New leasing business in Europe grew by 6.4% in the first quarter of 2015 compared to the same period last year, according to Leaseurope’s quarterly survey of 17 lessors in the European market.
The seventeenth edition of the survey, showed that new business volumes stood at 16.8bn in Q1 2015.
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The portfolio of outstanding contracts remained broadly stable, declining by 0.2% year-on-year, while risk-weighted assets decreased by a larger amount (-2.2%).
"This highlights the declining portfolio risk leasing companies are currently experiencing," wrote Leaseurope.
Total pre-tax profit increased by 8.7% for the 17 respondent in Q1 2015 compared to the same period in 2014, reaching 849m.
The average profitability ratio also increased from 32.2% to 40.2% in the same period, the highest on record in the survey’s history.
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By GlobalDataOperating income grew by 8.7% year-on-year in Q1 2015 at 2.1bn, while operating expenses increased by a smaller amount (3.6%) reaching 928m. As a result the average cost/income ratio fell to 44.9% in Q1 2015 compared to 46.5% in the first quarter of 2014.
Loan loss provisions decreased by 22.1% to 313m in the first three months of the year compared to the same period in 2014, making it the fifth consecutive quarter of declining loan loss provisions.
The average annualised cost of risk fell to its lowest level in three years, dropping to 0.58%.
Return on assets (RoA) and return on equity (RoE) increased significantly in Q1 2015 compared to Q1 2014, 1.7% and 206 respectively, reaching their highest values since the inception of the survey. These high figures are due to strong profitability increases despite stable leasing portfolios and declining RWAs.
Jean Pierre Vissers, executive vice president of De Lage Landen Vendor Finance Europe and Leaseurope board member, said: "Record profitability, RoA and RoE ratios in Q1 2015, combined with the lowest cost of risk ratio in three years, highlights the strong financial position of the leasing industry as European economies return to growth.
Significantly declining loan loss provisions are driving these positive developments, showing a reduction in leasing portfolio risk at the same time that new business volumes are growing. As domestic demand in Europe continues to strengthen into 2015, investment levels should also pick up, a good sign for continued high performance in the leasing business."
