Credit card performance stays strong in Q1: DBRS

Despite the combined impact of inflation and rising interest rates on household finances, credit card performance held up in the first quarter, according to a new report from DBRS Ltd.

The rating agency reported that its latest credit card performance index, which tracks securitizations, indicates that overall credit performance “remained strong” in the first quarter.

While certain metrics declined a bit on a quarter-over-quarter basis, they were generally stronger than in the same quarter last year, and improved from pre-pandemic levels, the data showed.

DBRS reported that the average payment rate in the quarter declined to 54.8%, down from 61.1% in the previous quarter. Yet, this remained higher than the rate in the same quarter last year, which was 48.9%.

Additionally, delinquencies over 90 days increased to 59 basis points, which was up from 50 bps in the previous quarter, but down from 68 bps in the first quarter of 2021.

And average net losses increased to 1.7% from 1.5% in the fourth quarter of 2021.

DBRS reported that delinquencies (over 90 days) and average net losses remain below their pre-pandemic levels — which were 81 bps and 3.1%, respectively.

While the economy faces heightened uncertainty from inflationary pressures, rising rates, the ongoing pandemic and geopolitical risks, DBRS said that it “expects these downside risks to credit performance to be partially mitigated by a strong labour market,” along with the structure of card securitizations.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.