"Evaluating the data of Latvia's largest leasing companies, in the 2nd quarter of this year, compared to the corresponding period last year, the number of leasing contracts concluded is 8% less... On the other hand, while the average amount issued for one loan continued to grow, the total amount issued remained almost unchanged (+1%)," said KIB in a news release August 15.
"After the decline experienced in 2020, the leasing market showed recovery trends in the following years, increasing the number of transactions compared to the corresponding period of the previous year. However, starting from the 2nd quarter of 2022, the number of transactions has started to decrease compared to a year earlier. The average decrease in the number of transactions each quarter is about 200 transactions. On the other hand, the sums of concluded transactions regularly increase, the only time transaction sums decreased in 2022 in the 2nd quarter," commented Intars Miķelsons, executive director of KIB.
Comparing the 2nd quarter of last year with the 2nd quarter of this year, the number of closed financial leasing transactions fell by 14%. The total amount issued in financial leasing also decreased slightly. Operational leasing has been less affected by the difficult economic situation, and such significant fluctuations are not observed in this area.
"Since the end of 2022, a decrease in the number of concluded transactions by approximately 30 to 40% has been felt in the car trade sector. The biggest problem in the purchase of new cars is precisely for private individuals, due to which the monthly mortgage loan payment has increased by 300 to 400 euros due to the increase in Euribor, so priorities are set and the purchase of new cars is postponed or the bank refuses the leasing transaction," said Andris Kulbergs, president of the Auto Association.
"If in previous years the financing of the purchase of a new car for private individuals was approximately 30% of the equity, but in 70% of cases leasing was used, then we can see that this distribution has already changed to 40% equity and 60% leasing transactions. It should be noted that due to the decrease in the number of new car purchases, Euribor also significantly affects the opportunities to purchase new electric cars, which in turn has a negative impact on CO 2achieving emission targets," said Kulbergs.
Despite the market decline, average transaction amounts have continued to grow as the cost of living increases. In the 2nd quarter of 2021, the average amount of one financial leasing transaction was 14.7 thousand euros, but in the 2nd quarter of 2022 it was already 16.5 thousand euros, representing an increase of approximately 12%. On the other hand, in the 2nd quarter of this year, the average loan was already 19.1 thousand euros, which is an increase of approximately 16% compared to the year before.
The growth of the average transaction amounts of operational leasing has practically stopped. In the 2nd quarter of 2021, the average amount of transactions was 13.3 thousand euros, a year later - 15.8 thousand euros, which is an increase of 18%. On the other hand, in the 2nd quarter of this year, transactions are closed for an average of 16 thousand euros, which is an increase of only 1%.
"The majority of leasing contract clients who have taken loans from banks have a positive credit rating. At present, 3.7% of bank leasing customers delay their payments by at least one day. The situation in this indicator has been stable for several years. However, taking into account that due to still high inflation, which exceeds wage growth, the solvency of the population continues to decrease, the number of defaulters may increase," warned Miķelsons.