Against the backdrop of turmoil in the financial markets,
Finance and Leasing Association (FLA) statistics for February
continue to paint a fairly rosy picture. On the same month last
year, business finance, excluding big ticket, was up 20 per cent,
with cars (18 per cent) and commercial equipment (21 per cent) both
showing strong gains. Big ticket financing appears the biggest
winner, up more than 200 per cent on the previous year and 25 per
cent on a rolling 12-month basis.
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Such stellar year-on-year growth needs to be put in
context. February is historically a poor month for new business
volumes, with February 2007 the lowest month for business finance
(including or excluding big ticket) over the past 24-month period.
This February’s big ticket volume ranks fifth in the past 12
months, so these results are impressive, but not earth-shattering.
Business finance, excluding big ticket, is the lowest monthly total
for six months.
Twelve-month and three-month rolling averages (measured to show
trends with reduced seasonal and quarter-end impacts) both continue
to show positive growth (despite very high growth in commercial
equipment financing in October and November of last year).
Likewise, data from the wider business community remains
positive. Advertising – considered a lead indicator of economic
activity in other sectors – is forecast to grow 3.5 per cent in
2008 (Advertising Association). While capital investment is still
expected to grow 1.75-2.25 per cent this year, bus and coach
registrations are up 25 per cent in the year to date, and vans and
trucks are up by a combined 10 per cent. High farm prices suggest
the agricultural sector may be in a strong investment position.
With the Euro staying above 80p, conditions remain good for
companies exporting to the Eurozone.
The FLA statistics indicate direct finance continues to grow at
the expense of sales finance, making up 78 per cent of February’s
new business volumes. While the 12 months to February have shown a
14 per cent increase in reported direct-finance volumes, a quarter
of this is likely to have been driven by the growth in big ticket
funding.
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By GlobalDataResidual-risk financing continues to show above market growth,
with the year to date representing 23 per cent of the total
reported FLA new business volumes, compared to finance lease of 18
per cent.
Comment
In a recent speech, the CBI’s directorgeneral, Richard Lambert,
concluded that “out in the real economy, lots of businesses are
still doing fine, thank you very much”. Based on market evidence so
far in 2008, there are plenty of opportunities for asset finance
companies to do well.
