Both the Spanish and Portuguese
leasing markets have seen dramatic declines in new business,
particularly in the SME and real estate sectors. Antonio Fabrizio reports.
The first half of 2009 was extremely
challenging for Spanish and Portuguese lessors. This was in line
with a general economic downfall which – particularly in Spain –
has made life very difficult for the two countries’ vital SME
sector.
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Industry figures obtained from the two local
leasing associations have shown the extent of the effects of the
crisis on their members, with a massive fall in new business in
both countries and a deterioration in leasing companies’ portfolios
largely caused by an increase in bad debt.
According to Portugal’s leasing association,
Associação Portuguesa de Leasing (ALF), new business for the first
six months of 2009 totalled €2.02 billion, a 40 percent decrease
compared with last year.
Of that, operating lease new business
decreased from €329 million to €246 million, and the total number
of contracts dropped from 45,000 to 31,000. On average, contract
values also decreased by almost €10,000 – from €74,000 to €65,000,
ALF said.
Some glimmers of hope
Lisbon-headquartered Caixa Leasing e
Factoring (CLF), one of the country’s top three lessors, reported a
huge drop in real estate leasing, which was down over 63 percent
compared to a national average of 44 percent.
The leasing arm of Caixa General de Depositos,
however, added that it performed much better than many of its
competitors in the equipment and vehicle leasing sectors, where it
also managed to position itself as the largest company by new
business volumes.
Overall, CLF had a 2 percent increase in
volumes within this segment, compared to an average 38 percent drop
recorded by the local market.
CLF’s moderate success was mainly evident in
the increase of company cars and trucks, the company said.
In this last sector alone, CLF showed a
definite countertrend as it posted new business volumes of €54.2
million – a 19 percent increase compared with the first six months
of 2008.
The company also recorded a 4 percent decline
in equipment and machinery leasing – from around €165 million to
€157 million – which was, however, much less negative than the 39
percent drop in the sector nationwide.
Compared with Portugal, the Spanish leasing
industry suffered even more the effects of the global downturn,
with new leasing business volumes down 58 percent in the second
quarter alone.
The statistics published by the Asociación
Española de Leasing (AEL) show the extent of the market drop of the
last three quarters – with a new business decline always in the
region of 55 to 62 percent compared to the same period the previous
year.
The total number of contracts dropped from
around 82,000 to 41,000, with a stunning 73 percent decrease in the
transport sector and over 55 percent decrease in equipment and
machinery.
In detail, in the first six months this year,
Spain’s equipment and vehicle leasing had a dramatic drop to €2.78
billion from €6.80 billion in the same period last year, whereas
real estate leasing fell from €1.57 billion to €0.79 billion.
Construction and real estate hardest
hit
According to Tomas Perez Ruiz, CEO
of Lico Leasing and president of the AEL, “virtually all business
sectors in the country have been negatively affected by the
recession, with construction and real estate being the hardest
hit”.
Similarly, all types of deal sizes have
recorded a sharp contraction, particularly in the small and medium
ticket business, he said.
In the case of Lico Leasing, this resulted in
the closing of several branch offices and a personnel reduction
from 270 to 247.
Barcelona-based La Caixa confirmed it had seen
a drop, particularly in the transport and construction equipment
leasing sectors.
Jorge Matas Fibla, who heads La Caixa’s
medium- and long-term finance operations, added that the middle
ticket sector was less badly affected than the rest of the market,
while “large ticket doesn’t exist anymore”.
“Companies in general don’t invest in
equipment because they are waiting for an evolution of the market.
Our forecast continues to be bad, but not worse than the first part
of the year,” he added.
Customer defaults have been a major issue in
both countries.
As far as the Spanish market is concerned,
Perez Ruiz said that the crisis has determined a “sharp increase in
defaults and greater difficulties in recoveries”, following the
higher number of insolvencies.
He said that the rates of delinquencies, which
have historically been very low in the country rose by three times
or more between mid-2008 and mid-2009.
“Only in the last two or three months have we
begun to see a slower growth in insolvencies, which we hope will
continue in the coming months, although it isn’t sure yet that this
trend will be confirmed,” Perez Ruiz added.
Jose Novais, a manager at Deloitte in
Portugal, said that arrears and bad debt had increased
“dramatically” in that country, too.
This was confirmed by Jose Manuel Lourenco,
marketing director at CLF.
He said: “[Bad debt and customer insolvencies]
is our major problem. We have been facing difficulties with our
customers, both individuals and companies.”
He said that CLF is taking “special measures”
to recover leased assets, but stressed that the situation of
insolvencies in Portugal was simply “as high as in the rest of the
world”, and that it was especially affecting smaller companies.
According to Lourenco, however, a sign that
the economy was about to turn was a slight growth in internal
demand.
But he added: “We will see what the near
future reserves. I don’t make any predictions, I have seen too many
people predicting about the future and they were so wrong.”
