After strong growth in 2010 and 2011, the Polish leasing juggernaut found itself in the slow lane in 2012. Claire Hack talks to the industry about its hopes and fears for 2013

As director general of the Polish Leasing Association, Andrzej Sugajski could be forgiven for being glad to see the back of 2012 – a year in which the previously rapidly growing Polish leasing market slowed down considerably.

Like the rest of Europe, the Polish leasing industry suffered as a result of the first global financial crisis in 2008, Sugajski tells Leasing Life, shrinking by about 30% across all asset segments in 2009.

The market then experienced 19% growth in 2010, says Sugajski, and grew a further 14% in 2011.

However, 2012 has proved a more difficult year and growth is rapidly dwindling.
“Unfortunately, 2012 appears as the second wave of crisis,” says Sugajski. “Results from the respective months of 2012 show that there is a visible slowing down of the leasing market development,” he says. In the first quarter of 2012, the market increased by 11% but in the next quarter, only by about 6%, Sugajski says.

Furthermore, in the first three quarters of 2012, leasing companies in Poland supplied a total of PLN22.5bn (€5.5bn) in financing, of which PLN21.7bn was in movable equipment – a rise of just 2% compared with the same period in 2011.

In total, during the first three quarters of 2012 the equipment leasing market (excluding vehicles) grew 4% year-on-year to PLN8.1bn, Sugajski says.

It’s a slowdown experienced by Radoslaw Wozniak and Jacques Fenwick of Europejski Fundusz Leasingowy (EFL), part of French banking group Crédit Agricole, who cite general investment levels over 2012 as evidence of deceleration.

In the first quarter of 2012, they say, overall new investment rose 6% year-on-year, compared with a decrease of 0.8% for the EU as a whole, and a decrease of 2.4% in the eurozone.

In the second quarter, new investment growth in Poland slowed down 1.3% year-on-year, but this was still above the EU, down 2.5% , and the eurozone, down 3.6%.

Preliminary data on Polish GDP in the third quarter of 2012 suggested a 1.5% fall in new investment, however, as a result of cutbacks in public spending.

Kicking off business

The Euro 2012 football championship, however, brought a welcome boost to the Polish leasing market. Sugajski describes it as “the main positive development factor” for investment in Poland.

PLA data showed strong results in the vehicle leasing segment, adds Sugajski, with about 60,000 passenger cars, worth PLN5.4bn, leased in the first three quarters, an increase of about 5% on the same period in 2011.

Also over the same period, there was growth of 37% in the bus and coach leasing sector with new business volume reaching PLN452m.

Fenwick and Wozniak, vice-president in charge of sales, finance, IT and administration and vice-president in charge of risk, legal and human resources respectively, agree Euro 2012 played an important role in the Polish economy as a whole, as well as the financing industry, last year.

On top of the boost in vehicle financing the increase in international visitors brought with it, Fenwick and Wozniak, point to a general increase in equipment finance as businesses prepared for the influx of supporters and media.

Farming growth

The strongest market performance, however, came from the agricultural segment, according to Sugajski, providing a further boost to the market.

“The market of equipment leasing owes its increase to a greater extent to farmers,” says Sugajski. “After three quarters of 2012, the revenue of agricultural equipment was more than twice as big as the construction segment and road construction equipment,” he says.

Agriculture used to lead the country’s equipment leasing market and leasing is still a vital component of the drive to modernise the farming industry, Sugajski adds.

The total value of financed transactions in this sector came to PLN2.4bn in the nine months to the end of September, or a total increase of 58%.

Fenwick and Wozniak also cited agricultural machinery as a rapidly growing sector in Poland, and said EFL recorded a 53% year-on-year rise in funding in this sector over the first nine months of 2012.

There were also major contributions from the plastic and metal processing industry, the food processing industry, the catering industry, and from the provision of forklift trucks, with all four sectors experiencing double-digit percentage growth, adds Sugajski.

Home market

Because most major European international finance groups are present in Poland, however, as much as 80% of the volume of leasing contracts comes from leasing companies whose shareholders are foreign investors.

While this suggests the native Polish leasing market has yet to develop fully, the PLA has established itself as a strong representative of the industry.

