Earlier this week, AmEx reported that credit card charge-offs declined for the second month in a row. Charge-offs represent loans that the issuer has deemed unable to be collected.
In July, charge-offs represented 9.2 percent of accounts, compared with 9.9 percent in June, the company said.
However, despite these encouraging signs, AmEx CEO Kenneth Chenault is cautioning the industry not to expect a complete turnaround yet.
“While loss rates were better than we expected, they still remain high by historical standards,” he said in a presentation to investors, according to the Wall Street Journal. “The external challenges are not going to go away anytime soon.”
Analysts also pointed out that many of AmEx’s customers are wealthy and may be in a more financially secure situation than cardholders at other credit card companies.
According to Reuters, only 4 percent of accounts in the lender’s portfolio are considered to be subprime, compared with up to 30 percent at companies like Citigroup and Bank of America.
Many predict that charge-off levels across the industry as a whole will not improve until the U.S. job market picks up.
Today’s figures from the Labor Department reveal that job losses were less than expected last month, with 247,000 people added to the unemployment rolls. The unemployment rate fell slightly to 9.4 percent.
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