The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $521 billion equipment finance sector, showed overall new business volume for August was $5.7 billion, up 33% from volume of $4.3 billion in the same period in 2010. Volume was unchanged from the previous month. Year-to-date cumulative new business volume is up 25%.
All credit quality metrics showed improvement. Receivables over 30 days decreased to 2.5% in August from 2.7% in July, and declined by 42% compared to the same period in 2010. Charge-offs were down slightly from the previous month, and decreased by 54%t from the same period in 2010, representing their lowest level in over two years.
Credit standards relaxed in August as the number of lease applications approved increased to 77.6% from 76.3% the previous month, and were up year over year as well. Over two-thirds of participating organizations reported submitting more transactions for approval during the month.
Finally, total headcount for equipment finance companies in August showed no significant change month to month and was down one percent year over year. Supplemental data show that the construction and trucking industries and small- and medium-sized enterprises led the underperforming sectors.
Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for September indicates a less-than-optimistic outlook for business performance. The September index of 47.6 is down from the August index of 50.0, indicating, in part, continuing concern with global economic conditions and their impact on the industry. For more detailed information on the MCI-EFI visit www.LeaseFoundation.org
ELFA President and CEO William G. Sutton, CAE, says: “While both new business volume and portfolio quality seem to be trending up, it is clear from less-quantitative reporting that equipment finance executives still believe the storm clouds hovering over our economy have not yet dissipated. Until the U.S. and global economies begin to show signs of strengthening in a meaningful and sustainable way, current and future business performance will continue to ebb and flow.”
Ron Arrington, Global President, CIT Vendor Finance, located in Livingston, NJ, says, “Our new business volumes year to date have outpaced 2010 levels even in the face of increased uncertainties in a number of economies around the world. This increased lending to businesses supports our customer needs in this environment, particularly for technology and office equipment. Even if the economic recovery slows, businesses have a need to replace older, essential-use equipment that they have put off replacing for too long. There is also an increased interest in managed services products as businesses look to managed services as a way to reduce costs while maintaining a technological edge.”
