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August 1, 2009updated 12 Apr 2017 4:34pm

Major bank lessors in black at year-end 2008

Revenues up at ING Lease and Singer, profits up at BoS, SEB and Key ING Lease (UK) Limited

By Jason T

Revenues up at ING Lease
and Singer, profits up at BoS, SEB and Key

ING Lease (UK)
Limited

ING Lease (UK) Limited (ING Lease)
had a successful year to 31 December 2008 with its portfolio during
this period having grown by £325.2 million (€378.9 million) – a
rise of 16 percent year-on-year.

Turnover at the lessor increased by 11 percent
to reach £171.6 million, and pre-tax profit grew by an impressive
28 percent to reach £27.1 million.

ING Lease’s return on its portfolio also grew
slightly last year, from 7.06 percent in 2007 to 7.27 percent in
2008.

The directors attributed the 28 percent
pre-tax growth to a “significant” increase in net income from the
portfolio, and also from a significant increase in profits realised
on disposals of leases.

Nevertheless, the company’s directors admitted
that the business environment was not easy.

“[It] continues to be challenging, with the
market being very competitive,” the directors said, adding that
recovery of outstandings was the “most significant financial risk”
to the business.

“But given the credit quality of the customer
base and the strong support provided by our parent, we are well
positioned to meet these challenges; we believe that these risks
are well covered,” they added.

Singer & Friedlander
Commercial Finance Limited

Another lessor whose parent bank had
a difficult year was Singer & Friedlander Commercial Finance
Limited (SFCF).

Although Kaupthing Singer &
Friedlander (KSF) was placed into administration in October 2008,
SFCF has continued to trade profitably, seeing revenue grow by 8
percent to reach £11.1 million.

SFCF also continues to be funded by its
Icelandic parent.

“We are funded by KSF, whose joint
administrators have formally confirmed the facilities remain in
full force and effect and they have no current intention of
accelerating any contractual terms,” the lessor’s directors
said.

They also added that, with nearly £88 million
available, the facilities were “more than adequate” to meet the
business’s liquidity needs and business objectives.

SFCF recorded a pre-tax loss of £722,681,
however; a fall on the previous year’s pre-tax profit of £1.3
million.

In light of the difficult economic
environment, the directors have instructed a review of the
business’s operating and legal structures this year in an attempt
to find operating efficiencies and cost savings.

The directors added that they intend to keep
the company as part of the KSF Group, however, as it is “both our
view and KSF’s joint administrators’ view that value is best
preserved and created through our continuance as a profitable going
concern”.

Key Equipment Finance
Limited

Losses were also recorded at Key
Equipment Finance Limited (KEF), which reported a pre-tax loss of
£2.1 million in the year ending 31 December 2008.

After tax, however, the American bank-owned
lessor saw a profit of £1.5 million, up from a £771,639 loss in
2007.

“The unique and exceptional economic climate
within the UK has largely contributed to the disappointing results
for the year,” said KEF’s directors, adding that, in terms of new
business generation, the business grew assets on lease by 17
percent.

“This increase has been achieved through
working ever more closely with our local and global vendor
partners,” they said.

“Despite the challenging circumstances within
the industry, we believe we are well placed to service our vendor
partners and thus leverage long-term benefits from our
partnerships.”

They added that the turbulent financial
markets have led them to make improvements and upgrades to their
administration and management information systems, in order to try
and maintain tight management policies and to improve vendor
relationships.

SEB Leasing Limited

Despite recording weaker profits
than the previous year, SEB Leasing Limited was still profitable in
2008. Indeed, in the year ending 31 December 2008, SEB Leasing
recorded a pre-tax profit of £170,381.

This was much less than the £1.3 million
pre-tax profit it recorded in 2007, and can be attributed to
impairment losses and provisions on leased assets worth £1.2
million.

“As general economic conditions deteriorated
during 2008, credit risk increased and there were company failures
amongst the lease portfolio,” SEB Leasing’s directors said.

“Some assets were returned and have been sold
realising a loss.”

The Swedish-owned lessor was also hit by
turmoil from the funding markets, leading to increased funding
costs on some transactions which “may depress the company’s
profitability over their life”.

Nevertheless, revenue was still up at SEB
Leasing, growing by 8 percent to reach £7.6 million at
year-end.

Bank of Scotland Equipment Finance
Limited

Despite having been acquired by
Lloyds TSB in January, Bank of Scotland Equipment Finance Limited
still managed to record a profitable 2008.

Pre-tax profit at the lessor reached £8.2
million in the year ending 31 December 2008, up from a pre-tax loss
of £3 million the previous year.

“The increase in profits is largely due to a
decrease in the movement of provisions for doubtful debts, and a
reduction in the interest rate which resulted in a reduction in
interest payable,” its directors said.

The company’s total assets also grew in 2008,
to reach £693.4 million, compared with 2007’s £613.7 million.

The credit rating of the lessor’s finance
lease receivables fell, however, to 67 percent in the
“satisfactory” or “better than satisfactory” segments, from
95 percent the previous year.

Looking ahead, the directors said the business
would remain in place.

“We remain committed to the business of
leasing assets to third parties, and will write new business in
future,” they concluded.

UK lessors – P&L
account

 

2008

2007

Change (%)

ING Lease (UK)
Limited

Turnover

£171.6m

£154.7m

11

Operating (loss)/profit

£26.6m

£20.5m

30

Pre-tax (loss)/profit

£27.1m

£21.3m

28

After-tax (loss)/profit

£18.4m

£35.2m

(48)

Bank of Scotland Equipment
Finance Limited

Turnover

£29.5m

£30.8m

(4)

Operating (loss)/profit

£391,000

(£4.7m)

(108)

Pre-tax (loss)/profit

£8.2m

(£3m)

(377)

After-tax (loss)/profit

£6.3m

(£3m)

(314)

Singer & Friedlander
Commercial Finance Limited

Turnover

£11.1m

£10.3m

8

Operating (loss)/profit

£2.2m

£1.9m

13

Pre-tax (loss)/profit

(£722,681)

£1.3m

(157)

After-tax (loss)/profit

(£369,540)

£669,574

(155)

Key Equipment Finance
Limited

Turnover

£21.4m

£20.8m

3

Operating (loss)/profit

(£2.2m)

(£857,021)

154

Pre-tax (loss)/profit

(£2.1m)

(£771,639)

176

After-tax (loss)/profit

£1.5m

(£771,639)

(291)

SEB Leasing
Limited

Turnover

£7.6m

£7m

8

Operating (loss)/profit

£865,951

£707,026

22

Pre-tax (loss)/profit

£170,381

£1.3m

(87)

After-tax (loss)/profit

£195,695

£1.1m

(83)

Source: Leasing Life

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