Report

on the state of development of leasing,

non-bank credit and factoring markets in theCzechRepublic
in the 1st quarter of 2017

Report on the state of development of leasing, non-bank credit and factoring markets in theCzech Republic in the 1st quarter of 2017

Macro-economic Framework

(Growing demand for non-bank financial products)

In the first months of 2017, financial products were being offered in conditions of economic growth started already at the end of 2013. Investments grew, household expenditures grew, too. Under these circumstances, the volume of non-bank financing on the year-on-year basis increased in the 1st quarter of 2017.

Data on the development of the CR economy relevant for non-bank funding:

  • GDPon the year-on-year basis grew(in the 4th quarter 2016 by 1,9 %, in 2015by 2,3 %, the growth is predicted by 2,6 % in 2017).
  • Industrial production grew on the year-on-year basis (in January by 4,3 %, in February by

6,7%).

  • Growth of investments is predicted by 3,8 %
  • Retail sales grew on the year-on-year basis (in January by 1 %, in February by 0,9 %)
  • Inflation rate grew on the year-on year basis (in 2016 by 0,7 %, 2,2 % in January, 2,5 % in February and 2,6 % in March)
  • Rate of unemployment reached 4,8 % in March (5,5 % in the end of 2016)

A part of the demand for funding investment and/or consumer projects was accompanied by considerable risks and could not be accepted after applying prudent criteria of the evaluation of the customer and of the funded commodity. There was a continued growth in the share of credit financing in business of leasing companies.

Contribution of non-bank financial products to economic development

(A significant share in funding enterprises and households)

In the 1st quarter of 2017, the CLFA member companies provided the following through leasing, factoring and/or loans to consumers and entrepreneurs:

  • The total funded sum of CZK 49,80billion (by5,69billion more than in the 1st quarter of 2016, the year-on-year increase by 12,9 % )

- of which:CZK42,38billion for funding investments and real estates and operation of

business entities

and CZK 7,42billionfor funding goods and services for households

  • The share of loans for funding investments of entrepreneurial entitiesreachedinthe 1st quarter of 2017 46,7 %
  • Funding of road vehicles (mostly new) by CZK 20,62billion

- of which:14,14billion for the acquisition of passenger carsincluding CZK 11,19billionfor the acquisition 27.435new passenger cars (the CLFA member companies have financed 40,3% of new passenger cars first registered in the CR inthe 1st quarter of 2017)

  • They also provided CZK 6,42billionto finance machinery and equipment
  • They concluded162.293new leasing and credit transactions
  • At the end of1st quarter of 2017,they managed1.335.887active lease and loan agreements
  • Claims from running lease and credit transactions reached CZK 247,20billion at the end of the 1st quarter of 2017

Development of Financing of Entrepreneurial Entities in the 1st quarter of 2017

1. Leasing of movable investment (machinery, equipment and vehicles)

(An apparent year-on-year increase associateda renewed increase of investments)

  • A sum of purchase prices (excluding VAT) – CZK 13,94 billion (year-on-yearincreasein the top fifteen companies by 13,8 %)
  • Estimate of the whole market – CZK 14,37billion
  • Total amount financed (initial debt) – CZK 13,44 billion
  • A year-on-year slightly increaseof share of operating lease in the total lease of movable investments – it reached 62,4 % (in the 1st quarter of 2016 – 58,3 %)
  • A commodity focus of the leasing for entrepreneurs – leasing of road vehicles continued to dominate:

-share of the leasing of passenger cars – 41,9 % (43,7 % in the 1st quarter of 2016)

-share of new cars in the total leasing of passenger cars –95,4%

-share of the leasing of lorries – 19,7% (27% in the 1st quarter of 2016)

-share of the leasing of machinery and equipment – 20,2 % (20,7 % in the 1st quarter of 2016)

  • 15.431 new contracts for leasing of machinery, equipment and vehicles for entrepreneurs were entered into:

-of which there were 3.241 financial lease contracts
3.780 operating lease contracts

7.799 contracts on full-service leasing

and 611 contracts on short-term rental

  • The number of new lease contracts to finance business investments increased by 9,8% on the year-on-year basis
  • 586 vehicles were received in the fleet management provided by CLFA members
  • At the end of the 1st quarter of 2017, leasing of machinery, equipment and vehicles for entrepreneurs was taking place on the basis of active 193.541 lease contracts, concluded by CLFA member companies:

-of which there were 73.646 financial lease contracts

28.675 operating lease contracts

89.026 contracts on full-service leasing

and 2.194 contracts on short-term rental

  • At the end of the 1st quarter of 2017 7.857 vehicles could be found in the fleet management
  • Receivables from the contracts concluded for the leasing of movable assets for entrepreneurs reached CZK 105,12 billion at the end of 1st quarter of 2017.

