Solid growth in leasing finance in October

New business volume for October was 9% up from the same month last year according to data from the Equipment Leasing and Finance Association (ELFA), which shows that for the year to date cumulative new business volume has increased 8% compared to 2013.

ELFA’s Monthly Leasing and Finance Index (MLFI-25) benchmarks economic activity from 25 companies drawn from a cross section of the sector. The latest statistics put overall new business volume for October at $8.3 billion, a 12% drop from September.

Receivables over 30 days increased from the previous month to 1.2%, and were up from 0.9% in the same period in 2013. Charge-offs were unchanged for the seventh consecutive month at an all-time low of 0.2%. Credit approvals totaled 78.3% in October, a decrease from 79.7% the previous month.

ELFA president and CEO William G. Sutton, said: “ELFA members report strong growth in new business volume, albeit tempered by continued margin compression in many sectors. The US economy continues to expand at a modest rate, providing a welcome stimulus for investment in business equipment.

Portfolios are performing relatively well, although delinquencies are showing some slight volatility. Most economic indicators—lower fuel prices, reduced unemployment and a robust equity and bond market—all point to a strong fourth quarter, absent some unforeseen development.”

Michael Doyle, president, BTMU Capital Leasing and Finance, who took part in the survey predicted that the year would end strongly in all areas with the possible exception of those markets related directly to petroleum exploration and development which could be negatively affected if low oil prices persist.

“Stronger sectors include those involving transportation assets and information technology equipment and software. Generally, we are seeing consistent credit discipline, but this has not yet translated into a more stable pricing environment. We expect that margin compression will continue to be an issue in the fourth quarter as lessors look to book volume to meet their 2014 budgets,” Doyle said.