Leaseurope Index Q1 2023
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 2023 is the forty-eighth edition of the survey.
The Q1 2023 Index results reveal a sustained growth momentum in the European leasing business. Most weighted average ratios demonstrated improvement compared to the same period the previous year, with the exception of cost/income. Conversely, the median ratios presented a mixed outlook, as cost/income and Return on Equity (RoE) displayed improvement, while other KPIs such as profitability, cost of risk, and Return on Assets (RoA) experienced a decline.
Total new leasing volumes reported by the sample of firms increased by 12.3% in comparison to Q1 2022, reaching €25.1 billion. The outstanding portfolio continued its expansion, growing by 2.5% during Q1 2023, while total risk-weighted assets (RWAs) also exhibited growth, albeit at a higher rate of 4.9%.
Pre-tax profit increased by 14.1% while operating income experienced a rise of 7.4% compared to the same period in 2022. As a result, the weighted average profitability ratio improved from 45.9% in Q1 2022 to 48.2% in the first quarter of this year. Conversely, the median profitability ratio (less susceptible to outlier values and more indicative of the ‘typical’ company) exhibited a contrasting trend, It declined from the previous level of 52.9% to 50.1% in Q1 2023, indicating a slight deterioration.
During the first quarter of 2023, operating expenses showed a 3.0% growth, leading to a marginal increase in the weighted average cost/income ratio, which stood at 47.8% at the beginning of the year. This marked a 0.5 percentage point rise compared to Q1 2022. However, when excluding outlier effects, the median cost/income ratio showcased a more positive trend, improving by 3.5 percentage points to reach 45.3% in Q1 of this year.
Loan loss provisions saw a significant decline in Q1 2023, down by -44.0% year-over-year from loan loss provisions in Q1 2022. Consequently, the average annualised cost of risk slightly improved compared to the level of Q1 2022, at 0.11% as opposed to 0.20%. As for the median ratio, the cost of risk stood at 0.15% in Q1 2023.
In Q1 2023, the weighted average ratios for RoA and RoE showed improvement compared to the previous year. However, the median ratios revealed a contrasting picture, with the median RoA slightly declining, while the median RoE exhibited progress.
Miranda Stokkingreef, CEO at ABN AMRO Asset Based Finance N.V., commented that
“The European leasing industry demonstrated resilience in the first quarter of this year, achieving positive performance with the expansion of new business volumes and portfolios. Despite facing challenges such as high inflation and interest rates, the industry managed to enhance its financial indicators, especially income and profitability. Looking ahead, the demand for business investment in Europe is expected to remain subdued due to ongoing uncertainties. However, the energy transition initiatives present an opportunity for further investment growth, particularly in the domains of electric vehicles and greener assets. European lessors should maintain a cautious optimism regarding future growth prospects and be ready to capitalize on opportunities to support businesses of all sizes, particularly SMEs, within a complex business landscape.”