“Approximately 66% of the member companies are leasing companies whose shareholders are bank groups. The remaining companies are mostly owned by producers and suppliers; 1% are independent,” Sugajski says.

In terms of leasing distribution, excluding a funder’s own sales networks, the most commonly used channel is manufacturers, at 48%, followed by banks (33%) and other intermediaries (37%).

Regardless of channel, the main end-users of leasing in Poland are overwhelmingly SMEs which make up 99.8% of Poland’s commercial landscape, according to the PLA director general.

About 96% of these SMEs are micro-companies, employing up to nine employees, and 76% of them don’t use external financing, Sugajski adds.

About a quarter of SMEs in Poland say that the major impediments to their development are access to bank credit and high levels of bureaucracy within traditional bank funding, he adds.

This has led more and more companies to look to leasing, where only 7% of companies have suggested access to leasing credit and bureaucracy are holding them back.

“Most SME companies have simplified accountancy and therefore cannot show any credit rating. For them, leasing is the only chance to develop,” Sugajski says.

Fenwick and Wozniak echo Sugajski’s assessment of SME’s credit access problems in light of a reduction in bank lending, and add “leasing remains the easiest, fastest and most accessible source of investment financing” for small firms.

The pair describe the sector as reacting sharply to changing macroeconomic conditions and say a lot of Polish entrepreneurs are still able to invest, despite the noticeable slowdown in economic growth and macroeconomic instability.

According to the EFL board members, the Polish entrepreneurial sector has shown it is prepared to invest in machinery, equipment, company vehicles and IT, and investment in these segments, through leasing, is relatively high among small firms.


Looking ahead to this year, the IT sector especially could boost the domestic leasing market in Poland, Fenwick and Woniak suggest, as it is an asset sector which tends to develop at a constant rate. The pair also expect the agricultural market to remain promising.

The weakening Polish economy, however, coupled with the major slowdown in Europe, will continue to affect the leasing sector. The first half of 2013 will see some further shrinkage, Fenwick and Wozniak add, but by the third quarter, there could be some signs of growth.

“When it comes to the outlook for 2013, we expect a growth in financing of approximately 3.3% as a result of companies’ investments,” says Fenwick.

“It is worth noting that private investments will be largely financed by loans as a result of increasing absorption of EU funds and the growing interest in loans.”

The leasing industry could also find support from additional funding supplied by the government aimed at reducing unemployment through training courses and job creation and Sugajski points out the government is working to decrease the administrative barriers to credit for small firms and entrepreneurs.

The industry could also benefit from a newly created government body, Polish Investments, which was set up to support investment mainly in energy and infrastructure.

Fenwick explains: “The main idea is to combine private and public investments in common projects. The new company will be financially run by the national bank BGK, and its credit capacity was defined at
PLN40bn. It will start its operating activity in 2013, but most spending has been planned for 2014.”

This year, however, taking into account the negative signals coming from the Polish industry and the employment market, the PLA is expecting revenue stagnation.

Sugajski points to impending regulation – Basel III and lease accounting – as likely to have a negative impact on the Polish market.
“Currently, without the option of sufficient financing [from their parent banks], financing is acquired through other financial institutions that are not part of the corporate group,” he says.

After the implementation of the new regulations, it will be virtually impossible for banks to finance their own corporate groups, he adds.
Sugajski also says there has been cause for alarm from the Polish Ministry of Finance, which is looking at implementing a much stricter taxation policy. The PLA has, however, been working with the Polish government, with the aim of working out a system to make accounting easier for lease contracts, in terms of early contract termination, and to promote wider access to leasing.

Going for growth

Two foreign-owned leasing subsidiaries tell Leasing Life how they intend to grow in the Polish market in 2013

SGEF Poland

Jan Robert Samsel is head of sales and marketing at Société Générale Equipment Finance (SGEF) Poland.

The company’s activity is focused on industrial equipment, high-tech and transportation, he says, and in 2012, SGEF Poland financed mainly injection moulding machines and machines for metal processing.

In 2012, furthermore, SGEF Poland focused on profitability rather than increasing its market share, as it had to keep up with a competitive environment on margins, according to Samsel.

