Leaseurope Index Q2 2021

Following the significant recovery seen in Q1 2021, all of the KPIs in the second quarter continue to improve.

The Leaseurope Index is a unique survey that tracks key performance indicators of a sample of 23 European lessors on a quarterly basis. This Q2 2021 is the forty-second edition of the survey.

Total new leasing volumes reported by the sample of firms increased by a third compared to the same quarter of 2020, reaching €28 billion. The outstanding portfolio continued to expand, with growth of 2.4% in Q2 2021 compared to the previous year. As a result, risk-weighted assets rose marginally by 0.5%.

Aggregate pre-tax profit nearly doubled in Q2 2021 compared to the same quarter a year ago. This was largely driven by the releasing of loan loss provisions held due to uncertainty arising from the Covid-19 crisis. As a result, weighted average profitability in Q2 2021 increased by almost four times compared to the Q2 2020 level, from 13.1% to 55.5%. The median profitability for the ‘typical’ company in the sample also shared a positive trend with a higher level of 59.2% in the second quarter of 2021.

Both operating income and expenses showed growth of 24.9% and 8.6% respectively in Q2 2021 compared to the same period last year. Consequently, the weighted average cost/income ratio improved by 6.3 percentage points to reach 44.6%, whereas the median cost/income ratio remained relatively unchanged at around 46% in the second quarter of 2021.

Loan loss provisions plunged by -92.3% in Q2 2021 compared to the same period a year ago. As a result, the weighted average cost of risk hit a record low, dropping from 0.98% in Q2 2020 to 0.07% in Q2 2021. Although cost of risk was slightly higher when excluding outlier effects, the median ratio reached the low level of 0.11% in the second quarter.

In Q2 2021, both RoA and RoE were at their highest levels since 2010. Both weighted average and median RoA stood at 2.2%. Similarly, the trend was observed for RoE with an average of 31.3% and a median of 10.1%.

View from the industry

Miranda Stokkingreef, CEO of ABN AMRO Asset Based Finance commented that

“The KPIs tracked by the Leaseurope Index indicate that the European leasing industry rebounded strongly in the second quarter. Portfolios continue to expand with a sizable increase in new business, and a brighter economic outlook has continued to be reflected in the recognition of lower provisioning for credit losses by European lessors. For the rest of the year, the European Commission has projected private investment as a main driver of economic growth with the implementation of the Recovery and Resilience Plan.2 With this forecast, lessors should focus on their strengths and be prepared to leverage on opportunities within a favourable business environment.”