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August 16, 2011updated 12 Apr 2017 4:12pm

A different league

There is growing optimism in the Austrian and Hungarian leasing markets as certain segments flourish, and expectations turn more positive The Austrian and Hungarian leasing markets remain unpredictable as unemployment is still high and fears mount over whether they will survive a second recession but the general outlook is far from bleak.

By Claire Hack

There is growing optimism in the Austrian and Hungarian leasing markets as certain segments flourish, and expectations turn more positive. Claire Hack reports

The Austrian and Hungarian leasing markets remain unpredictable as unemployment is still high and fears mount over whether they will survive a second recession – but the general outlook is far from bleak.

Both the leasing markets have managed to escape relatively unscathed as the Eurozone crisis spreads, and there seems to be little fear over contagion from surrounding areas.

What’s more, there is growing optimism between the two markets as certain segments flourish, and expectations turn more positive.

Lévai Gabor, general secretary of the Hungarian Leasing Association, said: “We estimate 20% growth for the whole year, and another 20% for 2012.

“The general machinery segment rose by 47%. The Hungarian economy is strongly linked to export markets, especially to Germany, and we have a relatively big spare-part industry related to car manufacturers.”

The Austrian market also grew by 20% in the first half of 2011, compared with the first half of 2010, Rudolf Fric, chairman of the Association of Austrian Leasing Companies, said.

“The basis for the Austrian leasing market’s excellent business development in the first half of the year 2011 was the increase of all leasing sectors,” Fric said.

The Hungarian market grew by 16% in the first half of the year, Gabor added, after 10 consecutive quarters of shrinkage.

Furthermore, the burgeoning Eurozone crisis has had “no significant effect” on the leasing market, Alfred Hagn, managing director of SG Equipment Finance (SGEF) in Austria, said.

Hagn added: “Austrian government bonds [have in fact] benefitted from the good Austrian credit standing, leading to reduced interest cost for the state.”

The market continues to suffer only from a general economic slowdown, Fric said, agreeing with Hagn’s comments.

“The Austrian leasing industry still suffers from the general economic crisis, as the commercial propensity to invest is recovering very slowly. But we do not see a specific impact of the Eurozone crisis on the local leasing market,” Fric said.

In Hungary, the impact of the strengthening Swiss franc has been among the key factors affecting lessees, Gabor said.

“[The] exchange rate rose by 10% within a month, and it heavily affects our customers’ ability to pay monthly instalments,” he said.

The Swiss franc has attracted attention in recent days as it strengthened against most foreign currencies, including the dollar and the euro, and is thought to have contributed to the weakness of other European currencies.

“From 2005 to 2006, private consumers [in Hungary] took loans for houses and passenger cars denominated in Swiss francs and euros,” Christian Piringer, manager director of SGEF in Hungary said.

“Because of the unfavourable exchange rate movements, especially in case of Swiss francs, there was an increase of approximately 50 to 70% in instalments payable in Hungarian forints.”

He added that players in the corporate market have taken on both loans and leases foreign currencies, but that the ratio of Swiss franc loans is lower.

Any negative effect on the exchange rate to Hungarian currency has been mitigated, however, as many segments of the market are geared towards export, Piringer said.

“Credit default swaps in Hungary show relatively hectic movement, but the effect on the interest rate is not that significant,” he added.

Increase in business volumes

Both Austria and Hungary, furthermore, have seen marked increases in business volumes across a number of segments.

“New business volumes for motor vehicles grew by 20% and other movable assets by 7%,” Fric said.

And as Europe looks increasingly to alternative sources of energy, renewable energy assets saw the highest growth during the first half, he added.

“IT office equipment went up by more than 80%, because of some individual contracts, although this is the smallest segment of the market [in Hungary],” Gabor said.

“Truck segment realised approximately 30% growth as transportation is also booming in connection with export.”

“The most significant upward movement was in [the transportation sector] in Hungary. German companies restarted co-operations with Hungarian subcontractors, especially in the automotive industry, metal processing, plastic and light industry,” Piringer added.

“In the case of agricultural investment, we can see a very positive investment environment, despite a lack of state subsidies, which have been postponed.”

And while it is to be expected that the two leasing markets would have a major impact upon each other, owing to their close economic and geographic ties, there is a general lack of business straddling the borders of the two countries, Gabor added.

“Some of the market players are owned by Austrian companies, for example Erste and Immorent, but there is not any cross-border leasing activity,” he said.

Austrian stakeholders in Hungary face increased risk

The Austrian stake in the Hungarian market is nevertheless significant, Fric said, and is heavily impacted by fluctuations in the Hungarian economy.

“Both weak demand for new business and risk issues arising from outstanding leases in foreign currency are challenging at present,” he said.

And while legislation affecting leasing transactions in Austria has remained more or less unchanged according to Fric, a Hungarian banking tax is continuing to have a major impact on the leasing industry there, Gabor told Leasing Life.

“The special banking tax has affected leasing companies, as every financial institution has to pay an extra 6.5% tax after net interest and fee income from 2009. The tax is payable for a minimum of three years,” he said.

A lack of internal market growth within the SME segment, as well as high levels of unemployment, have also caused a decrease in activity in vehicle, equipment and real estate investments, Gabor added.

Conversely, Fric said, there has been strong demand for vehicle leases in Austria, and especially from private customers, as well as a greater propensity to invest.

“[The market] is still driven by prudence, as order books and deal pipelines in some of the manufacturing and exporting sectors are still vague,” he said.

Market participation remains stable 

The number of companies within Austria’s leasing market has also remained stable during the first half of 2011, while Hungary has seen significant levels of consolidation.

“Small Hungarian leasing companies are not able to refinance their activity, and have left the market,” Gabor said.

