ELFA members report new business volumes down amid uncertainty

There has been a decline in new business volumes in the equipment finance sector over the past month, with figures from the Equipment Leasing Finance Association (ELFA) showing a 7% fall compared with both the previous month and the same period last year.

ELFA’s Monthly Leasing and Finance Index (MLFI-25) which reports based on a cross section of the industry’s key players, showed overall new business volume for May was $6.8 billion, down 7% year-over-year from new business volume in May 2015 and also down 7% from $7.3 billion in April. Year to date, cumulative new business volume decreased 9% compared to 2015.

Receivables over 30 days were 1.3%, an increase from the previous month and up from 1.09% in the same period in 2015. Charge-offs were 0.33%, up slightly from 0.31% the previous month.

Ralph Petta, ELFA president and CEO (pictured above), said: “Second quarter originations continue to move slightly lower, as a number of factors inhibit a more robust capex environment. Erosion in business confidence due to misgivings about the November presidential and congressional elections and what they portend for the future direction of the nation, an unexpectedly negative May unemployment report, an economy barely growing, and a series of violent events both here and abroad provide a negative backdrop.”

“In addition, as monthly losses and delinquencies continue to tick upward off their historic lows, equipment finance companies appear to be tightening their credit standards. We will be carefully monitoring these and other data points during the coming summer months,” Petta said.

William Stephenson, CEO and chairman of the executive board, DLL, and ELFA chairman of the board, added: “Consistent with the ELFA’s data, we have experienced a very small uptick in US market delinquency and charge-offs this past month. As we look ahead, mid-term growth prospects for the industry remain in question as headwinds abound. A weak US jobs report, low productivity gains and continued uncertainty in global markets were sufficient enough for the Fed to take pause this past week.”