Despite economic pressures the European leasing market reported significant growth in Q3 2019.
Total new leasing volumes reported by the sample of firms increased by 7% in comparison to Q3 2018, reaching €28.1bn.
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As the outstanding portfolio continued to rise at 4.7% growth in Q3 2019, total risk-weighted assets also increased at a slower rate by 2.4%.
Pre-tax profit grew by 11.2% in Q3 2019 in comparison to the same period of 2018.
The weighted average profitability ratio increased from 39% in Q3 2018 to 40.9% in Q3 this year.
Q3 2019 saw operating income increase by 3.9% compared to the same period in 2018, but operating expenses rose at a higher level of 7.9%.
As a result the weighted average cost/income ratio expanded to 49.0% in the third quarter of 2019.
Median cost/income ratio showed an increase in Q3 2019 to 48.2% which maintained a similar level to the first quarter of this year.
Loan loss provisions in Q3 2019 significantly decreased in comparison to the same period a year ago, shrinking 32%.
As a result the average annualised cost of risk dropped from 0.50% in Q3 last year to 0.34% in Q3 2019 – the lowest level seen so far this year.
Patrick Beselaere, global head ING Lease said: “Despite some economic headwinds during the first half of this year, the European leasing industry managed to perform relatively well in the third quarter. As the cost/income ratios continue to increase, going forward lessors should be cautious when it comes to rising operating expenses.
“Economic growth, together with investment, is expected to remain subdued for the rest of the year and going into 2020, setting the stage for potentially challenging market dynamics for the year ahead. Lessors will need to focus on our core strengths in order to continue outperforming the market,” he added.
