The Equipment Leasing and Finance Association (ELFA) has reported that the new business volume for January 2023 was $8.8 billion, representing a 6% increase from January 2022. However, the volume decreased by 32% from $12.9 billion in December 2022, following the usual end-of-quarter, end-of-year spike in new business activity.
ELFA's Monthly Leasing and Finance Index (MLFI-25) also revealed that the receivables over 30 days increased to 1.9% from the previous month's 1.8%, and credit approvals were down to 75.1 from 76.6 in December. Charge-offs were 0.34%, up from 0.26% the previous month and up from 0.17% in the year-earlier period. Total headcount for equipment finance companies was down 4.3% year-over-year.
Meanwhile, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) rose to 51.8 in February, up from 48.5 in January.
ELFA President and CEO Ralph Petta noted that while the demand for equipment financing remains strong, the credit quality bears watching as delinquencies and charge-offs creep up from historic lows.
“Although new business volumes and portfolio performance continue to be strong, uncertainty surrounding inflation and interest rates persists. This presents a bit of a dichotomy in that we see the confidence index increasing despite slight upward pressure on delinquencies and losses. This will drive continued discipline within credit and portfolio management until we see more stability and predictability in key economic indicators. In terms of new business, these same economic pressures will continue to drive strong demand for financial products in our industry. The reduction in headcount is reflective of the tight employment market, versus workforce demand, and we can expect to see this trend improve,"