Decline in operating expenses/lease investment
ratio points to efficient market.
Hypo Alpe Adria Leasing opened offices in
Belgrade at the end of 2002, followed closely by fellow Austrian
finance empire Raiffeisen Leasing in February of 2003.

Six years on, data provided by the Serbian national bank shows
an abrupt and striking halt to an era of growth that had seemed
certain to go from strength to strength.

Like market leaders Hypo Alpe Adria Leasing and Raiffeisen
Leasing, nine other of Serbia’s 17 lessors are subsidiaries of
international banking bodies.

Between them, they occupy around 85 percent of the market and
employ around 500 staff.

It is not hard to see why they were keen to build operations in
Serbia – from having no leasing economy to speak of in 2002, the
country’s lessors grew their combined portfolio at a significant
annual rate right up until year-end 2007.

Unsurprisingly, 2008 put Serbia into a position all too familiar
to Europe’s developing leasing economies.

Portfolio growth during the third quarter of 2008 was down from
its former year-on-year value of 40.7 percent to just 11.4 percent,
due to sales slumps in the machinery and passenger car sectors.

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The CV sector maintained only modest growth, however.

Serbia’s problems are magnified by examination of the National
Bank’s aggregate balance sheet statistics, which show profits for
the leasing sector decimated by a 58.7 percent drop from 2007’s
figures, leaving a figure lower than 2006’s profit total.

One factor behind this collapse was the decline of the average
lending rate in conjunction with rises in average deposit rate,
resulting in a net contraction of interest margin.

On the brighter side, the ratio of operating expenses to average
lease investment declined in the first three quarters of 2008
relative to 2007, reflecting a steady increase in the efficiency of
the financial leasing sector.


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