2. Development of Credit and Instalment Sales for Entrepreneurs

(The use of these non-bank products continues to grow)

  • They were provided by 16 CLFA member companies
  • Total loans – CZK 11,82 billion
  • Year-on-year increase in the volume of loans to entrepreneurs by 18,7% in the leading fifteen companies
  • Commodity focus:

-share of loans for passenger cars – 43,6 % (45,2% in the 1st quarter of 2016)

-share of loans for trucks – 10,2 % (12,9 % in the 1st quarter of 2016)

-share of loans for machines and equipment –31,8 % (27,1 % in the 1st quarter of 2016)

  • The total of 17.698 loans was granted, of them 63 loans for the acquisition of property
  • The number of loans granted increased by 7,4% on the year-on-year basis
  • An average loan granted – CZK 667.938
  • The number of active loans at the end of 1st quarter of 2017– 219.104
  • Receivables from loans at the end of 1st quarter of 2016– CZK 90,09 billion

3. Factoring

(An apparent year-on-year increase in use of factoring)

  • In the 1st quarter of 2017, total receivables for CZK35,91billion were assigned to the members of the Association of Factoring Companies of the CR (AFS CR) (of which the amount CZK 31,98 billion is attributable to factoring companies which are also members of the CLFA)
  • In AFS CR member companies, the above represents the year-on-year increase by 23,1 %
  • Product focus:

-recourse factoring –58,1 % (year-on-year increase of share by 5,4 %)

-non-recourse factoring –41,9%

  • Direction of factoring:

-domestic factoring – 60,3 % (year-on-year reductionof share by 2,5%)

-export factoring – 36,3 % (year-on-year increase of share by 2,2 %)

-import factoring – 3,4 %(year-on-year increase of share by 0,3 %)

  • Amount of funds provided by AFS CR members to clients reached CZK 19,54 billion as at

31stMarch 2017 (increasein comparison with the situation at the end of March 2016by CZK

3,28billion), of which CZK 17,05 billion was attributable to the members of the CLFA

Development of Non-bank Market of Consumer Credit in the 1st quarter of 2017

1. Consumer Credit

(mild year-on-year growth in the volume of loans granted)

  • They were provided by 16members companies of the CLFA (including a number of leasing companies that offer them in addition to leasing products)
  • Total loans provided for the personal use amounted to CZK 6,58 billion, year-on-year increase by 0,2 %
  • Volume and share of products:

-open-purpose loans – CZK 1,44 billion – 21,8 %

-revolving loans – CZK 2,19 billion– 33,4%

-financing of assets – CZK 2,94 billion – 44,8 %

year-on-year decline in the share of open-purpose loans (by 2,9 %), year-on-year increasein the

share of revolving loans (by 1,8%)and the share of financing of assets (by 1,1 %)

  • Volume of creditto finance carsyear-on-yearincreased by7,9 % to CZK 2,45billion, their number increased by 535to 13.638 loans on the year-on-year basis
  • A total of 125.714 contracts on consumer loans were concluded (year-on-year decline by 20,3 %)

-51.540 open-purpose loans

-22.348 revolving loans

-51.826 credit and instalment contracts aimed at financing assets

  • Number of active loan contracts at the end of the 1st quarter of 2017 – 899.632
  • Volume of receivables from active loan contracts at the end of 1st quarter of 2017– CZK 38,77 billion

2. Consumer leasing

(an apparent year-on-year significant growth in both the volume and the number of new contracts )

  • Sum of purchase prices of movable assets (excluding VAT) put to consumer leasing in the 1st quarter of 2017 – CZK 0,84 billion
  • The volume of consumer leasing including short-term rental the year-on-year increased by21,7%
  • Total amount financed (initial debt) – CZK 0,84 billion
  • Share of financing leases in the overall consumer leasing of movable assets – 2,1%, share of operating leasing – 82,9 %, share of full service leasing – 12,5 %, share of short-term rental – 2,5%
  • Commodity focus – still completely dominated by leasing of road vehicles:

-share of the consumer leasing and short-term rental of passenger cars – 99,6%

-share of new cars in total consumer leasing and short-term rental of passenger cars – 99,3%

  • 2.861 new consumer lease contracts and short-term rental were concluded (their number increased by 544 on the year-on-year basis):

- of which there were 29 financial lease contracts
2.396 operating lease contracts

378 contracts of full service leasing

and 58 contracts on short-term rental

  • At the end of 1st quarter of 2017, consumer leases were taking place on the basis of active 15.552 lease contracts concluded by CLFA member companies:

- of which there were 1.915 financial lease contracts
9.609 operating lease contracts

3.767 contracts of full service leasing

and 261 contracts on short-term rental

  • Receivables from lease contracts concluded with consumers reached CZK 1,764 billion at the end of 1st quarter of 2017

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