According to the Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index (MLFI-25), which reports economic activity from 25 companies representing a cross section of the $1 trillion equipment finance sector, overall new business volume for March was $10.4 billion, down 2% year over year from new business volume in March 2022. In addition, the index showed volume was up 32% from $7.9 billion in February and year-to-date cumulative new business volume was up 4% compared with the same period in 2022.
Receivables more than 30 days were 1.9%, up from 1.8% in February and up from 1.5% in the same period in 2022. Charge-offs were 0.32%, unchanged from February and up from 0.1% in March 2022.
Credit approvals totaled 75.3% in March, down from 75.7% in February. Total headcount for equipment finance companies was down 4.6% year over year in March as well.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in April is 47, a decrease from the March index of 50.3.
“While originations for the month are strong — in the face of a persistently high interest rate and inflationary environment — the metrics that bear monitoring deal with portfolio quality,” Ralph Petta, president and CEO of the ELFA, said. “Delinquencies and losses are up compared to the same period last year, indicating a potential softness in the economy that is making it more difficult for lessees to honor their lease and financing obligations.”
“Despite continued economic uncertainty, rising interest rates and other challenges, the equipment finance industry remains resilient, as seen in the increase in cumulative new business volume in the first quarter,” Linda Redding, head of equipment finance at J.P. Morgan Commercial Banking, said, “The industry continues to demonstrate its viability throughout economic cycles, as there is a consistent need for companies of all industries and sizes to invest in equipment. Times of economic uncertainty can even create unique opportunities for the equipment finance industry, as its flexible solutions can allow businesses to preserve strong liquidity and cash positions when they need them most.”
