Richard Knubben Automotive Affairs Adviser ALB National Conference, Bucharest 12 November 2009 A Look at the European Leasing & Consumer Credit Markets

Richard KnubbenAutomotive Affairs Adviser

ALB National Conference, Bucharest

12 November 2009

A Look at the European Leasing & Consumer Credit Markets

Agenda About Leaseurope

Leaseurope Work Streams

Leasing Market Figures:

- In the EU and beyond

- European Leasing Market in 2008 & H1 2009

About Eurofinas

Eurofinas Work Streams

Consumer Credit Lending:

- In the EU and beyond

- European CC Market in 2008 & H1 2009

About Leaseurope

The voice of leasing and automotive rental in Europe

It brings together 47 Member Associations

In turn representing more than 2 000 finance leasing firms & more than 1 100 short term rental companies

Leaseurope represents ~95%of the European leasing market

Leaseurope members


Prudential supervision – focus on leasing specific issuesPrudential supervision – focus on leasing specific issues¬ CRD Review

• In particular, technical amendments to the CRD¬ Forthcoming issues

• Changes to the European financial supervision system• Monitoring of any initiatives in the field of non-credit institutions

providing mortgage credit TaxationTaxation

¬ VAT for financial services LegalLegal

¬ Anti-Money Laundering¬ Insurance mediation directive¬ Credit intermediation¬ CCD and leasing¬ Product tying


Automotive issuesAutomotive issues¬ Block exemption regulation¬ Cross border restrictions on car rental ¬ Scrappage schemes¬ Vehicle remarketing¬ Environmental concerns

Other issuesOther issues¬ Debtors’ assets transparency¬ Leasing by the public sector

European level market dataEuropean level market data¬ Annual survey of European leasing¬ Ranking of top European leasing firms


Lease accountingLease accounting

¬ IASB/FASB are proposing a new lease accounting model - right of use approach (final standard – Q2 2011)

• Lessees will be required to recognise all leases on their balance sheets

• The current finance/operating lease distinction will no longer exist• The new rules will require complex assessments regarding the

lessee’s most likely lease term, contingent rental and residual value guarantee payments

¬ The Discussion Paper published in March 2009 did not address lessor accounting

• However, the Boards are working on a performance obligation approach to lessor accounting

• They have yet to confirm whether lessor accounting will be in an exposure draft standard (Q2 2010)


Lease accountingLease accounting

¬ Leaseurope has been instrumental in encouraging stakeholder reactions

• The Boards have received 300 comment letters

¬Our own response focused on the unnecessary complexity of the new proposals:

• IASB/FASB have to conduct a cost/benefit analysis• The new approach should be proportionate not

overshadow the true economic benefits of the product• Leaseurope has also raised due process issues regarding

lessor accounting with the governing body of the IASB

US

ELFA

138 bil€

Leaseurope

330 bil€ of which

equipment & vehicles:

294 bil€ Japan

JLA

42 bil€

New equipment leasing volumes; ELFA figures do not include passenger car leasingSource: Leaseurope 2008 Annual Survey, local leasing associations, Leaseurope estimates

Brazil

ABEL

11 bil€

Australia

AELA

23 bil€

Global Leasing Markets in 2008

European Leasing Market Evolution

European leasing market - new volume growthEuropean leasing market - new volume growth(% YoY)(% YoY)

€330.1 bil €36.1 bil €293.9 bil

Growth rates are calculated based on a homogenous sample of members reporting from year to year & are not adjusted for exchange rate fluctuationsSource: Leaseurope Annual Surveys

-25%

-15%

-5%

5%

15%

25%

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Total volumes Real Estate Equipment (incl vehicles)

-2.4%

-5.0%

-21.6%

New volumes 2008

PR are based on a homogenous sample of members reporting in Leaseurope’s Annual Statistical Enquiries, Eurostat

Leaseurope penetration rate (1999-2008)

20.9%

14.4%

2.0%

0%

5%

10%

15%

20%

25%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Total Equipment (incl vehicles) Real estate

2008 penetration for the 30 members in 23 countries for which data was available

European Leasing Penetration

Growth rates are calculated based on a homogenous sample of members reporting from year to year & are not adjusted for exchange rate fluctuationsSource: Leaseurope 2008 & 2007 Annual Surveys

New volume growth per region in 2008(%YoY)

