Moody’s expects deterioration in UK credit card sector over coming months

Moody's Investors Service reported in its UK Credit Card Index Report that the UK credit card ABS sector may witness deterioration over the coming months despite relatively stable credit card indicators reported in June 2008.
"Although the indices indicate a relatively benign trend at present, Moody's expects a rise in delinquencies and charge-offs over the coming months, albeit the magnitude of the increase is difficult to predict" said Cher Chua an Analyst at Moody's and co-author of the report.
She went on to point out, "as credit card accounts are typically charged-off after being delinquent for over 180 days, reported charge-off levels lag significantly behind current economic stresses. The majority of obligors charged-off in June 2008 stopped making payments at the end of last year."
Moody's has a negative outlook on the UK credit card sector. This view is primarily driven by the challenging UK economic environment, increasing costs of living, decreased availability of credit and high leverage levels of UK consumers.