Insights into the European Leasing Market Jean-Marc Mignerey Leaseurope Board Member Cannes 2012
Global Leasing Markets in 2011 Canada 16% CFLA 27 bil US 11% Leaseurope 232 bil Japan JLA 41 bil 13% ELFA 154 bil China CLBA 1% Brazil 106 bil 100% -28% ABEL 7 bil Australia AELA & AFLA 16% New equipment leasing volumes. ELFA figures do not include passenger car leasing Source: Leaseurope 2011 Annual Survey, local leasing associations, Leaseurope estimates 16 bil 2
European Leasing Market in 2011 3
European Leasing Market Results from Leaseurope s 2011 Annual Enquiry NEW VOLUMES Leaseurope Annual Survey Estimated TOTAL Market OUTSTANDINGS Leaseurope Annual Survey Estimated TOTAL Market Total Real Estate Movables 256 bil 24 bil 232 bil ~285 bil Total Real Estate Movables 698* bil 196 bil 502 bil ~800 bil Source: Leaseurope estimates, Leaseurope 2011 Annual Survey of European Leasing 34 member associations in 28 countries reporting, figures include hire purchase products when reported by member associations *Figure for total outstandigs reaches 712 bil if data for Portugal is included 4
% YoY European Leasing Market Evolution of the European leasing market New business, annual % change 25% 15% 11.2% 5% -5% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 7.4% -15% -18.6% -25% -35% Total volumes Real estate Equipment incl. vehicles 256.6 bil 24.3 bil 232.3 bil Growth rates are calculated based on a homogenous sample of members reporting from year to year & are adjusted for exchange rate fluctuations from 2007 onwards Source: Leaseurope Annual Surveys 5
% YoY European Leasing Market Evolution of the European leasing market New business, annual % change 25% CAGR (1996-2011) 15% 5.1% 5% -5% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 4.8% -15% 2.9% -25% -35% Total volumes Real estate Equipment incl. vehicles CAGR calculated for the 18 associations reporting from 96-11 Growth rates calculated based on a homogenous sample of members reporting from year to year Growth rates not adjusted for exchange rate fluctuations Source: Leaseurope Annual Surveys 6
European Leasing Market in 2011 Evolution of new business by country New business, annual % change (2011/2010) 30% and higher 20% to 30% 10% to 20% 0% to 10% -10% to 0% - 20% to -10% - 20% and lower NA Non - members Source: Leaseurope 2011 Annual Survey Annual growth rates based on a homogenous sample of members reporting in Leaseurope s 2011 Annual Statistical Enquiry and are adjusted for exchange rate fluctuations 7
European Leasing Market in 2011 Leased assets Total new lease volumes per asset category, % 40% 2010 13% Real estate 42% 2011 10% 16% Machines & equip CVs 16% 7% Cars ICT Big/other 7% 7% 16% 8% 18% 56% Automotive Source: 2011 Annual Survey. Based on a homogeneous sample of 30 members reporting 60% Automotive 8
Leaseurope s weight in the vehicle sector (2011) European Leasing Market in 2011 New business 5.6 million units 108 billion Penetration of new car sales: 31.9% Fleet 14 million units Penetration of total European fleet: 5.8% New business 1.4 million units 44 billion Fleet 4.3 million units Based on figures reported in the 2011 Annual Survey & Leaseurope estimates; includes figures from short term rental associations 9
European Leasing Market in 2011 New lease volumes per asset type % YoY (2011) 20% Total 20% Real estate Movables Machinery ICT CVs Cars Big Other 25% 20% 17.0% 15% 10% 5% 0% 7.4% 15% 10% 5% 0% 11.2% 15% 10% 5% 0% 6.7% 1.2% 10.5% 8.1% -5% -10% -15% -5% -10% -15% -20% -18.6% Growth rates are calculated based on a homogenous sample of members reporting from year to year & are adjusted for exchange rate fluctuations Source: 2011 Annual Survey -5% -10% -15% -20% -25% -25.5% 10
Regional performance by movable asset category New business growth - annual % change (2011/2010) European Leasing Market in 2011 80% DE UK FR IT* MED. Benelux, AT,CH CEE 64% Nordic, Baltic 60% 40% 20% 0% -20% -40% 18% 15% 15% 13% 10% 12% 8% -6% 15% 14% 4% -2% 3% -10% -25% -30% -13% -12% -36% -40% 33% 16% 5% -24% 18% 16% 13% 26% 18% 4% -29% -60% Machines & Equip ICT Vehicles Big/Other Growth rates are calculated based on a homogenous sample of members reporting & are adjusted for exchange rate fluctuations Source: Leaseurope 2011 Annual Survey * The category Other for IT includes some equipment renewable energy assets 11
Normalised PR 1999 =100 European Leasing Penetration Evolution of leasing penetration in Europe 19 countries (1999-2011) 220 200 180 160 140 120 100 80 60 40 20 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 19% 12% 3% Total volumes Movables Real estate Lease penetration is the share of total investment (excluding residential real estate) financed by leasing calculated as new leasing volumes / gross fixed capital formation for the 19 associations reporting from 99-11 Source: Leaseurope, Eurostat and AMECO (GFCF) 12
European Leasing Investment European investment & GDP vs total new leasing volumes 15% 10% 5% 0% -5% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012f 2013f -10% -15% -20% -25% -30% -35% Equipment investment (EU -15 ) GDP (EU 15) Total leasing volumes Source: AMECO, May 2012; Leaseurope estimates 13
