Deal terms reduced as risk departments
tighten up lending. Fred Crawley reports.
In many ways, the growth of
Ukrainian leasing has presented a brilliant example of the
potential for a developing European economy to adopt asset finance
– but has it proved so exemplary in its reaction to the
international financial crisis?
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Certainly growth is not over, although it has
slowed substantially. This year, the Ukraine’s leasing portfolio
grew by 41 percent – remarkable in the current climate, but less so
in comparison with the stunning 485 percent market growth seen
between year end 2006 and year-end 2007. Viewed beside the “core”
CEE leasing markets such as Slovakia, the Czech Republic and
Hungary, which all saw contraction over 2008, Ukraine has sustained
growth well through the encroaching global recession, due partly to
the high proportion of leasing business spread through the
resilient agriculture and food processing sectors.
But in some ways, it is only because of 2007’s
annus mirabilis that significant activity was possible at all last
year – previous business volumes were low enough that the country’s
businesses would have had no real perception of leasing as a
finance option when bank credit dried up, say analysts.
The progress made in 2007 also built up the
funding infrastructure of Ukraine’s leasing companies, to the point
where they were well placed to weather worse credit conditions –
overall last year, lessors drew nearly a quarter of funds from
their own capital, up from just 10 percent in 2007.
Beyond reduced growth, though, recessionary
pressure has impacted the Ukraine in other ways. Economic
instability, backed up by political disorder, has racked up risk
pricing for uncertain lessors, and significantly reduced the
average term lengths of deals. Similarly, the average value of
assets financed has decreased by nearly 45 percent.
The proportional makeup of lease payments has
also changed significantly over the year, with a larger amount of
money making up lessors’ fees, risk premiums and interest
compensations, to the tune of 30 rather than 20 percent of
instalments.
In terms of the business landscape, the
Ukraine remains dominated by big foreign bank networks, with
UniCredit and Raiffeisen second- and third-placed in terms of
portfolio size and new business volume. At the top of the chart,
though, is Russian colossus VTB Leasing, with nearly three times
the portfolio of its nearest competitor. The country’s leading
independent lessor is Euro Leasing, which achieves comparable
business levels to all but the three giant networks in the
country.
