THE DECREASE OBSERVED IN DEMAND AS A RESULT OF GEOPOLITICAL AND ECONOMIC UNCERTAINTIES WAS REFLECTED IN THE FINANCIAL LEASING INDUSTRY AS A DECLINE IN BUSINESS VOLUME.
INVESTMENT
Relative decrease observed in investment appetite as a result of geopolitical and economic uncertainties for the last three years lead its way to a negative course in 2018 with financial volatility, high currency and interest rates.
In 2018, transaction volume of the leasing sector decreased by 23% to USD 4.8 billion due to pressures resulting from current conjuncture. Leasing receivables of the sector as of 2018 year end reached TL 61 billion, representing an increase of 17% in TL and a decrease of 16% on USD basis.
Ratio of non-performing receivables to leasing portfolio of the sector climbed up to 7.20%.
Under all these unfavorable circumstances, return on equity of the sector dropped down to 9.6%.
When we look at the distribution of investments in the financial leasing sector, heavy duty and construction machinery take the first place with a share of 20.8%, while other machinery and equipment and real estate take the second and third places with respective shares of 19.2% and 17.7%. Following these sectors are textile machinery with 11.8% and metal processing with 9.2% shares.
In Turkey, share of financing of private sector fixed capital investments through leasing is around 5-5.5% and it remained quite stable for the last 5 years. This ratio is 22% in USA, 32% in UK, 17% in Germany and 16% in France. This rate indicates that leasing sector in our country needs to make considerable progress and it has a potential to change by including the end users in its target group with regulatory improvements in related products and industries and decrease in TL interest rates.
In 2019, ceasing of capital flow into our country resulting from increases in volatility in international markets and geopolitical risks will continue to create pressure on economic activity.
In current conjuncture, problems of real sector, deterioration in the investment environment and challenges of leasing sector in obtaining long term funding in comparison with prior years will all have unfavorable impacts on transaction volume.
It is anticipated that 2019 will be a year when focus on risk and activities to improve funding capability will stand out rather than improvement of transaction volume or number of customers.
