Total new leasing volumes reported by the sample of firms in the latest Leaseurope Index, for Q3 2105, increased by 9.2% in comparison to the same quarter a year ago, reaching over €23 billion.
The portfolio of outstanding contracts grew by 1.3%, while risk-weighted assets marginally declined for the first time this year (-0.3%).
Profit & profitability
Total pre-tax profit of all the participating companies continued the high growth seen so far in 2015, increasing by 30.9% for Q3 2015 in comparison to Q3 2014 (see table 1).
Aggregate Data, Q1 2014 – Q3 2015
| 2015 Q3 | 2015 Q2 |
2015 Q1
|
||||
|---|---|---|---|---|---|---|
| Aggregated data provided by companies (millions of euro) |
Sum of values (€ m) |
% change vs Q3 2014 |
Sum of values (€ m) |
% change vs Q2 2014 |
Sum of values (€ m) |
% change vs Q2 2014 |
| 1. Operating income | 2,618 | 8.4 | 2,626 | 9.1 | 2,505 | 9.9 |
| 2. Operating expenses | 1,777 | 6.8 | 1,137 | 15.7 | 1,128 | 4.7 |
| 3. Loan loss provision | 246 | -36.2 | 286 | -30.3 | 320 | -22.2 |
| 4. Pre-Tax Profit | 1,208 | 30.9 | 1,209 | 53.4 | 1,062 | 33.8 |
| 5. RWA at end of period | 176,136 | -0.3 | 181,150 | 3.4 | 175,642 | 0.4 |
| 6. Portfolio at end of period | 249,547 | 1.3 | 250,166 | 1.7 | 247,109 | 1.6 |
| 7. New business volumes | 23,343 | 9.2 | 24,559 | 11.0 | 20,668 | 8.5 |
| 2014 Q4 | 2014 Q3 | 2014 Q2 | 2014 Q1 | |||||
|---|---|---|---|---|---|---|---|---|
| Aggregated data provided by companies (millions of euro) | Sum of values (€ m) |
% change vs Q4 2013 |
Sum of values (€ m) |
% change vs Q3 2013 |
Sum of values (€ m) |
% change vs Q2 2013 |
Sum of values (€ m) |
% change vs Q1 2013 |
| 1. Operating income | 2,348 | 6.5 | 2,414 | 10.2 | 2,406 | 5.3 | 2,280 | 4.1 |
| 2. Operating expenses | 1,207 | 5.2 | 1,102 | 3.5 | 983 | -10.1 | 1,077 | 1.0 |
| 3. Loan loss provision | 496 | -68.7 | 385 | -8.2 | 411 | -12.5 | 411 | -3.5 |
| 4. Pre-Tax Profit | 619 | na* | 923 | 30.8 | 788 | 10.2 | 794 | 13.4 |
| 5. RWA at end of period | 170,879 | -5.6 | 176,590 | -2.9 | 175,193 | -4.4 | 174,901 | -8.1 |
| 6. Portfolio at end of period | 242,950 | 1.4 | 246,340 | 3.1 | 245,917 | 1.5 | 243,305 | -0.9 |
| 7. New business volumes | 22,658 | 5.6 | 21,373 | 15.1 | 22,123 | 11.1 | 19,048 | 7.0 |
Historical figures have been revised since the results were last published due to re-statements by some reporting companies.
This large increase is due to a number of firms seeing a return to profit, largely due to stabilising loan loss provisions. The weighted average profitability ratio increased as a result from 38.4% in Q3 2014 to 46.1% in Q3 2015, a similarly high level compared to the first half of 2015. Within these aggregate results there lies a large degree of variation in performance by company.
Income, expenses & cost/income
Compared to the same period a year ago, operating income increased (8.4%), while operating expenses increased by a smaller amount (6.8%). This resulted in a further improvement of the average cost/income ratio in Q3 2015 to 44.9%, which is a historically low figure.
Loan loss provision & cost of risk
Loan loss provisions decreased substantially in Q3 2015 compared to the same period of the previous year (-36.2%), continuing on the strong downward trend seen in previous quarters. This development led to the average annualised cost of risk declining in Q3 2015 to the lowest level yet seen in the Index of 0.4%.
RoA and RoE indicators
RoA and RoE 1 both increased in Q3 2015 compared to Q3 2014, reaching 1.9% and 227, respectively. Compared to Q2 2015, these figures are stable. The gains made in RoE this year are especially strong considering that the overall index in 2014 was 147 (table 3)
| 2015 | 2014 | |||||||
|---|---|---|---|---|---|---|---|---|
| Weighted Average Ratios | Avg Q3 2015 |
Avg Q2 2015 |
Avg Q1 2015 |
Avg 2014 full yr |
Avg Q4 2014 |
Avg Q3 2014 |
Avg Q2 2014 |
Avg Q1 2014 |
| Profitability (%) – average of all companies’ pre-tax profit as a % of total operating income |
46.1 | 46.1 | 42.2 | 32.6 | 23.6 | 38.4 | 38.2 | 34.7 |
| Cost/Income (%) – average of all companies’ operating expenses as a % of operating income |
44.9 | 43.4 | 45.4 | 47.4 | 51.5 | 45.1 | 44.6 | 47.2 |
| Cost of Risk (%)* – average of all companies’ loan loss provision (annualised) as a percentage of average portfolio over the period |
0.39 | 0.46 | 0.52 | 0.7 | 0.82 | 0.63 | 0.67 | 0.68 |
| Return on Assets (%)* – average of all companies’ net profit before tax (annualised) as a percentage of average portfolio over the period |
1.9 | 1.9 | 1.7 | 1.3 | 1.0 | 1.5 | 1.5 | 1.3 |
| Return on Equity (2010=100)* – index of all companies’ net profit before tax (annualised) as a percentage of 8% of total risk weighted assets over the period |
227 | 231 | 208 | 147 | 122 | 181 | 175 | 153 |
1 In order to ensure a feasible and comparable data collection across our sample, 8% of total risk weighted assets has been used as a proxy for equity. Therefore, the results reported here for RoE may not be directly comparable to the way leasing firms measure RoE internally or to some other measures of RoE.
* denotes that the quarterly numerator (either loan loss provision or net profit) has been annualised in order to calculate the relevant ratio for each individual quarter.
Norbert van den Eijnden, CEO of Alphabet, commented: “It is clear from the Q3 2015 results our industry is enjoying a very favourable performance this year. Financial key performance indicators are continuing to improve, building on the strong results seen in the first half of the year.
“With robust new business growth and increasing portfolios, the leasing industry positions itself as an important financer of the real economy, despite an increasingly complex and burdensome regulatory environment. Although European investment has shown slower growth than domestic demand, the leasing business continues to outperform the market. For 2016 I expect any improvements in business investment to further boost the industry.”
