New leasing business in Europe grew by 10.8% in 2015 compared to the previous year, according to Leaseurope’s quarterly survey. The survey tracks key performance indicators of a sample of 23 European lessors.
According to the survey, total pre-tax profit rose by 37.3% year-on-year in 2015, while weighted average profitability increased from 32.3% in 2014 to 41.6% in 2015.
"These large increases in aggregate profit figures are due mainly to loan loss provisions decreasing substantially from previously high levels," wrote Leaseurope.
Loan loss provisions decreased by 29.4% in 2015, resulting in average cost of risk falling from 0.74% in 2014 to 0.51% in 2015.
Over the same period, operating income increased by 8.7%, with the average cost/income ratio falling to 46%.
Both return on assets (RoA) and return on equity (RoE) experienced increases throughout all quarters in 2015. The total yearly average RoA ratio reached 1.7% compared to 1.3% in 2014 and RoE reached 170 compared to 123 in 2014.
Charlotte Dennery, chief executive officer at BNP Paribas Leasing Solutions, said: "In 2015, the financials for European lessors were undoubtedly strong. GDP growth in Europe remains stable, with economic recovery continuing at a slow pace, however the leasing industry appears to be forging ahead with encouraging growth in new business and outstanding portfolios. Particularly strong profitability performance, despite increased competition and squeezing margins, speaks well to the industry’s resilient business model.
"Deleveraging however, both at the level of our clients and for lessors themselves, is still having a significant effect on the industry as a whole. In addition, despite growing liquidity levels and favourable financial conditions, the European environment remains uncertainty. Therefore it continues to be imperative for lessors to remain agile in order to capitalise on opportunities for further KPI improvements."