12.4% hike in equipment finance new business volume in 2015

New business volume in the equipment finance industry was up by 12.4% in 2015, according to the 2016 Survey of Equipment Finance Activity (SEFA) released today by the Equipment Leasing and Finance Association (ELFA), marking the sixth consecutive year that businesses increased their spending on capital equipment.

ELFA also released a companion report called the 2016 Small-Ticket Survey of Equipment Finance Activity, which shows new business volume in the small-ticket space grew by just 0.4% in 2015.

“The equipment finance industry saw positive growth overall in 2015, as reported in the 2016 Survey of Equipment Finance Activity,” said ELFA president and CEO Ralph Petta. “More recent data collected in the first two quarters of 2016 suggest the equipment finance industry is entering a period of slower growth as business confidence and global markets appear increasingly volatile.”

Analysis from the 2016 SEFA shows that independents saw a 59.9% increase in new business volume, while banks saw an 11.6% increase and captives a 3.3% rise. The most active market segment was large-ticket, where volumes increased 33.9%. New business volume grew 2.8% in the small-ticket segment, while middle-ticket grew 12.4%.

From an asset perspective, the top-five most-financed equipment types were transportation, IT and related technology services, construction, agricultural and medical equipment, while the top five end-user industries representing the largest share of new business volume were services, industrial and manufacturing, agriculture, transportation and wholesale/retail.

Assets under management climbed 10% in 2015, while return on assets declined slightly to 1.5%. Net income increased 1.2%. Return on average equity decreased slightly but remained strong at 16.1%.

Overall, delinquencies remained steady, with less than 2% of receivables over 31 days past due. Net full-year losses or charge offs increased slightly but remained at 0.2% of average receivables.

Credit approvals decreased slightly while the percentage of approved applications that were booked and funded edged up.

Employment levels grew moderately by 6.8%, with headcount in sales and marketing functions increasing at a similar level. As expected, there was a significant increase in headcount associated with compliance.

PricewaterhouseCoopers administered the 2016 SEFA. The results were compiled from surveys sent to 375 eligible ELFA member companies in the first quarter of 2016. A total of 116 companies submitted 2015 US domestic lease and loan data.

ELFA will host a web seminar on August 17 at noon EDT to report the survey results. See details at www.elfaonline.org/SEFA.