There is growing optimism in the Austrian and Hungarian
leasing markets as certain segments flourish, and expectations turn
more positive. Claire Hack reports
The Austrian and Hungarian leasing markets
remain unpredictable as unemployment is still high and fears mount
over whether they will survive a second recession – but the general
outlook is far from bleak.
Go deeper with GlobalData
Both the leasing markets have managed to
escape relatively unscathed as the Eurozone crisis spreads, and
there seems to be little fear over contagion from surrounding
areas.
What’s more, there is growing optimism between
the two markets as certain segments flourish, and expectations turn
more positive.
Lévai Gabor, general secretary of the
Hungarian Leasing Association, said: “We estimate 20% growth for
the whole year, and another 20% for 2012.
“The general machinery segment rose by 47%.
The Hungarian economy is strongly linked to export markets,
especially to Germany, and we have a relatively big spare-part
industry related to car manufacturers.”
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By GlobalDataThe Austrian market also grew by 20% in the
first half of 2011, compared with the first half of 2010, Rudolf
Fric, chairman of the Association of Austrian Leasing Companies,
said.
“The basis for the Austrian leasing market’s
excellent business development in the first half of the year 2011
was the increase of all leasing sectors,” Fric said.
The Hungarian market grew by 16% in the first
half of the year, Gabor added, after 10 consecutive quarters of
shrinkage.
Furthermore, the burgeoning Eurozone crisis
has had “no significant effect” on the leasing market, Alfred Hagn,
managing director of SG Equipment Finance (SGEF) in Austria,
said.
Hagn added: “Austrian government bonds [have
in fact] benefitted from the good Austrian credit standing, leading
to reduced interest cost for the state.”
The market continues to suffer only from a
general economic slowdown, Fric said, agreeing with Hagn’s
comments.
“The Austrian leasing industry still suffers
from the general economic crisis, as the commercial propensity to
invest is recovering very slowly. But we do not see a specific
impact of the Eurozone crisis on the local leasing market,” Fric
said.
In Hungary, the impact of the strengthening
Swiss franc has been among the key factors affecting lessees, Gabor
said.
“[The] exchange rate rose by 10% within a
month, and it heavily affects our customers’ ability to pay monthly
instalments,” he said.
The Swiss franc has attracted attention in
recent days as it strengthened against most foreign currencies,
including the dollar and the euro, and is thought to have
contributed to the weakness of other European currencies.
“From 2005 to 2006, private consumers [in
Hungary] took loans for houses and passenger cars denominated in
Swiss francs and euros,” Christian Piringer, manager director of
SGEF in Hungary said.
“Because of the unfavourable exchange rate
movements, especially in case of Swiss francs, there was an
increase of approximately 50 to 70% in instalments payable in
Hungarian forints.”
He added that players in the corporate market
have taken on both loans and leases foreign currencies, but that
the ratio of Swiss franc loans is lower.
Any negative effect on the exchange rate to
Hungarian currency has been mitigated, however, as many segments of
the market are geared towards export, Piringer said.
“Credit default swaps in Hungary show
relatively hectic movement, but the effect on the interest rate is
not that significant,” he added.
Increase in business
volumes
Both Austria and Hungary, furthermore, have
seen marked increases in business volumes across a number of
segments.
“New business volumes for motor vehicles grew
by 20% and other movable assets by 7%,” Fric said.
And as Europe looks increasingly to
alternative sources of energy, renewable energy assets saw the
highest growth during the first half, he added.
“IT office equipment went up by more than 80%,
because of some individual contracts, although this is the smallest
segment of the market [in Hungary],” Gabor said.
“Truck segment realised approximately 30%
growth as transportation is also booming in connection with
export.”
“The most significant upward movement was in
[the transportation sector] in Hungary. German companies restarted
co-operations with Hungarian subcontractors, especially in the
automotive industry, metal processing, plastic and light industry,”
Piringer added.
