June's originations were the largest since end-of-year 2015, when business activity in the equipment finance sector typically spikes upward.
The Equipment Leasing and Finance Association's (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity from 25 companies representing a cross section of the $1 trillion equipment finance sector, showed their overall new business volume for June was $10.0 billion, up 3 percent year-over-year from new business volume in June 2015. Volume was up 47 percent month-to-month from $6.8 billion in May. Year to date, cumulative new business volume decreased 7 percent compared to 2015.
Receivables over 30 days were 1.4 percent, an increase from the previous month and up from 1.02 percent in the same period in 2015. Charge-offs were 0.65 percent, up from 0.33 percent the previous month.
Credit approvals totaled 78.1 percent in June, up from 76.5 percent in May. Total headcount for equipment finance companies was up 3.0 percent year over year.
Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for July is 52.5, steady with the June index of 52.3. ELFA President and CEO Ralph Petta said, “New business volume experienced a healthy increase in June, eclipsing a similarly strong year-ago month. In fact, June's originations were the largest since end-of-year 2015, when business activity in the equipment finance sector typically spikes upward. However, volume for the year thus far is still down when compared to last year at this time. This uneven performance appears to reflect the trend toward continued slow economic growth and volatile equity markets in the U.S., as well as troubling international events that are causing business owners to approach capital investment decisions with a wary eye. A decline in portfolio quality contributes to a narrative of an equipment finance market trying to gain its footing in the face of a volatile economy amidst a recent period of uncertain political and social unrest.”
Alan Sikora, CEO, First American Equipment Finance, a City National Bank Company, said, “After several challenging months, the U.S. equipment leasing and finance industry experienced growth in June. At First American Equipment Finance, we saw strong year-over-year growth in June and in the first six months of 2016. More and more clients are concluding that equipment leasing is an efficient, cost-effective and convenient way to acquire the equipment they need. From an industry perspective, it is encouraging to see U.S. businesses increase their investments in capital equipment and software, despite political uncertainty and global macroeconomic events.”
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