2005 STUDY “UPDATE ON LEASING IN EUROPE” 2005 STUDY “UPDATE ON LEASING IN EUROPE” OCTOBER 2005 OCTOBER 2005 “UPDATE ON LEASING IN EUROPE” LEASEUROPE ANNUAL CONFERENCE 2005 PRESENTED BY DEREK SOPER THE ALTA GROUP
Feb 22, 2016
2005 STUDY “UPDATE ON LEASING IN EUROPE”2005 STUDY “UPDATE ON LEASING IN EUROPE”
OCTOBER 2005OCTOBER 2005
“UPDATE ON LEASING IN EUROPE”
LEASEUROPE ANNUAL CONFERENCE 2005
PRESENTED BYDEREK SOPER
THE ALTA GROUP
2005 STUDY “UPDATE ON LEASING IN EUROPE”2005 STUDY “UPDATE ON LEASING IN EUROPE”
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LEASEUROPE SURVEY
Over 360 members of the Industry notified of Survey
Speedy response from CEE Countries, excellent co-operation from Italy and Germany.
Some Associations controlled the process. 28% Response – Greater than expected. Sample size should be statistically sound.
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ALTA’S FIRST REACTIONS
Some marked differences to the 2003 Survey. Some countries and companies still believe their
business is “unique”. Activities and subjects of concern are common across
all countries. Generally companies are optimistic about themselves
but not about their economies. Very few feel regulation is bad – we wonder if
companies feel safe from competition if everyone is “regulated”.
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TODAYS PRESENTATION
An overview of the results
The critical areas of interest
Some comment from Alta
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RESULTS
Ownership of European Lessors
Mainly Bank owned. Some Captives and Independents, but demonstrating very
different “attitudes”. Many references to “Parent Bank” and “Servicing the Bank
customers”, “the Bank want us to do this”, etc. Giving the impression that the Bank parents are very much in control.
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Results
Big Ticket…………………………………….37% Medium Ticket……………………………….94% Small Ticket………………………………….73% Direct Business……………………………..74% Vendor Leasing……………………………..82% Consumer Credit……………………………32% Floor plan / Stocking……………………….7%
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RESULTS
Spread of Countries for Subsidiaries
CEE / Austria – 5/6 countries quite usual. Very few have International Coverage. More with European Coverage, but limited. Mainly domestic only. Not much overseas expansion planned.
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RESULTS
Regulation / Supervision
Many believe ‘Regulation’ or ‘Supervision’ is an advantage for their business. The only concern expressed was cost.
A strong feeling came from the comments that companies like the protection “Supervision” gives them from the outside world.
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RESULTS
Basle II Almost universal support. See asset quality increasing. Some concerns about cost. A few comments about “small ticket” leasing
becoming closer to Consumer business.
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RESULTS
Growth or Decline in the Market
Overwhelming number said the Market would grow over the next three years.
A small number said growth this year and then decline.
No company said decline for the next three years.
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RESULTS
Where will Growth come from?Domestic 87%Europe 67%Outside Europe 19%Change in Direction 13%Other new services 21%Acquisitions 24%
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RESULTS
Margins. Most see a reduction in the short to medium term –
only a very small number expect an improvement. Over two thirds feel that leasing produces an
unsatisfactory return on capital. One third see longer term margins improving.
Interesting that none were advocating better margins from increased services – or perhaps this is secret!!
2005 STUDY “UPDATE ON LEASING IN EUROPE”2005 STUDY “UPDATE ON LEASING IN EUROPE”
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RESULTS
Do You favour Centralisation or Decentralisation?Centralisation…………………………………..27%Decentralisation………………………………..73%
Do you do leasing for Central or local Government?71% said yes they do.
Do you enter into Joint Ventures with Vendors?52% said yes they do.
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RESULTS
Human Resources.
Many expect a shortage of quality staff for the next three years, but a small number of companies say they will be OK but the rest of the industry will have a problem.
A very strong trend to decrease the back office and increase the sales and customer facing support staff.
A significant number said they were moving staff from the Bank into the Leasing Company.
