New leasing business in Europe grew by 8.8% in the first quarter of 2016 compared to the same period last year, according to Leaseurope’s quarterly survey. The survey showed that new business volumes exceeded €22bn (£17.3bn).

The twenty-first edition of the survey featured a sample of 17 European lessors.

The portfolio of outstanding contracts grew by 2% year-on-year, while risk-weighted assets increased by 3%.

Total pre-tax profit saw double digit growth of 12.7% for Q1 2016 in comparison to Q1 2015. Over the same period, average profitability ratio surged from 41% to 45.4%.

Compared to the same period a year ago, operating income increased by 1.3%, while operating expenses increased by a higher amount (4.4%). This resulted in a rise in the average cost/income rate to 46.1% in Q1 2016 compared to 44.5% in the same period in 2015.

Loan loss provisions almost halved (-41.6%) year-on-year , making it the third consecutive year of declining loan loss provisions. This development led to the average annualised cost of risk falling to its lowest level in the history of the survey at 0.3%.

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Return on assets (RoA) and return on equity (RoE) both remained at high levels, reaching 1.9% and 184 respectively. These high figures were due to strong profitability increases as a result of declining loan loss provisions.

Andy Hart, head of asset finance at Investec, said: "In Q1 2016 leasing KPIs continue to go from strength to strength, with particularly well performing profitability and cost of risk. However, these positive developments are being driven largely by declining loan loss provisions. Slowing income growth and escalating costs in the first quarter of the year could be cause for concern.

"On the bright side, strong new business growth, as well as increasing portfolio levels, suggest that the leasing industry is well placed to meet any challenges that the rest of the year may bring. The continuation of an accommodative monetary policy and broad recovery across Europe should boost investment going forward, a good development for the leasing business, but current political uncertainties leave future prospects unclear."