According to the Leaseurope Index, total new leasing volumes reported in Q4 2018 by the sample of firms decreased by 8.6% year-on-year, the first such decline since 2013.
The Leaseurope Index tracks key performance indicators of a sample of 23 European lessors on a quarterly basis. The Q4 2018 survey is the thirty-second edition.
Aggregate pre-tax profit decreased in 2018 overall compared to 2017, dropping by 6%. This was attributed by Leaseurope to poor performance in Q1 and particularly Q3, with growth in Q4 2018 considered strong compared to 2017 at 18.8%.
Charlotte Dennery, chief executive officer of BNP Paribas Leasing Solutions, said: “Despite relatively strong performance in the second quarter, 2018 has been a challenging year. Uncertainty surrounding global trade and Brexit have resulted in more conservative domestic demand than expected and subdued business investment.
“Regardless of these hurdles, European lessors have continued to grow their portfolio. The European Commission predicts lingering uncertainty and suppressed demand going into 2019, therefore it will be important for our industry to leverage on our strengths in order to continue outperforming the market.”
Average operating income saw relatively strong growth in Q4 2018 of 3.5%. Combined with declining operating cost of 6.0% during this period, the weighted average cost to income ratio also dropped to 52.3% year-on-year. The trend for the whole of 2018 was not as positive, with cost escalation of 3.5% outpacing income growth of 1.9%. This led to a slight rise in the average cost to income ratio to 48.5% for 2018.
As well as BNP Paribas, participating companies in the survey include ABN AMRO Lease, Hitachi Capital UK, Investec, LeasePlan, Lombard, Société Générale Equipment Finance, and Xerox Financial Services – Europe.
Leaseurope aims to publish the results on the Leaseurope Index website within eight weeks of the close of quarter. Europe is defined in the widest sense as EU28 and EFTA plus other countries such as Turkey, Ukraine, Russia and Serbia.
The Leaseurope European business confidence survey recorded a “generally positive’ outlook for the continent in 2019. The report was published in conjunction with asset finance provider Invigors EMEA, and also noted there were “growing signs of caution in some areas.”