December 8, 2010
Moody's: Canadian credit card performance stable in Q3
Toronto, December 07, 2010 -- The performance of Canadian credit card debt
continued to improve in the third quarter of 2010, as the charge-off rate
index pulled back to 3.97%, almost a percentage point below its record high
of 4.92% in third quarter 2009, Moody's Investors Service says in its latest
Credit Card Indices for Canada. During the third quarter the charge-off rate
dropped sharply from 4.61% the previous quarter.
"Canada's robust recovery has recently moderated, but looking ahead we still
expect it to be strong enough to support a stable credit card sector," says
Michael Buzanis, Moody's Vice President -- Senior Credit Officer.
Moody's changed its outlook on the Canadian Credit Card asset-backed
security sector to stable from negative in October.
Additional measures of card performance also posted improvements in the
The delinquency rate declined marginally in the third quarter, dropping to
3.79% from 2.79% the previous quarter. Often a harbinger for future trends
in charge-offs, the delinquency rate index measures the proportion of
account balances for which monthly payment is more than 30 days past due.
The payment rate index continued to improve in the third quarter, to 31.92%.
The payment rate has advanced 163 basis points from a year ago.
As a measure of cardholders' willingness and ability to pay credit card
debt, payment rates that are high suggest stronger credit.
Credit card performance in Canada continues to compare favorably to that in
the US and the UK. For example, the charge-off rate in the US for the fourth
quarter was 9.46%, while it was 7.55% in the UK.
Moody's Canadian Credit Card Indices are composed of owned and managed
portfolios of Visa and MasterCard issuers in Canada. As of December 31,
2009, it tracked the performance of approximately C$70.5 billion in
receivables, or over approximately 80% of the outstanding Visa and
MasterCard credit card receivables in Canada.