Fitch: Canadian Credit Card Debt Safe from Broader Economic Struggles

Link to Fitch Ratings' Report: Canadian Consumer Charges Up Credit Card ABS Performance

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=856368

Signs pointing to slower economic growth in Canada are materializing lately, though not enough to penetrate the strong performance of credit card bonds within the region, according to Fitch Ratings in a new report.

'Canadian consumers are facing higher household debt burdens primarily tied to rapidly rising mortgage borrowing and disappointing productivity growth,' said Managing Director Michael Dean. 'That said, credit card portfolios have and are expected to remain largely unscathed.'

The overriding reason is Canadian consumers take on much less credit card debt compared to the US (an average of two cards per household compared with six in the US). Additionally, more Canadian credit card borrowers repay their balances in full each month. 'Most Canadians have long cultivated a conscientious and responsible attitude toward the use of credit to strengthen their financial profiles,' said Dean.

While consumer debt levels in Canada are climbing, credit cards still account for just over 5% of total household debt compared with 20% in the US. This has led to exceptional performance for Canadian credit card ABS. 'Card delinquency and loss rates are down significantly from peak levels while payment rates remain high, often exceeding 35%,' said Director Herman Poon. The rating outlook for the Canadian credit card sector remains stable. Canadian credit card ABS issuance is expected to remain steady ($3-$4 billion) in 2015.

'Canadian Consumer Charges Up Credit Card ABS Performance' is available at 'www.fitchratings.com' or by clicking on the above link.

Additional information is available at 'www.fitchratings.com'.

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