The pain inflicted by deteriorating economic and employment pictures continues to show up in the performance of credit card portfolios.
Moody’s Investors Service’s Canadian Credit Card Index continued to soften in the third quarter, the rating agency reported. It also said that with the Canadian consumer likely to face even harder times in the near future and rising unemployment, it expects the performance to weaken further.
“In the current environment, the historical strength that has been evident in the Canadian credit card portfolios backing asset-backed securitizations will be tested,” says Moody’s Sumant Inamdar, a Moody’s vice president and senior analyst. “Rising unemployment, bankruptcy filings and the fact that more recently originated credit card loans are yet to be tested in a cyclical downturn will certainly lead to higher delinquency and loss rates.”
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