“In the case of agricultural investment, we
can see a very positive investment environment, despite a lack of
state subsidies, which have been postponed.”
And while it is to be expected that the two
leasing markets would have a major impact upon each other, owing to
their close economic and geographic ties, there is a general lack
of business straddling the borders of the two countries, Gabor
added.
“Some of the market players are owned by
Austrian companies, for example Erste and Immorent, but there is
not any cross-border leasing activity,” he said.
Austrian stakeholders in Hungary face
increased risk
The Austrian stake in the Hungarian market is
nevertheless significant, Fric said, and is heavily impacted by
fluctuations in the Hungarian economy.
“Both weak demand for new business and risk
issues arising from outstanding leases in foreign currency are
challenging at present,” he said.
And while legislation affecting leasing
transactions in Austria has remained more or less unchanged
according to Fric, a Hungarian banking tax is continuing to have a
major impact on the leasing industry there, Gabor told Leasing
Life.
“The special banking tax has affected leasing
companies, as every financial institution has to pay an extra 6.5%
tax after net interest and fee income from 2009. The tax is payable
for a minimum of three years,” he said.
A lack of internal market growth within the
SME segment, as well as high levels of unemployment, have also
caused a decrease in activity in vehicle, equipment and real estate
investments, Gabor added.
Conversely, Fric said, there has been strong
demand for vehicle leases in Austria, and especially from private
customers, as well as a greater propensity to invest.
“[The market] is still driven by prudence, as
order books and deal pipelines in some of the manufacturing and
exporting sectors are still vague,” he said.
Market participation remains
stable
The number of companies within Austria’s
leasing market has also remained stable during the first half of
2011, while Hungary has seen significant levels of
consolidation.
“Small Hungarian leasing companies are not
able to refinance their activity, and have left the market,” Gabor
said.
“Some of the international players are also
inactive at the moment, because their parent company might have
some problems at home, or because the Hungarian activity and/or the
market was too small.”
“Several leasing companies stopped activities
[in Hungary] including BAWAG Leasing, Fortis Leasing, and Impuls
Leasing, and some of them suspended activities – Raiffeisen, ING,
CIB-Banka Intesa, KBC,” Piringer said.
“Some are gaining bigger market share,
including UniCredit, SGEF, BNP Paribas, GE Leasing, and De Lage
Landen.”
According to Hagn, furthermore, two major
players within the Austrian and Central and Eastern European
markets have been sold, or are in the process of being partly
sold.
“Austrian-based Volksbank International Group
announced its take-over by Russian Sberbank,” he said.
“The Hypo Alpe Adria Group has also put its
leasing activities in Austria and CEE up for sale. The process is
managed by Citibank and is ongoing.”
As 2012 approaches, Gabor remains confident of
the 20% growth in the Hungarian market, but Piringer is slightly
less optimistic.
“The favourable first and second quarter of
2011 gave optimistic expectations for the second half of the year,
but companies seem to have stopped planned investments or have
tried to postpone them because of the euro crisis,” he said.
Fric is hopeful of a general recovery from the
recent onslaught of new economic turmoil.
“We expect some growth in vehicle leases and
are optimistic that the recovery of the equipment leasing and real
estate leasing segments will continue,” he said.
Market snapshots
Hungary: As
per statistics published by the Hungarian Lease Association, market
production remained flat in the first quarter of 2011, compared
with the first quarter of 2010.
However, in the second quarter of 2011, new
business volumes were 8.5% higher than in the corresponding period
of 2010.
This was mainly due to the development of the
truck sector and investments in machinery, according to Hagn.
The passenger car segment, meanwhile, suffered
a massive drop in 2009, falling 80%, and again by 10% in 2010 in
terms of new business volumes.
In 2011, the market failed to recover fully
and a further 5% drop was visible in the second quarter of the
year, compared with the second quarter in the previous year.
This segment nevertheless represents 50% of
the total leasing market in Hungary.
