New business volume grew 9.3 percent in the equipment finance industry in 2013, according to the 2014 Survey of Equipment Finance Activity (SEFA) released by the Equipment Leasing and Finance Association (ELFA). The growth in volume was down from the 16.4 percent increase reported for 2012 and the 16.5 percent increase reported for 2011, but well above the 3.9 percent increase reported for 2010 and the 30.3 percent decline in 2009. The SEFA, which is based on responses from 109 ELFA member companies, covers key statistical, financial and operations information for the $827 billion equipment finance industry.
ELFA also released a companion report to the 2014 SEFA called the 2014 Small-Ticket Survey of Equipment Finance Activity. The 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 10.2 percent in 2013.
“We are pleased to present the 2014 SEFA and the 2014 Small-Ticket SEFA, which provide comprehensive performance metrics for the $827 billion equipment finance industry,” said William G. Sutton, CAE, ELFA president and CEO. “The data show the equipment finance sector continued to gain momentum as the economy improved in 2013. More recent data collected in 2014 indicate that growth is continuing amid a slow economic recovery, at a more tempered rate.”
Key findings for 2013 as reported in the 2014 SEFA include:
- Overall new business volume grew 9.3 percent.
- By market segment: All market segments showed growth in volume, except for the smallest segment. New business volume fell 5.9 percent for the micro-ticket segment but grew 14.3 percent for the small-ticket segment, 8.5 percent for the middle-ticket segment and 6.8 percent for the large-ticket segment.
- By organization type: After lagging for several years, independent equipment finance organizations led the industry in new business volume growth rates. Independents saw the strongest increase in new business volume (17.7 percent), while captives saw their volume grow by 11.3 percent and banks saw a 6.2 percent increase.
- From an asset perspective, the top-five most-financed equipment types were transportation, computer equipment, agricultural, construction and medical equipment. The top five end-user industries representing the largest share of new business volume were services, agriculture, transportation, industrial/manufacturing and wholesale/retail.
- Delinquencies remained steady between 2012 and 2013. Full-year losses or charge-offs also fell well below 1.0 percent overall.
- Credit approvals increased, and the percentage of those approved applications being booked and funded remained steady.
- Employment levels grew by 2 percent, with headcount in sales and marketing increasing, while all servicing and collections categories lost headcount.
- Given the current financial markets, cost of funds continued to decline. However, competitive pressure drove pre-tax spreads still lower in 2013 compared to previous years, to 3 percent, its lowest level in five years.
- Assets under management grew between 2012 and 2013. Return on assets dropped slightly in 2013 but remained healthy at 1.7 percent.
- Net income remained steady between 2012 and 2013 in dollar terms. Return on average equity also remained healthy at 16.8 percent.