Fitch: UK Credit Card ABS Asset Performance Stronger Than Ever in 2015
The charge-off index finished the year below one-third of the peak reached in September 2009, while its three-month average (3MA) rolling figure declined to 2.8% in 4Q15 (from 3% in the preceding quarter). The 3MA 60-180 delinquency index improved the record low set in 3Q15 slightly while the 3MA payment rate and gross yield indices continued to deteriorate during 4Q15. These resulted in improved break-even charge-off multiples for most Fitch-rated trusts.
The long anticipated ruling on interchange cap came into force in December 2015. In preparation, some originators had already started to axe the value of their reward and cash-back programmes, and we expect this trend to continue. Fitch does not anticipate any direct effect on trust performance from this cap and will monitor trust data for any second-order effects, such as changing portfolio composition or cardholder behaviour.
In November, Fitch rated the credit card ABS issued by NewDay Funding 2015-2 Plc, backed by a pool of an organic book with ongoing originations of new accounts, and a closed book consisting of two legacy pools acquired by the NewDay Ltd - one of the largest specialist credit card companies in the UK.
The full report, entitled 'Credit Card Index - UK 1Q16', is available at www.fitchratings.com or by clicking on the link above.
Fitch will also update "ABS Compare", an Excel tool, providing easy access to the agency's surveillance and index data on European consumer and credit card ABS transactions (see "ABS Compare" on www.fitchratings.com).