Equipment Finance New Business Volume Rises 6% Y/Y in January

The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25) showed overall new business volume for January was $8.8 billion, up 6% year over year from new business volume in January 2022. Volume was down 32% month over month from $12.9 billion in December following the typical end-of-quarter, end-of-year spike in new business activity.

Receivables more than 30 days were 1.9%, up from 1.8% in December and up from 1.8% in the same period in 2022. Charge-offs were 0.34%, up from 0.26% in December and up from 0.17% in the year-earlier period. Credit approvals totaled 75.1%, down from 76.6% in December. Total headcount for equipment finance companies was down 4.3% year over year.

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in February is 51.8, an increase from the January index of 48.5.

“The year gets off to a strong start with healthy new business volume in January,” Ralph Petta, CEO and president of ELFA, said. “Business demand for equipment financing continues unabated despite uncertain and, in some cases, conflicting economic signals: inflationary pressures, rising interest rates, a hot labor market, and easing supply chain disruptions. Credit quality bears watching, as delinquencies and charge-offs creep up from historic lows.”

“Although new business volumes and portfolio performance continue to be strong, uncertainty surrounding inflation and interest rates persists. This presents a bit of a dichotomy in that we see the confidence index increasing despite slight upward pressure on delinquencies and losses,” Nicholas Small, vice president of Finance Shared Services, Cisco Systems Capital, said. “This will drive continued discipline within credit and portfolio management until we see more stability and predictability in key economic indicators. In terms of new business, these same economic pressures will continue to drive strong demand for financial products in our industry. The reduction in headcount is reflective of the tight employment market, versus workforce demand, and we can expect to see this trend improve.”

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