Report Shows Equipment Leasing Activity Down Year over Year
While February origination volume is virtually flat when compared to January and the year-earlier period, credit quality shows signs of deterioration.
📅 Wed March 23, 2016 - National Edition
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 February was $6.1 billion, up 2 percent from new business volume in January. Volume was down 2 percent from $6.2 billion in February 2015. Year to date, cumulative new business volume decreased 7 percent compared to 2015.
Receivables over 30 days were 1.4 percent, up from 1.3 percent the previous month and up from 1.15 percent in the same period in 2015. Charge-offs were 0.37 percent, up from 0.26 percent the previous month.
Credit approvals totaled 79.2 percent in February, up from 78.0 percent in January. 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 March is 51.6, an increase from the February index of 48.3.
ELFA President and CEO Ralph Petta said, “While February origination volume is virtually flat when compared to January and the year-earlier period, credit quality shows signs of deterioration, with delinquencies and charge-offs inching upward over the same time intervals. Both metrics are worth keeping a close eye on as economic uncertainty continues to act as a drag on U.S. businesses' decisions to invest in capital equipment. However, this seems to run counter to the Foundation's Monthly Confidence Index, which increased over the period from February to March.”
Dave Fate, President and CEO, Stonebriar Commercial Finance, said, “Trend lines for Q1 2016 are not too dissimilar to 2015; however, we expect commodity driven markets to be even more sensitive in 2016 due to shrinking capital resources, a slowing global economy and a more complex geo-political environment. We continue to see opportunities growing for non-regulated financial institutions operating in this challenging environment, especially leasing opportunities across all asset classes.”
For more information, please visit www.elfaonline.org.
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