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RESULTS
TrainingUse in-house training Team…………………………….84%
Use External Trainers…………………………………….72%
Public Seminars / Conferences…………………………53%
Web based training……………………………………….None
Management Development (INSEAD, IMD, etc)………7%
2005 STUDY “UPDATE ON LEASING IN EUROPE”2005 STUDY “UPDATE ON LEASING IN EUROPE”
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RESULTS
Training - continued
Top three subjects for training :-
Basic Leasing Skills – New Staff Selling and Marketing / Training the Vendor Asset Management.
2005 STUDY “UPDATE ON LEASING IN EUROPE”2005 STUDY “UPDATE ON LEASING IN EUROPE”
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RESULTS
The three most Concerning Issues. ( What keeps you awake at nights)
Profitability / volumes and ROC
How to increase turnover – the hunt for business
Maintaining good quality Staff.
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RESULTS
IAS17 - accounting for leases.
Overwhelmingly little or no concern. A very strong feeling that many did not know what
effect it would have on their business. Recognition that customers would still want Off
Balance Sheet products. No evidence of much “new product” activity.
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RESULTS
Is good quality credit information available in your domestic market?
Most thought the information available was good quality and received it from:-
1. Parent Bank Data.2. Central Bank Data.3. Rating agencies.
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RESULTS
Are you experiencing any changes in credit quality in your existing portfolio?
The majority said – mainly stable, very little change expected and not expecting to change strategy on lending criteria.
One indicated a very steep decline – lets wish him Goodbye – he may not be here next year.!
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RESULTS
Are your systems E Commerce enabled and do you plan to use E Commerce delivery of product.?
Very few indicated they could deliver at this point in time 25% said they were planning to do so. A significant number said they had no intention of using this
method of delivery.
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RESULTS
Is Software Support a major area for Investment?
The vast majority indicated that Software spend was a significantly increased number in their budgets.
Many very negative comments – “no good suppliers” – “mostly about Basle II” – “Takes too much management time” etc, etc.
2005 STUDY “UPDATE ON LEASING IN EUROPE”2005 STUDY “UPDATE ON LEASING IN EUROPE”
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RESULTS
Residual Value Insurance.
Virtually none use it.
Involvement in Project Financing 35% said yes, in some form.
Involvement in Waste disposal or Renewable energy financing
42% said Yes.
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RESULTS
MARKETS. – Vehicles
An overwhelming sector of the market – particularly in the CEE countries, where it is 60 / 80% of the business in many cases
Most in operating leases of cars and commercials, but very few in trailers.
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Vehicles - continued
The Car Market……………………………………………….81%The Full Service car market……………………………..…74%Commercial Vehicles……………………………………..…67%Commercial Vehicle Operating Leases…………… ….…54%Trailer Leasing………………………………………… …….26%Trailer Operating Leasing……………………………….....19%
Leasing of Vehicles to Private Individuals or Just Business? 80% was to Business only.
2005 STUDY “UPDATE ON LEASING IN EUROPE”2005 STUDY “UPDATE ON LEASING IN EUROPE”
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RESULTS
MARKETS. – Operating Leasing
A great many who do operating leasing do not employ asset management specialists.
Very few residual positions are covered by RV Insurance. Residual positions taken are mainly for one or two types of
equipment only. Many only do Operating leases where the residual position is
covered by the supplier.
2005 STUDY “UPDATE ON LEASING IN EUROPE”2005 STUDY “UPDATE ON LEASING IN EUROPE”
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RESULTS
MARKETS. – Real Estate Leasing
About 50% of the respondents do Real Estate Leasing Most take residual positions. Most will only lease to the end user. Overwhelmingly Office or Industrial Buildings only. Most see it as a growth sector.
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CRITICAL CONCERNS
Where is growth coming from. Profitability. IT Strategy. Compliance. Evidence of Leasing being more integrated into the
Banks.
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SOME THOUGHTS FROM ALTA
European company earnings depressed. Pressure on short term margins All GDP forecasts for Europe are pessimistic
And yet almost everyone expects growth year on year for the next three years !
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SO WHERE WILL THE LEASING GROWTH COME FROM?
New products and services? Can leasing take an increased share of the market? Investment in more technology? Mergers and Acquisitions? Banks exiting the business? International Growth?
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Thank you to Leaseurope for allowing us to conduct the survey and present
the findings to this Meeting