Moody's UK aggregate credit card charge-off index declined to 11.4% in October from 11.8% one month previously, while its UK aggregate delinquency index remained stable at 7.7%. After months of continuous deterioration, the sector is beginning to show some preliminary signs of stabilisation, the rating agency notes.

Delinquency rates have been flat or decreasing across most trusts for the past three to four months. Payment rates have remained broadly stable over 2009, while excess spread levels are on the rise due to the lower cost of floating rate bonds.

Moody's continues to have a negative outlook for the UK credit card sector and expects UK GDP to return to growth in Q409, after six consecutive quarters of decline. However, the rating agency expects recovery to be slow, dragged by weak credit conditions and poor consumer demand. In 2010, GDP is expected to grow by a modest 0.8% after contracting by 4.7% in 2009.