Leaseurope Index Q1 2022

All KPIs continued to improve in Q1 2022 on the back of a strong recovery last year.

The Leaseurope Index is a unique survey that tracks key performance indicators of a sample of 20 European lessors on a quarterly basis. This Q1 2022 survey is the forty-fifth edition.

All of the weighted average ratios for Q1 2022 improved compared to the same period of last year. The trend in the median ratios on the other hand, showed a mixed picture, with profitability and cost of risk improving, while cost/income, RoA and RoE deteriorated.

Total new leasing volumes reported by the sample of firms increased by 4.8% in comparison to Q1 2021, reaching €24.7 billion. As the outstanding portfolio continued to rise at 2.8% growth in Q1 2022, total risk-weighted assets (RWAs) also increased, at a slower rate, by 2.2%.

Pre-tax profit increased by nearly a third (32.5%) compared to the same period of 2021. Consequently, the weighted average profitability ratio also increased from 40.1% in Q1 2021 to 45.4% in the first quarter of this year. The median profitability ratio (less susceptible to outlier values and more indicative of the ‘typical’ company) exhibited a similar trend, with profitability improving from a previous level of 46.5 to 52.2% in Q1 2022.

In the first quarter of 2022, operating income escalated by 16.8% compared to the same period a year ago. Despite the simultaneous increase of 6.3% in operating expenses, the weighted average cost/income ratio improved to 47.2% at the beginning of 2022, which was 1.5 percentage points lower than Q1 2021. The median cost/income ratio is negative when excluding outlier effects, increasing by 1.9 percentage points to reach 46.8% in Q1 this year.

Loan loss provisions contracted in Q1 2022, down by -6.9% year-over-year from loan loss provisions in Q1 2021. As a result, the average annualised cost of risk slightly improved compared to the level of Q1 2021, at 0.29% versus 0.26%. In terms of the median ratio, cost of risk reached 0.13% in Q1 2022.

The weighted average ratios of both RoA and RoE improved in Q1 2022 in comparison with the same period last year. On the contrary, the median ratios of these indicators worsened during the same time period.

View from the industry

Stefan Davidsson, Executive Vice President at DNB Finans, commented that

“The first quarter of this year shows a positive performance with new business volumes growing and portfolios expanding on the back of significant recovery last year. The European leasing industry managed to continue improving financial indicators, particularly income and profitability. Going forward, supply chain constraints as well as rising energy and other input costs are expected to deteriorate the demand outlook for business investment across Europe. Despite these economic headwinds, the Recovery and Resilience Fund and the energy transition efforts are projected to support investment growth in both 2022 and 2023. With this forecast, together with a steady increase in the use of leasing for green transitions, European lessors should be prepared to leverage on opportunities within a challenging business environment.”