ELFA’s Monthly Leasing and Finance Index Shows 8% Y/Y Decrease in October New Business Volume

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 October was $10.4 billion, down 8% year over year from new business volume in October 2022. However, volume was up 7% from $9.7 billion in September and year-to-date, cumulative new business volume was up 0.7% compared to the same period in 2022.

Receivables more than 30 days were 2.5%, up from 2.3% in September and up from 1.7% in the same period in 2022. Charge-offs were 0.42%, up from 0.36% in September and up from 0.26% in October 2022.

Credit approvals totaled 76%, up from 73.6% in September. Total headcount for equipment finance companies was down 0.6% year over year in October.

Separately, according to the Equipment Leasing & Finance Foundation’s November 2023 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI), overall confidence in the equipment finance market is 42.8, an increase from the October index of 40.1.

“Despite a set of sound metrics in the U.S. economy, MLFI participants report slight increases in both losses and delinquencies,” Ralph Petta, president and CEO of the ELFA, said. “This softness in credit quality is indicative of the challenges experienced by some businesses as they operate in a higher interest rate environment, constrained in some sectors, at least, by reports of a pull-back in bank lending. Origination activity for the year continues to be in acceptable ranges.”

“All metrics continue to reflect the equipment finance industry’s stability and resilience. The trends are consistent with the economic environment and market turmoil resulting from quantitative tightening, inflation, employment and supply chain disruption. Volume declines, delinquencies and charge-off increases are moderate particularly after periods of such artificially low comparable results,” Dennis Bolton, senior managing director and head of equipment finance in North America at Gordon Brothers, said. “All in all, the industry has performed well and displayed its ability to effectively manage relationship, credit and equipment risk. While challenges remain, the industry is well positioned to manage these challenges and support continued equipment investment.”

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