New business volume (NBV) is expected to have fallen at the end of 2012 as a result of the slowdown in the economy, he adds, and especially the collapse of the construction segment, where SGEF Poland has historically played a major role.

“Lower NBV in the construction sector was partially offset by the increase in the agriculture sector,” Samsel says.

SGEF has been present in the Polish market for the past 15 years, Samsel says, and since then it has seen its level of business grow constantly.

“We have a strong position in the construction and printing segment and we are the leaders in high-tech financing,” he said.

“SGEF Poland is also one of the few companies involved in financing planes and helicopters – this market sector is not big in Poland, but remains fairly stable.”

Across the leasing market in Poland, vehicles represent more than 50% of the annual NBV, followed by industrial equipment, with IT, rail, planes and other movable items together representing 7%.

“It is hard to compare the Polish leasing situation with the rest of Europe,” Samsel says.

“The market is now calmer, and we will probably experience moderate growth. The economy is slowing down in every market segment, however, and has reduced new investments.”

Given the current environment, SGEF Poland is focused more on the cost of risk than developing NBV, he adds, which could present problems for the entire sector.

It is likely that there will be a visible decrease in new investments, according to Samsel, and EU subsidies are now much scarcer.

“Our clients, in most cases, have decided to wait until the new subsidies are in place – so, considering the circumstances, the appetite to invest is weak,” he says.

However, comparing the level of investment financed by leasing in Poland with other countries such as Germany, there is potential for growth, he adds.

“Growth must come, in our opinion, from offering more specialised leasing products,” Samsel says.

“Financial leasing also has potential, but the main drivers for growth are new products and services to be offered by leasing companies for clients and vendors – for example, consumer leasing for passenger cars.”

Looking ahead to 2013, SGEF Poland will stick to the well-established assets and vendors in the Polish and European market.

“This will be those with well-recognised brands and secondary market value. We will have to be careful in evaluating new projects, especially in the construction segment,” Samsel said.

“We will also devote our activity to the promotion of financing for energy-saving machines and equipment.”

In November, the company signed a credit agreement with the EBRD and the funds will be distributed among its SME clients who invest in energy-saving projects.

Clients will be eligible for refunds to the equivalent value of 10% of the transaction size if the machine being financed meets the relevant criteria.

“This year will definitely be challenging for the whole industry. A lack of EU subsidies and the economic slowdown will result in smaller investments and, as a result, NBV will be lower than in 2012,” Samsel says.

“We will not focus on increasing NBV, but there is always room for improvement of the quality of services, the added value for partners, the cost of risk and profitability.”

Europejski Fundusz Leasingowy

EFL was the leader in sales at the end of the third quarter of 2012, financing assets worth PLN1.9bn, according to Radoslaw Wozniak and Jacques Fenwick.

It’s the largest leasing company in Poland, with more than 230,000 customers, and it works with 51,000 providers of machinery, equipment, vehicles and other fixed assets.

“EFL, as a company operating in the Polish market for more than 20 years, leads an active credit policy,” Fenwick says.

“This means that we’re trying to predict business cycles in different industries and, in advance, change the approach to them, thus matching the current sales offer.”

Using an “anticipatory risk policy”, the company instituted various changes at the end of last year, as the impending crisis in the construction industry began to emerge.

This included changes in their approach to financing investments, as well as the assessment of potential clients, including those within high-risk industries.

These changes were not dramatic, but moved forward gradually, Fenwick says.

“‘More space for entrepreneurs’ is a motto that guides the company’s operations. It translates into continuous improvement of products, which today are used by micro, small and medium-sized companies, as well as corporate customers,” he says.

“The EFL Group provides its clients with financing and leasing in the form of loans and additional services, such as fuel cards, insurances and recently introduced factoring,” he adds.

EFL reaches its clients through a network of suppliers and dealers, according to Fenwick, which includes local branches, call centres, a self-service web portal and “mobile agents”.

“It should be noted that the electronic channels supporting relations with the customers are nowadays more and more important,” Fenwick adds.

“Via the internet or mobile phones, financial companies are able to reach clients easily and quickly, with the full range of their services and products.”