DE

UK

FR

IT

Med

AT, CH, Benelux

CEE

Nordic 07-08

06-07

6.4%

14.3%

3.6%

10.2%

1.6%

16.7%

50.1%

11.4%

1.8%

-15.2%

3.6%

-18.5%

-23.8%

4.7%

12.2%

2.4%

-25.0% -15.0% -5.0% 5.0% 15.0% 25.0% 35.0% 45.0% 55.0%

Performance of European Leasing Markets

UK €17 bn

DE €20 bn

IT €13 bn

FR €13 bn

ES €4 bn

PL €2 bn

CZ €0.8 bn

-39%

-25%

-23%-52%

-41%

-57%

-57%

-36%

European Leasing Market in H1 2009

GrowthH1’09/H1’08

Source: Leaseurope’s member associations data

-30%

-25%

-23%-38%

-41%

-57%

-54%

-33%

Adjusted for exchange rate fluctuations:Adjusted for exchange rate fluctuations:

Source: Leaseurope’s member associations data

UK €17 bn

DE €20 bn

IT €13 bn

FR €13 bn

ES €4 bn

PL €2 bn

CZ €0.8 bn

GrowthH1’09/H1’08

European Leasing Market in H1 2009

Source: Leaseurope and Eurostat

59%

-2%

-22%

-2%

-42%

9%

23%

26%

19%

15%

41%

< -5 %

-5% – 0%

0% – 5%

> 5 – 10%

GDP growth

Growth of new leasing volumes H1 2008

CEE cluster: 12.2%

On average, CEE leasing still performs well in 2008

> 10 %

0 - 10 %

- 10 - 0 %

< - 10 %

European Leasing Market: CEE

-74%

-75%

-70%

-38%

-70%-42%-54%

-70%

-74%

-2%

-65%

-76%

Source: country estimates, national leasing associations and Eurostat, ING Lease calculations; adjusted for currency fluctuations

2009 outlook for CEE is very different

European Leasing Market: CEE

< -5 %

-5% – 0%

0% – 5%

> 5 – 10%

GDP growth

Growth of new leasing volumes H1 2009

> 10 %

0 - 10 %

- 10 - 0 %

< - 10 %

-25%

-20%

-15%

-10%

-5%

0%

5%Total

-25%

-20%

-15%

-10%

-5%

0%

5%Real estate Movables*

-25%

-20%

-15%

-10%

-5%

0%

5%Machinery ICT CVs Cars Big/other

* Decline of -1% if big/other excluded

European new leasing volumes per asset type in 2008 (% YoY)

-5%

-22%

-2%

+5%

-11%

-2%

-11%

-2%

Annual growth rates calculated based on a homogenous sample of members reporting in the previous year

Automotive assets represent more than 50% of all new leases

European Leasing Market Growth

European Car Leasing & Rental Market

Cars purchased or financed by Leaseurope members in 2008

Source: Leaseurope estimates based on data collected in its 2008 Annual Survey

NANA239.30€ (bil)

16.830.7816.05# (mil)

Total ST RentalLeasing

Portfolio/fleet

137.0820.14116.94€ (bil)

7.020.986.04# (mil)

Total ST RentalLeasing

Cars financed/purchased

Forecast 2009

Following extremely weak H1, new volumes in Europe will be significantly lower in 2009

Source: New volumes reported in Leaseurope Annual Enquiries; Leaseurope estimate based on H1 2009 data provided by main European markets

0

50

100

150

200

250

300

350

400

2002 2003 2004 2005 2006 2007 2008 2009f

Bil

€

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

New volumes Annual growth

European Consumer Credit MarketEuropean Consumer Credit Market

The voice ofThe voice of specialised consumer specialised consumer credit providerscredit providers at European levelat European level

It currently representsIt currently represents 17 Member 17 Member AssociationsAssociations

In turn bringing together more thanIn turn bringing together more than 1,000 finance and credit institutions1,000 finance and credit institutions

Employing overEmploying over 80,000 people80,000 people

EurofinasEurofinas membersmembers

About Eurofinas

Eurofinas Working Priorities Eurofinas Working Priorities Responsible Lending and BorrowingResponsible Lending and Borrowing

Consumer Credit DirectiveConsumer Credit Directive

Credit Standardisation & DisclosureCredit Standardisation & Disclosure

Consumer RightsConsumer Rights

Other Initiatives of InterestsOther Initiatives of Interests

Unfair Commercial Practices – Misleading Advertising – Distance MarketingUnfair Contractual Terms – Data Protection – Redress - Scoring

