European leasing industry shows mixed signals in Q4 2024

Leaseurope has released the results of its Q4 2024 Leaseurope Index, marking the fifty-fifth edition of its unique quarterly survey tracking key performance indicators (KPIs) across a sample of 19 major European leasing firms. While the final quarter of 2024 showed signs of resilience, the broader picture for the year reveals underlying challenges for the continent’s leasing sector.

Q4 2024: uptick in new business, but cost pressures remain

In the final quarter of 2024, total new leasing volumes across participating firms increased by 7.3% year-on-year. This contributed to a full-year increase of 8.0%, with total new business surpassing €123 billion. Portfolios of outstanding contracts also expanded by 4.3%, while risk-weighted assets grew more significantly, up 9.5% year-on-year.

Weighted average KPIs generally improved compared to Q4 2023, although the cost/income ratio deteriorated, indicating continued pressure on operating efficiency. Median ratios showed similar directional movement, but notably recorded a decline in Return on Equity (RoE).

Full-year 2024: profitability weakens amid rising risk and expenses

Despite the encouraging Q4 figures, the annual picture revealed stress points. Pre-tax profit for the full year declined by 13.6%, mainly due to increased loan loss provisions in the first three quarters. Consequently, weighted average profitability fell from 45.9% in 2023 to 40.4% in 2024.

Operating income fell -1.0% in Q4, while expenses remained stable with a slight increase of 0.1%. This drove the Q4 cost/income ratio up from 52.5% to 54.4%. Over the full year, the average cost/income ratio worsened from 47.8% in 2023 to 49.9%, as costs rose by 7.7% and income declined by -0.8%.

Risk indicators also deteriorated. The average annualised cost of risk increased from 0.18% to 0.20%, while the median cost of risk jumped more sharply from 0.20% to 0.32%.

Return metrics reflected this strain. While both Return on Assets (RoA) and RoE held steady in Q4 year-on-year, both declined over the full year.

“Equipment investment has slowed, largely due to high financing costs and a more cautious investment climate. Despite these headwinds, European lessors have continued to grow their new business volumes and portfolios. This demonstrates the importance of staying agile by offering tailored financing solutions, exploring opportunities in the used equipment market, and focusing on resilient sectors like healthcare and renewables. Success in this environment means adapting quickly and staying closely aligned with our customers’ evolving needs.”

About the Leaseurope Index

The Leaseurope Index is the only survey to provide both business volume and value creation metrics for the European leasing and automotive rental markets. It is based on confidential, self-reported data from a representative sample of 19 leading lessors, including ABN AMRO, Arval, BNP Paribas Leasing Solutions, Siemens Financial Services, Société Générale Equipment Finance, and others.

Tracked indicators include operating income and costs, pre-tax profit, portfolio size, risk-weighted assets, new business volumes, and various profitability and risk metrics.

Looking ahead

Leaseurope will continue to monitor and report on quarterly leasing trends, with the Q1 2025 edition of the Leaseurope Index expected later this summer.

For access to the full Q4 2024 Leaseurope Index Summary Report, visit: https://www.leaseurope.org/data-research/leaseurope-index