Outlook for equipment finance healthy

Activity levels in November softened slightly according to data from the Equipment Leasing and Finance Association (ELFA) with its Monthly Leasing and Finance index (MLFI-25) showing overall new business volume for the month down by 8% compared with the previous year, but the longer term outlook remains positive.

The MLFI-25, which reports economic activity from 25 companies representing a cross section of the equipment finance sector, put overall new business volume for November at $6.8 billion, an 18% drop from October. Year to date, cumulative new business volume increased 6% compared to 2013.

Additional data shows receivables over 30 days decreased from the previous month to 1%, and were up from 0.9% in the same period in 2013. Charge-offs were unchanged for the eighth consecutive month at an all-time low of 0.2%. Credit approvals totaled 79.1% in November, an increase from 78.3% the previous month.

ELFA president and CEO William G. Sutton said: “The equipment finance sector has showed the kind of volatility experienced in other financial markets during this quarter. While new business volume dipped in November, member organizations’ portfolios continue to perform well, indicating a healthy business sector.”

“Liquidity continues to be plentiful, making for a hyper-competitive marketplace. Continued favorable pricing in the sector should provide a healthy environment for businesses—small and large—to make equipment investment decisions so necessary to run their business operations, add employees to their payrolls, and contribute to the overall health of the US economy,” Sutton commented.

Separately, ELFA’s Monthly Confidence Index (MCI-EFI) for December is 63.4, steady with the November index of 64.2.

Scott Rafkin, president, Volvo Financial Services, said: “Strong originations and solid portfolio performance, together with stable customer delinquencies, all point to a continued good performance in the equipment finance sector as we close 2014 and enter into 2015. Volvo Financial Services is benefiting from a generally steady economic recovery in most of our global markets, highlighted by a very strong North America.”