There was strong development in the truck and
freight segment, as demand for new vehicles increased.
In the second quarter of this year,
there was an increase of 36.9% in investment compared with Q2
2010.
Bus financing, however, dropped by almost 13%,
while truck financing grew by 40 percent.
The total machinery market grew 34%, due to
stable investment in IT investment, as well as positive trends in
manufacturing equipment machinery investments, up 30%, and
agricultural machinery, up 67%.
Figures for the second quarter of this year
also showed a small increase in investment in construction
machinery, up 8% compared with in the same period in 2010.
Austria:
Within vehicle leasing, which includes passenger cars, trucks and
trailers, new business volume grew by 20.3% to €1.89bn. The number
of contracts increased by 13.2%, while the number of registrations
grew by 11.3%.
The average value per contract was up 6.3%, or
an average value of €22,000.
Equipment leasing in general saw new business
volumes grow 36.2%, to €771m, while the number of new contracts
dipped by 11.5%.
The average value of each contract was up by
as much as 54%, leading to an average value of €89,000.
There was also a slight recovery in machinery
and industrial equipment leasing, up 6.7%, while the strongest
performance was in agricultural equipment, up 108%.
Business aviation leasing was also up 95%,
while shipping fell 71% and rolling stock was down 70%. Computer
and office equipment fell 22%.
As a standalone segment, passenger cars rose
15%, and trucks, trailers and buses rose 25%. Only tractors showed
a decrease in new business volume, down 4.5%.
Key players
SGEF
The Société Générale subsidiary is set to
strengthen its position in key areas such as the financing of
buses, working with the company’s major partners, both Hagn and
Piringer said.
In Hungary, furthermore, Piringer claimed the
company could overtake CIB Leasing in terms of market share, with
about 65% of market share in terms of new business volumes.
The company is also focussing on medical
equipment and high tech, and especially software financing, Hagn
said.
“SGEF Austria could introduce complex
financing solutions like step-up leases or pay per use leases and
[white label] leasing models, which allow large producers to offer
financings off-balance sheet in their own name, while SGEF provides
for the financing in the background,” he said.
Hagn added that SGEF is looking to strengthen
its position as one of the top three vendor finance providers in
Austria. It is also looking to become one of the leading suppliers
of high tech financing solutions in Hungary, Piringer said.
“Due to the limitation of investment in
Austrian-based leasing companies in CEE, there is the clear
refocusing of those lessors onto the Austrian market,” Hagn
said.
There are difficulties to be faced, however,
and especially for lessees, he said.
“Besides the heavy competition from local
small banks, this increase of competition leads to pressure on the
margins, especially for top and well-rated customers,” Hagn
added.
Other key players
Unicredit Leasing Austria
·
CEO: Martin Frank
2010 ranking in Austria: 1
· 2010 market share:
13.32%
· 2010 market growth
rate: +8.7%
· Full time employees:
265
· Branches: 8
· Net profit: €42.3m
(stable)
· Other facts: Competence
centres located in Vienna provide expertise to the whole UniCredit
Leasing network in the real estate, automotive, renewable energy
segments.
Unicredit Leasing
Hungary
·
CEO: Gyorgy Porfy
· 2010 Ranking: 3
· 2010 market share:
9,6%
· Full-time employees:
85
· Other facts: A much
smaller presence than in Hungary. The market has been steadily
decreasing, mainly due to contraction in real estate.
Raiffeisen Leasing
· Managing directors: Peter Engert (chairman),
Michael Ohner, Karlheinz Sandler
· Employees: 363 in
Austria, 1,370 internationally
· Regional offices:
Burgenland, Carinthia, Lower Austria-Vienna, Salzburg, Styria,
Tyrol, Vorarlberg
· Other facts:
Involved in vehicle, machinery, equipment and real estate leasing,
property development and comprehensive services such as
construction management, fleet management and operator models,
contracting, and projects in ecology and electric mobility.
