New business volume in the equipment finance industry overall grew 16.4% in 2012, on par with the 16.5% increase the previous year, according to the 2013 Survey of Equipment Finance Activity (SEFA) released by the Equipment Leasing and Finance Association (ELFA).
A companion report, the 2013 Small-Ticket Survey of Equipment Finance Activity, which focuses on small-ticket and micro-ticket equipment transactions among the SEFA respondents, found that new business volume in this space grew by a moderate 3.8% in 2012.
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.
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%.
The industrial & manufacturing industry represented 11.5% of new business volume reported by ELFA member companies, down from 12.4% in 2011.
The metal & machinery industry represented 5.8% of new business volume reported by ELFA member companies, up from 5.4% in 2011.
Wood, paper, chemical & plastic industries represented 3.2% of new business volume reported by ELFA member companies, relatively unchanged from 3.3% in 2011.
Other industrial/manufacturing industries represented 2.5% of new business volume reported by ELFA member companies, down from 3.7% in 2011.
Percentage of new business volume ELFA member companies financed by equipment type:
|
Equipment category |
In 2012 |
In 2011 |
|
Semiconductors |
0.4% |
0.5% |
|
Machine tools |
2.1% |
2.3% |
|
Plastic extrusions |
0.2% |
0.3% |
|
Product & process control |
0.9% |
1.0% |
|
Water pollution & waste management treatment |
0.1% |
0.1% |
|
Other industrial/manufacturing |
1.3% |
0.6% |
|
Materials handling |
3.2% |
3.6% |
