US-headquartered lessor CIT Vendor Finance, part of CIT Group, has posted fourth quarter pre-tax profits of $5m (3.67m), marking a substantial rise in the end-of-year profits of the leasing business, despite a substantial drop in the quarterly results of the company.
The final quarter of the year for CIT Vendor Finance, was affected by higher credit costs and lower finance income, which offset lower operating costs. This led to a fall of 89% in net profits from $46.9m in the previous quarter.
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For the year, Vendor Finance’s profits jumped from a loss of $107.9m in December 2012 to a net profit of $23.3m. Last year’s loss was, however, largely attributable to CIT Group’s repayment of debt from its bankruptcy in 2010.
The overall profitability improved due to a number of factors. The sale of the Dell Europe portfolio contributed $29m in the final quarter as did lower overall operating costs and an improvement in receivables over the year from $4.5bn to $4.8bn.
However, net write-offs continued to rise from the $19m in the previous quarter to $21m, which included assets held for sale as well as lower recovery rates. This represented 1.72% of CIT’s total portfolio.
Net write-offs were just $5m in 2012, or 0.43% which was still slightly higher than the US national average.
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By GlobalDataNew business volumes also declined year-on-year, both in the quarter and the year overall. In the three months to December new business stood at $711m which was down 18% year-on-year. The fall was less dramatic for the year having only declined from $3bn to $2.9bn.
CIT Group saw overall profits soar from a loss of $592m in 2012 to a net profit of $675m for 2013.
