LEASEUROPE INDEX LATEST RESULTS: Q1 2024

Brussels, 15 July 2024 – The Leaseurope Index is a unique survey that tracks key performance indicators of a sample of 19 European lessors on a quarterly basis. This Q1 2024 is the fifty-second edition of the survey.

The Q1 2024 Index results reveal a weak momentum in the European leasing business. All of the weighted average ratios deteriorated in Q1 2024 compared to the same period a year ago. Conversely, the median ratios presented a mixed outlook, with Return on Assets (RoA) and Return on Equity (RoE) displaying improvement, while other KPIs such as profitability, cost of risk, and cost/income weakened.

Total new leasing volumes reported by the sample of firms increased by 2.5% in comparison to Q1 2023, reaching nearly €28 billion. The outstanding portfolio continued its expansion, growing by 5.0% during Q1 2024, while total risk-weighted assets (RWAs) also exhibited growth, albeit at a higher rate of 5.9%.

Pre-tax profit decreased by -26.7% while operating income experienced a decline of -14.2% compared to the same period in 2023. As a result, the weighted average profitability ratio worsened from 47.7% in Q1 2023 to 43.2% in the first quarter of this year. The median profitability ratio (less susceptible to outlier values and more indicative of the ‘typical’ company) exhibited a similar trend. It declined from the previous level of 50.1% to 42.7% in Q1 2024, indicating a significant deterioration.

During the first quarter of 2024, operating expenses showed a drop of -1.1%, and due to a larger decline in operating income, the weighted average cost/income ratio escalated to the level of 49.2% at the beginning of the year. This marked a 2.4 percentage point rise compared to Q1 2023. Excluding outlier effects, the median cost/income ratio also showed negative development, worsening by 6.6 percentage points to 51.4% in Q1 of this year.

Loan loss provisions saw a notable surge in Q1 2024, up by 60.9% year-over-year from Q1 2023. Consequently, the average annualized cost of risk slightly weakened, rising to 0.21% as opposed to 0.14% in Q1 2023. As for the median ratio, the cost of risk stood at 0.20% in Q1 2024.

In Q1 2024, both weighted average ratios for RoA and RoE performed worse than in the same period a year ago. However, the median ratios presented a contrasting picture. The median RoA slightly improved during the same period, while the median RoE improved.

Andy Hart, CEO of Investec Asset Finance, commented "The European leasing industry started the first quarter of the year with weak momentum, carrying over from the previous quarter. Despite a challenging business environment, the industry managed to expand its new business volumes and portfolios. However, with cost/income ratios showing signs of increase, lessors should be cautious about rising operating expenses. Looking ahead, business investment in Europe is expected to slow down due to prolonged weakness in the manufacturing sector, a subdued outlook for equipment investment, and depressed loan demand. Although this sets the stage for potentially challenging market dynamics for the year, lessors will need to focus on our core strengths and be prepared to leverage on opportunities within a complex business environment.”