DBRS Publishes Europe-Wide Credit Card Index: Beyond the Plastic

DBRS today published the second edition of a Europe-wide index of credit card securitisations. The DBRS periodical report explores the credit card securitisation market across Europe, which demonstrates a continuation of strong overall performance. Tracking the European credit card market, DBRS analyses charge-off rates, delinquency rollover rates, yields, excess spread and many other metrics to provide insight of performance beyond the ratings. This latest edition of “Beyond the Plastic” includes the addition of recent transactions from Carrefour and the DBRS-rated transaction from El Cortes Ingles.

“Credit card transactions within Europe vary widely; from transactions based on department store cards to bank-originated credit cards,” notes Gordon Kerr, Senior Vice President, Structured Finance Research Europe. “In recent months charge-offs fell across Europe, but yields have marginally declined.” DBRS has gathered information on each of the credit card transactions within Europe and finds:

-- Charge-Offs Continue to Improve — Credit card transactions across Europe are experiencing continually decreasing charge-off levels, falling to 3.5% in February 2014 from 4.8% in February 2013.
-- France Outperforming — French credit card charge-offs are showing some improvement with an average charge-off rate of 2.4%.
-- Yield Decline, but Net Yields Remain Strong — Gross yields across Europe are showing signs of marginal decline after remaining relatively stable since October 2010.
-- Payment Rates Continue Trend Higher — Payment rates are broadly increasing in European credit card transactions over the long term, moving to 20.7% in February 2014 from 16.2% in February 2013.
-- Continuing Growth — DBRS expects issuance to continue to grow in 2014 as more markets issue transactions across Europe and with the removal of the Funding for Lending Scheme in the U.K.
-- Lending Growth Slows in U.K., Further Declines in Europe — U.K. credit card annual growth remains positive, but has slowed to 5.2% in February 2014. In Europe, year-over-year change in consumer lending has been negative since June 2011.

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