Peter Hunt analyses market
statistics for the year to May 2010.
Go deeper with GlobalData
Highlights
The Finance & Leasing Association
(FLA) business finance market topped £2bn (€2.4bn) in June, the
first month to achieve that threshold since March 2009. Business
finance volumes excluding big ticket showed a very healthy 19% jump
on last year, the biggest monthly gain since February 2008.
The big growth story was in the big
ticket market, for transactions of more than £20m.
Consumer finance continues to look
weak except in terms of car financing activity, which remains up on
the year. Motor finance, extracted from business and personal
finance totals, continues to show positive upward movement. Growth
in motor finance is increasingly driven by the business finance
market.
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By GlobalDataThe rise in big ticket lending aligns
with movements in a number of asset classes and finance product
types. At £168m, air, ships and rolling stock also recorded its
highest total since March 2009. International assets, receivables
finance and other finance are all asset classes that have a close
association with big ticket transactions, and all showed
corresponding growth in June, as did finance leasing and other
finance products.
Outside the big ticket market, the
trend towards direct finance continues.
Taking a three month moving average,
most asset categories remain below the same period in 2009, with
cars the main exception and business equipment marginally
positive.
Comment
Continued positive new business
volumes suggest that we’ve finally hit the bottom of the investment
cycle and can expect continuing growth over the coming months.
Companies are beginning to assess their market position and whether
their business model is aligned with emerging growth opportunities
and competitive dynamics.
Assuming that recent growth is
demand-driven rather than the relaxing of lending supply, funding
weaknesses in the broker market could signify a serious supply
shortage, in particular as a distribution channel for the SME
market. In such circumstances bank owned direct funders will
increase lending volumes, to a large extent dictate margin levels
and still appease political paymasters. With bad debts increasingly
under control, volume and profitability from new business will be
attractive and 2011 and 2012 financial results are likely to be
very strong.
The author is a partner at the
consulting and services firm Invigors, and can be reached at
peter.hunt@invigors.com
