Leasing market, nine months of 2008: full speed astern

Full speed astern: the economic crisis made the leasing market shrink. Within the first nine months of the year amount of new deals dropped by 9.4% versus similar period in 2007. The market operations amounted to 605 bln rubles. Last year deals approximated 667.9 bln rubles. The leasing market deceleration collides with other segments of the financial market: incremental assets in the banking sector in the first half of 2008 amounted to 14.6%, in the factoring market - to 82.1%.

Everything at one's own expense: the issue of finding money is getting more and more urgent for leasing companies. In the first nine months of the current year lessors had to finance 15.2% of their operations by their own means. In the corresponding period of 2007 the same share did not exceed 9.6%. The share of advance payments in the structure of funds also went up. Bank credits to leasing companies at the same period declined from 74% to 63.9%.

Law on market shrinkage: in line with legal changes as of January 1, 2009 accelerating ratios cannot be used for property depreciation in groups 1-3. Expert RA expects the market diminish by 1/6 or even 1/5. The following leasing segments would suffer most: motor transport, banknotes calculating devices, different conveyers, agricultural laboratory equipment, forage storing mechanisms, buses up to 7.5 meters, PCs, servers and printers, timber tractors, different machine tools. On the lessee's side SME would suffer most - leasing deals for a number of inexpensive mobile equipment would become less profitable.

Continued decline: the market unfavorable events in 2008 do not allow expecting positive market growth in 2008. Considering traditional business activity in the last quarter of a year, we predict the leasing market shrinkage in 2008 to near 18% with new leasing deals to total 810-860 bln rubles.

New turn: the leasing market would restore its acceleration capacities with restored business and cash flow activity, and unfrozen large investment projects. The market situation may be improved in the second half of 2009, after risk and asset reassessment and in the absence of external shocks. The growth may be driven by priority state programs and larger deals, currently frozen at the stage of planning or approval.