American Express Co. said uncollectible loans declined in May, aided by the sale of consumer debts written off in past months.
American Express wrote off 10% of managed U.S. card loans, compared with 10.1% for April, the New York company said in a regulatory filing Monday. The decline reflects proceeds from selling bad loans that were already charged off, the filing said.
Credit card profits have been under pressure this year, and the U.S. jobless rate climbed to 9.4% in May, the highest since 1983. Defaults historically rise and fall with unemployment because consumers are more prone to default when they lose their jobs. Analysts at KBW Inc. predicted that chargeoffs at American Express could reach 12.6% in 2010.
"Credit quality is likely to deteriorate given the state of the economy and rising unemployment," KBW's Sanjay Sakhrani said in a research note published last week.
Loans 30 days or more overdue at American Express declined to 4.7%, from 4.9% in April.
