The performance of most credit card issuers has been stable since 2001, despite increasing competition and growing outstanding balances of a number of credit card issuers, says Dominion Bond Rating Service in a newly released study.

“The stable performance reflects the judicious and generally conservative credit underwriting standards employed by Canadian credit card entities,” DBR says.

The firm reports that portfolio yields have been stable in the range of 16% to 18% for most issuers since 2001 while there are noticeable differences among payment rates and loss rates of the various issuers. The monthly payment rates ranged from 10% to over 45% and the loss rates ranged from 2% to close to 7%. “Such difference in performance is not due to the credit quality of respective customers, but is a reflection of different market strategies and risk tolerances of issuers,” DBRS says.

DBRS adds that it expects the competition to intensify and loss rates to increase moderately in the future. “However, given the relatively conservative underwriting standards of credit card issuers in Canada and enhancement available to credit card-backed notes, DBRS does not foresee any substantial deterioration of credit quality,” it concludes.