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market participants
Number of lessors
As at 30 June 2009, the list of licensed lessors included:
1. UniCredit Leasing Srbija d.o.o. Beograd
2. Hypo Alpe-Adria-Leasing d.o.o. Beograd
3. Intesa Leasing d.o.o. Beograd
4. OTP Leasing d.о.о. Novi Sad
5. LIPAKS d.o.o. Beograd
6. NLB Leasing d.o.o. Beograd
7. Porsche Leasing SCG d.o.o. Beograd
8. Procredit Leasing d.o.o. Beograd
9. Raiffeisen Leasing d.o.o. Beograd
10. S-Leasing d.o.o. Beograd
11. Sogelease Srbija d.o.o. Beograd
12. NBG Lizing d.o.o. Beograd
13. VB Leasing d.o.o. Beograd
14. Zastava Istrabenz Lizing d.o.o. Beograd
15. EFG Leasing a.d. Beograd
16. Meridian Leasing d.o.o. Beograd
17. Piraeus Leasing d.o.o. Beograd
Number of employees
Rising steadily year after year, in 2009 employment in the financial leasing sector recorded a mild decline. At end-Q2 2009, there were 505 people employed in the sector. The average number of employees per lessor was around 30. Table 1 below shows total employment in the financial leasing sector in the previous years and at end-Q2 2009:
| Table 1 – Number of employees in the financial leasing sector | |
| Date | Number of employees |
| 31 Dec 2005 | 329 |
| 31 Dec 2006 | 388 |
| 31 Dec 2007 | 478 |
| 31 Dec 2008 | 516 |
| 30 Jun 2009 | 505 |
Ownership structure
Domestic vs. foreign ownership
- 11 leasing providers were in 100% or majority ownership of foreign legal entities;
- 5 leasing providers were in 100% or majority ownership of domestic entities (of which 4 were owned by domestic banks with a share of foreign capital);
- 1 leasing provider was jointly owned by a domestic bank with a share of foreign capital and a foreign legal entity, each holding a 50% stake in the leasing provider’s capital.
Financial vs. non-financial sector
- 14 leasing providers were set up by banks, banking group members or other financial institutions;
- Two financial leasing providers (LIPAKS d.o.o. Beograd and Zastava Istrabenz Lizing d.o.o. Beograd) did not belong to the financial sector. Porsche Leasing SCG d.o.o. Beograd may also be classified in the same group, as it was founded by a Porsche Group member – a bank specialized in financing Porsche Group products.
Table 2 gives an overview of the ownership structure of lessors.
Table 2 – Ownership structure of lessors (table)
Balance sheet structure
Balance sheet
On 30 June 2009, total balance sheet assets of the leasing sector stood at RSD 120.3 billion, down by 1.9% relative to 2008 (RSD 122.6 billion). Both assets and liabilities of the financial leasing sector were for their major part (94.8% and 91.5%, respectively) foreign currency denominated or foreign currency clause indexed.
Although 5.6% lower than in 2008, receivables continued to account for the largest share of financial leasing assets. Of the total balance sheet assets, financial lease receivables accounted for 75.1%, which is a decrease relative to both 2007 and 2008 (79.5% and 78.1%, respectively). Receivables due for payment accounted for 3.1% of the total (of which 41.2% were past due up to 30 days). Receivables past due over 90 days made up 0.6% of the total portfolio.
The share of item “cash and cash equivalents” in total balance sheet assets increased from 14.6% at end-2008 to 16.8% at end-Q2 2009 (14.5% in 2007). Reserves against credits, other loans and supplementary payments from abroad (other than payments for share capital increases), which are included in item “cash and cash equivalents”, added 75.9% to its value as at 30 June 2009.
Long-term obligations accounted for the largest share of lessor liabilities – 90.5%, down by 2.3% from a year earlier (89.8% in 2007 and 90.9% in 2008).
The share of long-term foreign credits declined from 86.8% in 2008 to 86.4% (86.1% in 2007), while the share of long-term domestic credits rose from 4.0% in 2008 to 4.1% in Q2 2009 (3.6% in 2007).
