Leaseurope Index Segment Survey 2020
The Leaseurope Index is a unique survey that tracks key performance indicators of a sample of European lessors on a quarterly basis. The Segment Survey is an annual supplement to the quarterly Index, reporting on the financial ratios broken down by four asset types; equipment, real estate, passenger cars and commercial vehicles. This 2020 survey is the tenth edition of the project.
The results of the 2020 Segment Survey show that the leasing industry faced many challenges due to the Covid-19 pandemic’s effect on the global economy, with KPIs of all asset categories worsening. Of the total outstanding portfolio reported, 39% is attributed to equipment, 37% to passenger cars, 17% to real estate and 7% to commercial vehicles.
The profitability ratio indices all asset categories weakened in 2020 compared to 2019, primarily driven by loan loss provision escalation. While real estate experienced the lowest drop in profitability between 2019 and 2020, commercial vehicles were the worst performer, with profitability plunging to the lowest level in the history of the index. At the quarterly level, all asset types showed declines in profitability in the second and the last quarter of 2020 due to the impact of national Covid-19 lockdowns. The profitability indices of equipment and commercial vehicles reached their peaks in Q1 2020, while that of real estate and passenger cars peaked in Q3 2020.
Cost/income ratios escalated across all asset categories in 2020, particularly within the automotive sector. Passenger cars and commercial vehicles have continued to experience cost escalation since 2018, at 49% and 54% respectively. To a lesser extent, the cost/ income level of real estate rose by 3 percentage points, from 34% in 2019 to 37% in 2020. When looking at quarterly data, the ratio especially escalated in the fourth quarter of 2020, with real estate, equipment and commercial vehicles reaching their highest levels at 40%, 50% and 56% respectively.
Cost of risk ratios of all asset types in 2020 were roughly two or three times as much as 2019’s level. Real estate and passenger cars shared the same rising cost of risk level between 2019 and 2020, with each increasing from 0.2% to 0.5%. The ratio of equipment doubled from 0.5% to 1.1%, whereas that of commercial vehicles escalated from 0.3% to 0.7%. In general, the cost of risk ratios surged in the second quarter of 2020, where both real estate and passenger cars shared similar levels of 0.6% each. By contrast, commercial vehicles showed a sharp increase in the cost of risk level at 1% in Q4 2020.
Developments in return on assets were negative for all asset categories in 2020, especially commercial vehicles which saw the largest drop of 0.7 percentage points. Among four asset types in 2020, passenger cars had the highest record in RoA at 0.9%, with equipment following up at 0.8%, while both real estate and commercial vehicles standing at 0.5% and 0.2% respectively. Regarding quarterly level, RoA performed stronger across four asset categories in Q1 and Q3 2020 than Q2 and Q4 2020.