feel comfortable that we are going to retain their job and when those things start to happen, I think is when we will really start to see some notable improvements.
emphasis added