ELFA report on equipment leasing: 2% year-over-year volume gain in January

The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity from 25 companies representing a cross section of the $900 billion equipment finance sector, showed their overall new business volume for January was $8.3 billion, up 2 percent year-over-year from new business volume in January 2021. Volume was down 30 percent month-to-month from $11.8 billion in December following the typical end-of-quarter, end-of-year spike in new business activity.

Receivables over 30 days were 1.8 percent, down from 2.0 percent the previous month and down from 2.2 percent in the same period in 2021. Charge-offs were 0.17 percent, down from 0.25 percent the previous month and down from 0.47 percent in the year-earlier period.

Credit approvals totaled 78.4 percent, down from 78.6 percent in December. Total headcount for equipment finance companies was down 11 percent year-over-year, a decrease due to significant downsizing at an MLFI reporting company.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in February is 61.8, a decrease from 63.9 in January.

ELFA President and CEO Ralph Petta said, “Despite persistent supply chain disruptions in several collateral categories and nagging inflation, the equipment finance industry picks up in January where it left off last year: new business volume is robust and portfolios continue to perform. The impact of impending higher interest rates on industry performance in the coming weeks and months bears watching, however.”

Eric Gross, Chief Operating Officer, Dext Capital, said, “As we end February and look forward, we have conflicting pressures on the market. The pandemic subsiding and the prospect of a return to some sense of normalcy, as well as a robust backlog, raises optimism. These positives are countered with the ongoing supply chain disruptions, inflation, a rising interest rate environment and international tensions. With that said, overall, we think the headwinds are manageable and are bullish on market growth through 2022.”

The MLFI-25 is the only index that reflects capex, or the volume of commercial equipment financed in the U.S. The MLFI-25 is released globally at 8 a.m. Eastern time from Washington, D.C., each month on the day before the U.S. Department of Commerce releases the durable goods report.