Leaseurope Index Q3 2021

All KPIs continued to recover in Q3 2021, with weighted average and median ratios improving

The Leaseurope Index is a unique survey that tracks key performance indicators of a sample of 23 European lessors on a quarterly basis. This Q3 2021 is the forty-third edition of the survey.

The results of Q3 2021 show that all KPIs continued to recover, with weighted average and median ratios improving compared to Q3 2020, albeit at a lower level relative to Q2 2021. Total new business volumes reported by the sample of firms increased by 4.1% year-over-year, reaching €26.1 billion. The portfolio of outstanding contracts expanded by 2.1% in Q3 2021, with risk-weighted assets growing marginally by 0.9%.

Aggregate pre-tax profit surged by 68.5% in Q3 2021 compared to the same quarter of last year, driven by lower loan loss provisioning. Consequently, weighted average profitability improved by 16.7 percentage points compared to the Q3 2020 level, from 32.0% to 46.7%. The median profitability of the ‘typical’ company in the sample also showed an improvement in Q3 2021 with a higher level of 53.1%.

Both operating income and expenses experienced increases of 16.8% and 6.7% respectively in Q3 2021 compared to the same period last year. As a result of larger income growth, both weighted average and median cost/income ratios improved by 3.0 and 2.1 percentage points to reach 45.3% and 43.5% respectively in the third quarter of 2021.

Loan loss provisions continued to drop significantly by -66.2% in Q3 2021 compared to the same period a year ago. This resulted in an improvement of 0.4 percentage points in the weighted average cost of risk ratio, decreasing from 0.6% in Q3 2020 to 0.2% in Q3 2021. When excluding outlier effects, the median ratio also stood at 0.2% in the third quarter of this year.

In Q3 2021, the level of both RoA and RoE remained high following strong performances observed. In the second quarter, weighted average and median ratios of these indicators relatively similar this quarter, with those of RoA reached 2.2% each.

View from the industry

Andy Hart, CEO Investec Asset Finance commented that

“Following an impressive recovery seen in Q2 2021, the European leasing industry continued to perform solidly in the third quarter with financial indicators improving. The provision of loan losses has been dropping for three consecutive quarters over the course of this year. Despite some remaining uncertainty and risks, the European Commission projects the European economy will keep expanding for the rest of the year and going into 2022 on the back of an improved labour market, favourable financing conditions and the full deployment of the Recovery and Resilience Fund. However, the surge in energy prices may have a knock-on impact on business investments, setting the stage for potentially challenging market dynamics going forward. Therefore, it will be essential for European lessors to maximise our internal strengths, minimize the impact of external challenges, and continue to support European businesses, especially SMEs, during the shifting economic environment.”