Leasing Penetration by Country Share of equipment investment financed by leasing (2011) > 30% 25% to 30% 20% to 25% 15% to 20% Equipment 20.8% 10% to 15% < 10 % NA Lease penetration is the share of total investment financed by leasing calculated as new leasing volumes (excluding consumers)/ gross fixed capital formation in equipment Source: Leaseurope, AMECO, Eurostat 14
Characteristics of European Market Players 15
Characteristics of European Market Players Rank Company name Country New business 2011 ( bil) # of European countries 1 BNP Paribas Equipment Solutions (incl. Arval Leasing Solutions) FR 13.17 2 Volkswagen Leasing GmbH DE 9.54 3 Societe Generale Equipment Finance FR 9.38 4 UniCredit Leasing IT 8.93 5 Deutsche Leasing DE 7.53 6 De Lage Landen International B.V. NL 7.52 7 Credit Agricole Leasing & Factoring FR 5.78 8 OJSC VEB Leasing RU 5.42 9 ING Lease NL 5.16 10 LeasePlan Corporation N.V. NL 5.05 11 Nordea Finance SE 5.04 Source: Leaseurope 2011 Ranking Survey of Top European Leasing Companies Companies with volumes > 5 billion are shown here along with the number of countries inside Europe in which they operate inside Europe 16 * Companies having operations outside Europe (e.g. in 2011, DLL granted 8.9 bil new vols outside Europe) 17 2 19 15 19 20 5 9 15 23 8 * * * * * *
# of firms reporting Characteristics of European Market Players Market concentration: % of total new volumes reported in 2011 Ranking Survey 80 60 40 20 TOP 10 TOP 20 0 0% 20% 40% 60% 80% 100% % of total new volumes reported in Ranking Likely trends: New entrants unlikely M&A activity expected to stabilise TOP 10 All firms in Ranking TOP 20 % of all new volumes reported 57% All new volumes reported 136 bil % of all new volumes reported 81% Source: Leaseurope 2011 Ranking Survey of Top European Leasing Companies 17
New business volumes bil New business volumes bil Characteristics of European Market Players Distribution channels used by partaking firms in 2011 Ranking Survey All firms TOP 20 firms 50 45 40 From 34% to 32% of new volumes From 27% to 34% of new volumes 70 60 50 45 40 20 18 16 35 50 35 14 30 25 20 40 30 30 25 20 12 10 8 15 20 15 6 10 5 10 10 5 4 2 0 Banks Vendors Direct Sales Intermed. Other 0 0 Banks Vendors Direct Sales Intermed. Other 0 New volumes granted by all firms (LHS) Source: Leaseurope 2011 Ranking Survey of Top European Leasing Firms Number of firms using channel (RHS) New Volumes granted by TOP 20 (LHS) 2011 2010 18
Characteristics of European Market Players The Leaseurope Index ratios (Q1 2010-Q2 2012) Profitability ratio Cost / income ratio 40% 35% 30% 30.2% 26.1% 60% 55% 50% 45% 40% 47.6% 53.0% 46.0% 25% 35% 20% 15% 10% 2011 (full year) 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% Source: Leaseurope Index Cost of risk ratio 0.65% 14.5% Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 0.94% 0.84% 2011 (full year) Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 30% 25% 20% 15% 10% 2011 (full year) Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 19
Characteristics of European Market Players The Leaseurope Index RoA & RoE (Q1 2011-Q2 2012) RoA RoE 1.4% 1.2% 1.0% 0.8% 1.0% 1.2% 1.1% 1.0% 0.8% 25% 20% 15% 17.1% 20.4% 20.7% 18.1% 14.6% 0.6% 0.6% 0.5% 10% 0.4% 0.2% 5% 0.0% 2011 (full year) Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 0% 2011 (full year) Q1 2011 Q2 2011 Q1 2012 Q2 2012 Source: Leaseurope Index 20
Going forward 21
European Leasing Market in 2012 Past Expectations H1 2012 Expectations for H2 2012 22
% Survey respondents Profitability is expected to recover slowly European Leasing Market in 2012 Past Expectations H1 2012 Expectations for H2 2012 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% June'10 Dec'10 June'11 Dec'11 Survey date Decrease Q1 2012 Q2 2012 Pre-tax profit (% change*) -10.5% -32.7% Profitability ratio % 35.1% 26.1% No change Increase 66% of respondents expect profit June'12 *% change period on same period a year ago Source: Business Confidence Survey, June 2012; Leaseurope Index Q2 2011 23
Growing importance of leasing in supporting European SMEs over next years In 2011, 43% of SMEs expected to use leasing to finance their investment Recognition of leasing s economic role Leasing companies need to be prepared to be addressed as financiers for SMEs. According to the Eurostat survey, for all type of enterprises leasing companies is one of the most important finance source for the next few years. 50% 40% 30% 20% 10% 40% 43%? EIF support can mitigate the current market distortions, thereby enabling the financing of new leases to SMEs and contributing to enhance their access to long-term financing. 0% 2010 2011 Micro Small Medium Source: Survey on the use of leasing amongst European SMEs, Oxford Economics & Leaseurope, July 2011 Going forward Modest increases in the uptake of leasing by SMEs would add an extra 0.9% to 1.5% to the level of GDP by 2020.. 24
The European market is the largest leasing market in the world Leasing is key to European SMEs The EIB and EIF recognise that leasing is a way to achieve their goals for the financing of SMEs Leasing has a lower risk profile than traditional lending Leasing companies are profitable and show ROE significantly above those of the banking sector But, regulatory threats are still present Concluding remarks Looking ahead, being recognized as the most efficient means of financing for SME investment, leasing must build upon its central role at the heart of the real economy 25
Insights into the European Leasing Market Cannes 2012