The volume of new business in the leasing market for the nine months of 2023 reached a historical maximum

The volume of new business in the leasing market in the nine months of 2023 doubled compared to the same period last year. However, next year it will no longer be possible to achieve such high figures. “Expert RA” in the base scenario predicts market growth in 2024 by 18%. The constraining factor remains the high key rate, continuing difficulties in working with Asian suppliers and the risks of deterioration in the quality of portfolios formed during the period of rush demand and market recovery in the last two years.

The volume of new business in the leasing market for the nine months of 2023 reached a historical maximum of 2.49 trillion rubles, which is 95% higher than last year’s result, according to the Expert RA report (Kommersant reviewed it). Compared to the first nine months of 2021, the growth was 65%. This was a consequence of the realization of pent-up demand, rising prices and restructuring of the Russian economy, the authors of the study indicate. The growth in business activity amid the stabilization of the economic situation led to an increase in the number of transactions concluded by 1.5 times, to 345 thousand, which is also 12% higher than the level of nine months of pre-crisis 2021. Due to the shortage of equipment, the inflationary component and the weakening of the ruble exchange rate, the average amount of a leasing transaction over 12 months showed an increase of 1.4 times, to 12.4 million rubles. At the same time, analysts note market concentration against the backdrop of strengthening the positions of federal players and the departure of foreign companies. The top ten largest companies account for 77% of the volume of new business versus 64% at the end of nine months of 2021 (see “Kommersant” from March 24, 12 May).

At the same time, as Mikhail Gonopolsky, managing director of the Insight investment group, notes, the cycle of rapid growth of the Russian economy with attractive rates for economic entities has ended. “In the fourth quarter, we are already seeing a slight slowdown in new business growth, at least in the wheeled segments (see “Kommersant” dated November 27) and trucks,” he points out.

At the same time, 2024 will be less dynamic for the industry, Expert RA expects.

Analysts estimate market growth by the end of 2023 by 70%, to 3.41 trillion rubles, and in 2024 – by only 18%. Moreover, the quality of portfolios may suffer. As Expert RA notes, “in the context of a tougher fight for clients, there was a decrease in the average size of advances against the backdrop of an aggressive increase in sales, which could lead to the accumulation of risks” (see “Kommersant” dated August 1).

The segment will continue to be pressured by the ongoing shortage of leased items, as well as difficulties with their supplies from China and subsequent servicing. Long lead times are the main problem when working with Chinese suppliers, analysts say. In addition, difficulties arise due to the lack of representative offices in Russia, the lack of components, and determining the residual value of the leased asset. “The market in 2024 will also be held back by a possible increase in the key rate of the Bank of Russia and the slow localization of production,” says Maxim Kalinkin, CEO of Gazprombank Leasing.

The companies themselves give forecasts for 2024 with caution, first of all noting the increased key rate – in six months the Central Bank raised it twice, to 15%, and does not exclude further growth.

“In conditions of high funding costs, lessees will take a more conservative approach to updating fixed assets,” Interleasing is confident. In addition, as Europlan’s financial director Anatoly Amirov points out, the gigantic pent-up demand was partly already realized at the time the key rate was reduced. “We hope that if monetary policy is eased by the middle of next year, the market will partially compensate for the slowdown. In general, we expect an increase of 10–15% relative to the current year’s volumes,” says Rustem Mukhamedov, CEO of Region Leasing.

In the context of a slowdown in the growth rate of the Russian economy in 2024, the quality of portfolios may also deteriorate somewhat, although there are no such changes as of the middle of the fourth quarter of 2023, notes Mikhail Gonopolsky. However, the situation here may be different for market participants, believes Anton Musatov, General Director of VTB Leasing. “The level of default is significantly restrained by the cost of leased property, a steady trend towards rising prices and, as a consequence, the motivation of lessees to preserve assets,” he notes. At the same time, the company predicts an acceptable level of default and does not expect “new significant negative events for the leasing market in 2024.”

Polina Trifonova