So, Germany last year retained its
lead at the top of Europe’s leasing table, according to
Leaseurope’s most recent figures published late last month.
Outstandings among members of the
German leasing association totalled €144 billion, €9 billion more
than Italy, which is ranked second, and €35 billion more than
members of the Finance & Leasing Association.
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Leaseurope’s figures are, of
course, considerably out of date – they indicate, for instance,
that Central & Eastern Europe is a thriving leasing economy
whereas in reality, right now, large parts of it is on its
knees.
The need for more up-to-date
figures is one reason why Leasing Life has spent the last few weeks
carrying out a detailed survey of the performance of Europe’s top
leasing companies over the past nine months and their plans for the
future, full details of which will appear in the magazine’s October
issue.
Also, we have provided the latest
quarterly results of a different European leasing economy in each
issue of the last year.
Another discrepancy, and one
which was raised by the FLA last month, is that Leaseurope’s
figures state that new production among FLA members declined 15.1
percent in 2008. However, remove exchange rate fluctuations and the
true figure is far smaller – as low as 1.3 percent in fact.
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By GlobalDataBut what cannot be ignored,
particularly among UK lessors, is the dire impact that arrears and
writedowns are having on their profit line.
Take Lombard North Central plc,
for instance, one of Europe’s largest lessors. Last month it
reported that in 2008 its revenues grew by 19 percent – while its
pre-tax profits fell by a whopping 88 percent. Impairments, the
lessor said, were partly the reason for this.
Given the fact that year-on-year
levels of arrears, which forms part of general impairments, in the
UK have grown sharply over the past eight months, it would be a
safe bet to say that Lombard’s impairments have risen even further
this year, meaning its 2009 profits will be even leaner than what
they were last year.
Because of this, some clearing
banks, many of which face less bright futures, are hunting
desperately for someone to buy their low-margin businesses which
are not cushioned against growing arrears, looking to shrink their
balance sheets, and hoping they can continue to make money from
early terminations and secondary rentals.
Meanwhile, it comes as little
surprise that lessors which historically have charged higher rates
to riskier customers, and whose bad debt has been cushioned by
higher margins, are now not only riding high but also looking to
grow their portfolios and make acquisitions.
Brendan Malkin
