ELFA: January New Business Volume Up 3% Y/Y, Down 49% M/M

The Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index (MLFI-25) showed overall new business volume for January was $6.2 billion, up 3% year-over-year from new business volume in January 2016.

Volume was down 49% month-over-month from $12.1 billion in December, following the typical end-of-quarter, end-of-year spike in new business activity.

Receivables over 30 days were 1.70%, up from 1.40% the previous month and up from 1.30% in the same period in 2016. Charge-offs were 0.43%, up slightly from 0.42% the previous month, and up from 0.26% in the year-earlier period.

Credit approvals totaled 75.4% in January, down from 77.4 percent in December. Total headcount for equipment finance companies was up 18.3% year-over-year, a spike largely attributable to acquisition activity at a MLFI reporting company.

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) for February is 72.2, leveling off after January’s all-time high index of 73.4.

ELFA President and CEO Ralph Petta said, “After the first year-over-year decline in new business volume since the financial crisis, the increase in January 2017 originations gets the year off on the right foot. The 3% increase coincides with analysts’ forecasts for more sustained and stronger equipment finance industry growth over the next 12 months. Yet to be known, however, are the potential effects of more business-friendly policy pronouncements by the new Trump administration on the amount and nature of capital investment in the United States. Credit quality appears to be eroding slightly as delinquencies and charge-offs head upward, off their historic lows of 2015-2016.”

Harry Kaplun, president of Specialty Finance at Frost Bank, added, “The high level of economic confidence not only shows in more originations but also in backlogs this year. Higher equipment finance backlogs suggest sustainable growth throughout 2017.”

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