“Some of the international players are also inactive at the moment, because their parent company might have some problems at home, or because the Hungarian activity and/or the market was too small.”

“Several leasing companies stopped activities [in Hungary] including BAWAG Leasing, Fortis Leasing, and Impuls Leasing, and some of them suspended activities – Raiffeisen, ING, CIB-Banka Intesa, KBC,” Piringer said.

“Some are gaining bigger market share, including UniCredit, SGEF, BNP Paribas, GE Leasing, and De Lage Landen.”

According to Hagn, furthermore, two major players within the Austrian and Central and Eastern European markets have been sold, or are in the process of being partly sold.

“Austrian-based Volksbank International Group announced its take-over by Russian Sberbank,” he said.

“The Hypo Alpe Adria Group has also put its leasing activities in Austria and CEE up for sale. The process is managed by Citibank and is ongoing.”

As 2012 approaches, Gabor remains confident of the 20% growth in the Hungarian market, but Piringer is slightly less optimistic.

“The favourable first and second quarter of 2011 gave optimistic expectations for the second half of the year, but companies seem to have stopped planned investments or have tried to postpone them because of the euro crisis,” he said.

Fric is hopeful of a general recovery from the recent onslaught of new economic turmoil.

“We expect some growth in vehicle leases and are optimistic that the recovery of the equipment leasing and real estate leasing segments will continue,” he said.

Market snapshots

Hungary: As per statistics published by the Hungarian Lease Association, market production remained flat in the first quarter of 2011, compared with the first quarter of 2010.

However, in the second quarter of 2011, new business volumes were 8.5% higher than in the corresponding period of 2010.

This was mainly due to the development of the truck sector and investments in machinery, according to Hagn.

The passenger car segment, meanwhile, suffered a massive drop in 2009, falling 80%, and again by 10% in 2010 in terms of new business volumes.

In 2011, the market failed to recover fully and a further 5% drop was visible in the second quarter of the year, compared with the second quarter in the previous year.

This segment nevertheless represents 50% of the total leasing market in Hungary.

There was strong development in the truck and freight segment, as demand for new vehicles increased.

In the second quarter of this year, there was an increase of 36.9% in investment compared with Q2 2010.

Bus financing, however, dropped by almost 13%, while truck financing grew by 40 percent.

The total machinery market grew 34%, due to stable investment in IT investment, as well as positive trends in manufacturing equipment machinery investments, up 30%, and agricultural machinery, up 67%.

Figures for the second quarter of this year also showed a small increase in investment in construction machinery, up 8% compared with in the same period in 2010.

Austria: Within vehicle leasing, which includes passenger cars, trucks and trailers, new business volume grew by 20.3% to €1.89bn. The number of contracts increased by 13.2%, while the number of registrations grew by 11.3%.

The average value per contract was up 6.3%, or an average value of €22,000.

Equipment leasing in general saw new business volumes grow 36.2%, to €771m, while the number of new contracts dipped by 11.5%.

The average value of each contract was up by as much as 54%, leading to an average value of €89,000.

There was also a slight recovery in machinery and industrial equipment leasing, up 6.7%, while the strongest performance was in agricultural equipment, up 108%.

Business aviation leasing was also up 95%, while shipping fell 71% and rolling stock was down 70%. Computer and office equipment fell 22%.

As a standalone segment, passenger cars rose 15%, and trucks, trailers and buses rose 25%. Only tractors showed a decrease in new business volume, down 4.5%.

Key players


The Société Générale subsidiary is set to strengthen its position in key areas such as the financing of buses, working with the company’s major partners, both Hagn and Piringer said.

In Hungary, furthermore, Piringer claimed the company could overtake CIB Leasing in terms of market share, with about 65% of market share in terms of new business volumes.

The company is also focussing on medical equipment and high tech, and especially software financing, Hagn said.

“SGEF Austria could introduce complex financing solutions like step-up leases or pay per use leases and [white label] leasing models, which allow large producers to offer financings off-balance sheet in their own name, while SGEF provides for the financing in the background,” he said.

Hagn added that SGEF is looking to strengthen its position as one of the top three vendor finance providers in Austria. It is also looking to become one of the leading suppliers of high tech financing solutions in Hungary, Piringer said.

“Due to the limitation of investment in Austrian-based leasing companies in CEE, there is the clear refocusing of those lessors onto the Austrian market,” Hagn said.

There are difficulties to be faced, however, and especially for lessees, he said.

“Besides the heavy competition from local small banks, this increase of competition leads to pressure on the margins, especially for top and well-rated customers,” Hagn added.

Other key players

Unicredit Leasing Austria

·        CEO: Martin Frank

       2010 ranking in Austria: 1

·        2010 market share: 13.32%

·        2010 market growth rate: +8.7%

·        Full time employees: 265

·        Branches: 8

·        Net profit: €42.3m (stable)

·        Other facts: Competence centres located in Vienna provide expertise to the whole UniCredit Leasing network in the real estate, automotive, renewable energy segments.

Unicredit Leasing Hungary 

·        CEO: Gyorgy Porfy

·        2010 Ranking: 3

·        2010 market share: 9,6%

·        Full-time employees: 85

·        Other facts: A much smaller presence than in Hungary. The market has been steadily decreasing, mainly due to contraction in real estate.

Raiffeisen Leasing 

· Managing directors: Peter Engert (chairman), Michael Ohner, Karlheinz Sandler

· Employees: 363 in Austria, 1,370 internationally

·  Regional offices: Burgenland, Carinthia, Lower Austria-Vienna, Salzburg, Styria, Tyrol, Vorarlberg

·   Other facts: Involved in vehicle, machinery, equipment and real estate leasing, property development and comprehensive services such as construction management, fleet management and operator models, contracting, and projects in ecology and electric mobility.


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