New business volume grew 16.4% in the equipment finance industry in 2012, according to the 2013 Survey of Equipment Finance Activity released by the Equipment Leasing and Finance Association. The growth in volume was on par with the 16.5% increase reported for 2011, and well above the 3.9% increase reported for 2010 and the 30.3% decline in 2009.
The SEFA, which is based on responses from 112 ELFA member companies, covers key statistical, financial and operations information for the $725 billion equipment finance industry.
ELFA also released a new companion report to the 2013 SEFA called the 2013 Small-Ticket Survey of Equipment Finance Activity. The new report, which focuses on small-ticket and micro-ticket equipment transactions among the SEFA respondents, found that new business volume in the small-ticket space grew by a moderate 3.8% in 2012.
Key findings for 2012 as reported in the 2013 SEFA include:
- Overall new business volume grew 16.4%. By market segment: All market segments showed growth in volume, except for the smallest segment. New business volume fell 4.7% for the micro-ticket segment but grew 13.1% for the small-ticket segment, 15.8% for the middle-ticket segment and 31.1% for the large-ticket segment. By organization type: Banks saw the strongest increase in new business volume (22.2%), while captives saw their volume grow by 10.8% and independent equipment finance organizations saw a 7.4% increase.
- From an asset perspective, the equipment types that saw the largest year-over-year increases in new business volume included transportation (34.4%); mining, oil and gas extraction (31.4%); and industrial/manufacturing (22.3%).
- Delinquencies remained steady between 2011 and 2012. Full-year losses or charge-offs also fell well below 1.0% overall.
- Employment levels remained stable, though headcount by function reflected a decline in collections and services, juxtaposed with an increase in sales and marketing, credit approvals and booking.
- Given the current financial markets, cost of funds continued to decline. Competitive pressure drove pre-tax spreads lower in 2012 to just above 3%, on par with the lowest levels in five years.
- Credit approvals increased, and the percentage of approved applications that were booked and funded remained steady.
- Net income remained steady between 2011 and 2012 in dollar terms. Return on average equity also remained healthy at 14.45%.