European lessors bounce back in Q3 from Q2 2020 lows: Leaseurope

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ost key performance indicators for 23 European lessors worsened in Q3 2020 compared to Q3 2019, according to the Leaseurope Index. The Index found that in Q3 2020, the companies surveyed showed significant recovery compared to the lows seen in Q2 2020 due to the effect of national Covid-19 lockdowns.

Compared to Q3 2019, total new business volumes reported by the sample of firms declined by -10.7%, reaching €25.4bn.

The portfolio of outstanding contracts remained relatively stable with a marginal decrease of -0.5% in Q3 2020, while risk-weighted assets shrank by -2.8%.

Aggregate pre-tax profit fell by -14.0% in Q3 2020 compared to the same quarter of last year, driven by loan loss provision escalation.

Consequently, weighted average profitability in Q3 2020 declined by 9.7 percentage points compared to the Q3 2019 level, from 40.9% to 31.2%.

The median profitability for the ‘typical’ company in the sample also exhibited a similar trend, although at a higher level of 34.9% in this year’s third quarter.

Looking at developments over 2020, profitability has recovered from the drop in Q2 and is more similar to the levels seen in Q1. Both operating income and expenses experienced declines of -1.2% and -5.0% respectively in Q3 2020 compared to the same period last year.

As a result of the larger cost reduction, both weighted average and median cost/income ratios improved by 0.6 and 2.7 percentage points to reach 48.5% and 45.4% respectively in the third quarter of 2020.

Loan loss provisions escalated by 82.3% in Q3 2020 compared to the same period a year ago.

Leaseurope’s Q3 2020 survey is in its 39th edition. Leaseurope is the European federation of leasing and automobile renting associations.