OREANDA-NEWS. Fitch Ratings says its UK three-month average (3MA) rolling charge-off index was 2.6% in 2Q16, marking a slight increase on the first quarter as the effects of Penarth's asset substitution in 1Q16 fade away. The payment rate continued to fluctuate within its long-term band during 2Q16, while the gross yield index decreased to below 15% for the first time since the inception of the index.

The UK continued to deliver positive news as regards macroeconomic trends during 2Q16. GDP grew 0.6% in the second quarter and 3MA total pay - including bonuses - rose 2.3% compared with last year, improving the purchasing power of UK households further as the consumer price index remained unchanged at 0.3% in May.

However, business and consumer confidence fell sharply following the Brexit vote on 23 June, indicating companies are likely to curtail investment plans and put hiring decisions on hold over the next 12 months. Fitch expects a marked slowdown in growth in the UK, but no outright recession.

Despite the slower growth expected in the next two years, no change has been made to UK structured finance sector rating outlooks, including UK credit card ABS. Fitch's Outlook for UK Credit Cards remains Stable as the performance deterioration based on the agency's macro forecast is still in line with our steady state levels for UK credit card trusts.