+29%
Total transaction volume of the overall sector was up by 29% to USD 3.3 billion.
2020 has started well for the sector that saw its leasing receivables crash as a result of shrank transaction volume of 2019; however, the decelerated economic activity in connection with the pandemic-induced measures and restrictions from March onwards resulted in a remarkable decline in leasing demands.
As part of the measures the BRSA adopted to curb the financial and economic impacts of the pandemic, the sector players extended all possible support for deferring leasing installments in order to back the cash flows of companies that sustained business loss in their economic and commercial activities, and for alleviating the impact of the pandemic.
As economic activity hit the rock bottom in the second quarter of the year, the economy and industrial production adopted a fast recovery trend from the third quarter of 2020. Economic recuperation reflected quickly on the leasing sector, and the sector’s transaction volume showed a rise from July onwards.
From the onset of August, the restraint on credit expansion of banks led credit demand to be channeled to non-bank financial institutions, and the sector took advantage of this trend in terms of volume.
Total transaction volume of the overall sector was up by 29% to USD 3.3 billion. In 2020, the leasing sector expanded both in TL and USD terms, as opposed to the case in 2019.
Along with the rise in transaction volume, net leasing receivables and total assets of the financial leasing sector also expanded. The sector’s leasing receivables amounted to TL 57.3 billion, while total assets were worth TL 70.3 billion. Having a shareholders’ equity of TL 12.4 billion, the sector’s net profit for the period was registered as TL 1.5 billion.
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 17.9%, as real estate ranked second with 14.1% share, and other machinery and equipment ranked third with 13.9% share. Following these sectors are textile machinery with 12.0% and motor vehicles with 11.1% share.
In Turkey, the ratio of financing of private sector fixed capital investments through leasing is 4.5%-5.5%, which further slipped down to 3.30% in 2020. Given the high correlation between the leasing transaction volume with the country’s growth, leasing transaction volume has the potential to grow, provided that anticipated growth levels are achieved.
The post-pandemic economic rebalancing and recovery process is expected to positively affect the markets and new investments in 2021, and the year ahead is predicted as a more productive one in terms of new customer acquisition with the introduction of digital onboarding and electronic contract signing processes as a result of the enforcement of regulatory arrangements. In the leasing sector that services 38 thousand customers and competes mainly on the financing of SMEs, commercial companies of larger scale in addition to the SMEs are also kept in focus, with the target of inculcating leasing finance in the investment decisions of commercial companies.