The share of short-term obligations in total liabilities decreased relative to 2007 and 2008 – from 3.9% to 2.6%, of which 0.6% referred to short-term domestic credit (1.6% in 2007 and 2.0% in 2008), while item “other” accounted for 2.0%.
Significant increase in capital (32.5%) in the first half of the year relative to 2008 triggered a rise in share capital (20.4%) and retained earnings. As capital went up against the backdrop of declining balance sheet total, its share in total liabilities rose from 5.1% in 2008 to 6.8% at end-Q2 2009 (6.2% in 2007).
Table 3 shows aggregate balance sheet of all lessors (in thousand dinars) as at 31 December 2007, 31 December 2008 and 30 June 2009.
Table 3 – Aggregate balance sheet of all lessors (in RSD thousand) (table)
As at 30 June 2009, the ratio of the balance sheet total of lessors (RSD 120.3 billion) to banking sector balance sheet total equalled 6.47%.
chart 1 Balance sheet total of banks and leasing providers (chart)
From 31 December 2008 until 30 June 2009, leasing sector balance sheet fell by 1.9%, while banking sector balance sheet total went up by 4.6%.
chart 2 – Growth rates of the balance sheet total of lessors and banks (chart)
market share
In order to analyse the structure of the financial leasing market and the level of competition among different lessors, calculations were made of individual and cumulative market shares of lessors’ balance sheet totals, as well as of the Herfindahl-Hirschman index (HHI).
Table 4 – market share of lessors (table)
The HHI of 1,472.6 on 30 June 2009 points to moderate concentration of the Serbian financial leasing market.
As Table 4 shows, the ranking of lessors by market share changed in the first half of 2009 relative to 2008. The first three lessors (Hypo Alpe-Adria- Leasing d.о.о. Beograd, Raiffeisen Leasing d.о.о. Beograd and NLB Leasing d.o.o. Beograd) kept their top positions. The market share of these three lessors outstripped that of all other lessors together.
The most significant ranking changes were recorded for the following leasing providers:
- S-Leasing d.о.о. Beograd, ranked fifth in 2008 and fourth at end-Q2 2009, with its market share up from 7.2% to 7.9%,
- NBG Lizing d.о.о. Beograd, ranked eleventh in 2008 and eighth at end- Q2 2009, with its market share up from 3.2% to 3.6%,
- Sogelease Srbija d.о.о. Beograd, ranked twelfth in 2008 and eleventh at end-Q2 2009, with its market share up from 3.0% to 3.4%,
- Meridian Leasing d.о.о. Beograd, ranked fifteenth in 2008 and fourteenth at end-Q2 2009, with its market share up from 1.3% to 1.6%,
- VB Leasing d.о.о. Beograd, ranked fourth in 2008 and fifth at end-Q2 2009, wih its market share down from 7.4% to 6.2%,
- Porsche Leasing SCG а.d. Beograd, ranked tenth in 2000 and twelfth at end-Q2 2009, with its market share down from 3.4% to 2.6%.
Profit and loss account
Total profit before tax of all lessors taken together came to RSD 1,131,282 thousand in the first half of 2009, which is a significant increase on 2008 when it stood at RSD 476,153 thousand.
exchange rate gains were the most significant category of lessor income, accounting for 69.6% (70.0% in 2007 and 79.1% in 2008). Interest income rose by 11.5% at annual level, and accounted for 22.5% of total income (24.7% in 2007 and 16.8% in 2008). Operating income made up 2.3% of total income (2.7% in 2007 and 1.7% in 2008).
exchange rate losses took up the largest share of total expenses – 73.8% (72.2% in 2007 and 79.0% in 2008), accounting for 69.7% of total income. Other major expense items were interest expenses – 10.6% of total expenses (14.9% in 2007 and 11.4% in 2008) or 10.0% of total income, and operating expenses – 7.0% of total expenses (8.9% in 2007 and 5.9% in 2008) or 6.6% of total income.
