Leaseurope Index Q4 2021
The Leaseurope Index is a unique survey that tracks key performance indicators of a sample of 23 European lessors on a quarterly basis. This Q4 2021 survey is the forty-fourth edition.
All of the weighted average ratios continued to improve in Q4 2021 compared to the same period in 2020. When excluding some large outlier values, the trend in the median ratios revealed a similar picture for the ‘typical’ company in the sample, with profitability, cost/income and cost of risk performing better in the fourth quarter of 2021. On an annual basis, all KPIs show a strong rebound in 2021.
Total new leasing volumes reported in Q4 2021 by the sample of firms were up by 1.9% in comparison to the same quarter of the previous year. The whole of 2021 experienced an increase of 9.6%, seeing almost €110 billion in new business conducted. The portfolio of outstanding contracts in the sample expanded by 2.9% in 2021, with risk-weighted assets increasing by a similar level of 2.3%.
Aggregate pre-tax profit hit a record high in 2021, which was mainly driven by large declines in loan loss provisions and high operating income. As a result, weighted average profitability nearly doubled from 26.3% to 47.5% between 2020 and 2021, with median values showing similar performance.
Aggregate operating income rose by nearly one-fifth (19.1%) in Q4 2021 compared to 2020’s same period. Since operating expenses escalated to a lower degree during this period, rising by 1.8%, the weighted average cost/income ratio dropped to 46.1% from 51.8%. The whole of 2021 shared the same trend, with income growth of 18.4% exceeding cost escalation of 5.7%. This resulted in a decline in the average cost/income ratio, reaching a similar level of the fourth quarter of 46.1% for 2021.
Loan loss provisions in Q4 2021 continued to experience releases for the fourth consecutive quarter. As a consequence, the average annualised cost of risk improved from 0.92% in the fourth quarter of 2020 to 0.26% in 2021’s same period. Over the full year 2021, both median and weighted average cost of risk contracted by almost four times lower than the previous year, reaching the level of 0.2% each.
Weighted average RoA and RoE in Q4 2021 roughly doubled compared to Q4 2020. In the whole year of 2021, both ratios experienced improvements.
Patrick Beselaere, Global Head at ING Lease, commented that
“Regardless of the persistent uncertainties, 2021 marked a significant recovery for the European leasing sector with solid performances in financial KPIs observed throughout the year. Particularly, European lessors have managed to strengthen their income and portfolio, with the sizable releasing of loan loss provisions. This year will present unprecedented challenges for firms across Europe due to higher inflationary pressures, driven by soaring energy prices and supply chain disruptions. Although the near-term outlook for business investment remains subdued, what is clear is the stronger need to invest in green and digital technologies, and we will stand ready to assist European firms of all sizes through their transitions.”