Canadian credit card performance worsened in the second quarter with charge-off rates setting a record high, Moody's Investors Service Inc. reported this week.

The Canadian charge-off rate was 4.8% in the second quarter, an increase of 173 basis points from 3.07% during the same period a year ago, according to Moody's. By comparison, the charge-off rate was 10.45% in the United States and 8.71% in the United Kingdom.

"The intensity of the current recession has led to charge-offs that have exceeded previous cyclical highs by a relatively wide margin," Sumant Inamdar, Moody's vice president and senior analyst, said of the report's findings.

"So far, this deterioration has not translated into many rating actions for the Canadian credit card sector," Inamdar said. "Nevertheless, if charge-offs rise more steeply than expected then there may be negative rating consequences for the related credit card ABS securities."

The delinquency rate in Canada, which measures the proportion of account balances more than 30 days past due, was 2.82% in the second quarter, up from 2.29% a year earlier, but slightly better than the 2.9% in the first quarter of this year. By comparison, the U.S. and UK delinquency rates are more than twice as high.

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