The leasing arms of the top French banks are riding the crest of the crunch with first quarter 2008 results showing mostly growth year-on-year.
New production volumes at Credit Agricole Leasing’s French outlets have grown 18 per cent during the year to date, partly due to rising demand for real estate financing.
SG Equipment Finance, which is present in 23 countries, increased new lending by 11.3 per cent to €2.2bn for year-on-year Q1 2008, and its outstandings by March 31 2008 reached €17.6bn. Pre-tax profits, however, at the equipment solutions arm of BNP Paribas Group dropped 11 per cent year-on-year during the first quarter of this year, despite marginal growth in its vehicle financing arm. BNP attributed the drop in pre-tax income, down to €89m, to a €5m increase in operating expenses in the first quarter of 2008, and an extra €3m expense in the cost of risk during the same period. However, the parent bank reported in its first quarter statement that its equipment solutions business had “showed a good sales and marketing drive [in the last three months], in particular in equipment leasing and in vehicle financing”. It saw a 7.3 per cent rise year-on-year in the number of vehicles it financed, while revenues totalled €284m, which it described as “stable”. Credit Agricole Leasing’s French real estate arm is ranked number one in France in leasing production volumes, which grew 19 per cent year-on-year during 2007 to reach €928m.
While its real estate arm appears to be thriving, particularly considering the fact Credit Agricole Leasing was only launched three years ago, some of its main competitors are seeing a marginal decline in this sector. Production volumes at Societe Generale, which is ranked second in France, dropped 8 per cent last year down to €787m.
Some 23 per cent of Credit Agricole Leasing’s total business is sourced from real estate leasing, compared with 59 per cent from equipment leasing, and 13 per cent from sustainable development and public sector leasing. Structured long term deals represent 1 per cent of its overall business.
The French company, which has 32 branches in France, plans to increase net earnings by €6.5m to reach €50m at year end 2009.
By the end of next year it plans to have doubled its international division, which covers Spain, Morocco, Poland, Greece, Italy, Portugal and Armenia, so it represents 40 per cent of its revenues. Production at its international arm rose last year by 25 per cent to reach €1bn, and net earning grew 13 per cent to total €11.3bn. It is ranked 16th in Europe for leasing production volume.
At SG Equipment Finance, operational vehicle leasing & fleet management and IT asset leasing and management comprised 18 per cent, 17 per cent and 5 per cent respectively of the financial services division net banking income for Q1 2008.