Relative to 2008, in the first two quarters of 2009 total expenses and income declined by 20.6% and 16.7%, respectively (recalculated at annual level). As a result, the share of net profit before tax in total income rose from 1.0% to 5.5%.
Table 5 shows the aggregate profit and loss account of all lessors (in thousand dinars) as at 31 December 2007, 31 December 2008 and 30 June 2009.
Table 5 – Aggregate profit and loss account of lessors (table)
Structure of investments
Lessees
In the first two quarters of 2009, the structure of financial lease investment by lessee (chart 3) remained broadly unchanged from 2008 – legal entities accounted for a major share of total financial lease investments (86.5%), while private individuals held 6.3%. The share of investments to legal entities has been rising steadily, mainly at the expense of investments to private individuals.
chart 3 - Investment structure by lessee (chart)
Object of financing
The structure of financial lease investment by lease object (chart 4) reveals a dominant share of financing of freight vehicles, minibuses and buses – 39.5% (40.4% in 2008). The share of financing of passenger vehicles fell from 23.1% in 2008 to 22.7%. The share of financing of production machines was 10.7% and category Other – 10.3%.
chart 4 - Investment structure by lease object (chart)
Sector
The structure of financial lease investment by sector (chart 5) showed no major changes relative to 2008. The most significant share referred to transport, warehousing and communications (28.9%), followed by the processing industry (18.3%), trade sector (15.0%), agriculture, hunting and forestry (13.3%).
Individual shares of other sectors were less than 10%.
chart 5 - Investment structure by sector (chart)
Performance indicators
Table 6 shows performance indicators for financial leasing providers.
| Table 6 – Performance indicators | ||
| PERFORMANCE INDICATOR | 31 Dec 2008 | 30 Jun 2009 |
| Return on assets (ROA) | 0.44% | 1.86% |
| Return on equity (ROE) | 7.85% | 31.27% |
| Net interest margin | 3.14% | 5.43% |
| Average lending rate | 9.56% | 9.82% |
| Average deposit rate | 5.48% | 3.65% |
| Coverage of interest expenses | 1.09x | 1.55x |
| Operating expenses to average investment | 3.31% | 2.88% |
| Total debt to equity | 18.69х | 13.58х |
| Long-term debt to equity | 17.93x | 13.21x |
As indicated by both ROA and ROE, the profitability of lessors increased in the first half of 2009 relative to 2008.
The average lending rate picked up, while the average deposit rate went down, resulting in the widening of net interest margin.
The ratio of operating expenses to average lease investment declined in the first two quarters of 2009 relative to 2008 – from 3.31% to 2.88%.
The ratio of total and long-term debt to equity came to 13.58 and 13.21 respectively.
Sources of financing and reserve balances
The balance sheet structure indicates that the largest portion of financial lease investment was financed from foreign borrowing – as at 30 June 2009, foreign credit obligations made up 86.4% of total liabilities, while financial lease investment accounted for 75.1% of total assets. The share of long-term domestic credits rose relative to 2008, from 4.0% to 4.1% of total liabilities, whereas the share of short-term domestic credits declined from 2.0% to 0.6%. In the majority of cases, foreign creditors of financial leasing providers were either their founders or legal entities operating within the same banking group.
The reserving base as at 30 June 2009 (against which allocation was made on 10 April 2009) increased relative to 31 January 2006 (against which the first calculation and allocation was made on 10 February 2006) almost 16 times to reach EUR 816 million. The above base for calculating and allocating reserves was equal to 76.1% of total credits used and/or received from abroad by leasing providers.
Changes in the reserving base relative to the previous month are shown in chart 6.
chart 6 – Changes in the reserving base (chart)
Changes in total reserves allocated by leasing providers in the first half of 2009 (in thousand euros) are illustrated by chart 7 below.
chart 7 – Total allocated reserves of leasing providers (chart)
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Financial Leasing Supervision Report Q2 2009.pdf, 275 Kb