StandardisationAlternative Dispute Resolution – Insurance Mediation –

Financial Education – Scoring TransparencyInterest Rates Restrictions – Anti-Money Laundering – Financial Inclusion –

European Level Market Data

Eurofinas Work Streams

Total Eurofinas lending – period on period growth ratesTotal Eurofinas lending – period on period growth rates

Includes mortgage lending and industrial credit

Growth rates for new credit compare the first 6 months of the year for biannual figures, all other growth rates are annual growth rates

Eurofinas Market Evolution

-20,00%

-15,00%

-10,00%

-5,00%

0,00%

5,00%

10,00%

déc-02

juin-03

déc-03

juin-04

déc-04

juin-05

déc-05

juin-06

déc-06

juin-07

déc-07

juin-08

Outstanding New Credit

Xx

Xx

Xx

xx

juin-déc-08 09

-0.3%

-10.1%

-2.7%

-19.1%

Adjusted for exchange rate fluctuations

-15.6%

0.6%

Source: Eurofinas Annual & Biannual Surveys

Total new credit Total new credit

373 Bil €373 Bil €

-10.1%

Eurofinas Market

Total new Total new consumer creditconsumer credit by by product type (2008)product type (2008)

268 Bil €268 Bil €

57 079 47 471

36 740 31 169

115 366 101 922

205 769 192 534

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

2007 2008

Mortgages Industrial credit

Vehicle finance CC for pers consumption

Mil €1%

25%

9%

38%

16%

11%

Personal loans Revolving

Non-auto Pos New car finance Pos

Used car finance PoS Other vehicle PoS

415 Bil €415 Bil €

Source: Eurofinas 2008 Annual Survey

Source: Eurofinas 2008 Annual Survey

New consumer credit lending & market share per Eurofinas New consumer credit lending & market share per Eurofinas member in 2008member in 2008

Eurofinas New Consumer Credit Lending

40%51%

17%

37%39%

95%

36%

56%

89%

29%

0

20 000

40 000

60 000

80 000

100 000

120 000

NO CZ SE PT NL FI BE DE ES FR IT GB

Mill

of

€

0%

20%

40%

60%

80%

100%

120%

Total consumer credit Total lending Local consumer credit market share

35%

Eurofinas:Eurofinas:

43.7%43.7%

New credit – period on period New credit – period on period growth ratesgrowth rates

Growth rates for new credit compare the first 6 months of the year for biannual figures while they compare 12 months for annual figures

New credit – annual growth New credit – annual growth per member (2008)per member (2008)

• DE & CZ only members to show growth DE & CZ only members to show growth in all 3 product categoriesin all 3 product categories• Decreases in UK (largest market) Decreases in UK (largest market) contribute significantly to overall Eurofinas contribute significantly to overall Eurofinas declinedecline

-3%

-10%

-4%

-12,00%

-7,00%

-2,00%

3,00%

8,00%

13,00%

déc-03

juin-04

déc-04

juin-05

déc-05

juin-06

déc-06

juin-07

déc-07

juin-08

déc-08

Personal loans RevolvingNon-auto PoS Overall

-60%

-40%

-20%

0%

20%

40%

60%

NL CZ IT DE BE FI PT FR ES GB

Personal loans Revolving Non-auto PoS

Consumer Credit for Personal Consumption


Consumer Credit for Personal Consumption

New credit – period on period New credit – period on period growth ratesgrowth rates

New credit – growth per member New credit – growth per member (H1 2009 vs H1 (H1 2009 vs H1

2008)2008)


juin-

-20,00%

-15,00%

-10,00%

-5,00%

0,00%

5,00%

10,00%

15,00%

déc-03

juin-04

déc-04

juin-05

déc-05

juin-06

déc-06

juin-07

déc-07

juin-08

déc-08 09

Personal loans

Revolving

Non-auto PoSOverall

-16.2%-13.8%

-19.8%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

ES GB PT NO CZ SE FR BE FI IT

DE

Personal loans Revolving Non-auto PoS


-18.5%

-13.4%

-7.9%


Consumer car finance – new Consumer car finance – new credit granted period on period credit granted period on period

growthgrowth

Vehicle Finance


-16%-8%

-18%

-13%

-8%

-3%

2%

7%

12%

déc-03

juin-04

déc-04

juin-05

déc-05

juin-06

déc-06

juin-07

déc-07

juin-08

déc-08

New Cars Used Cars

Consumer car finance – annual Consumer car finance – annual growth per member (2008)growth per member (2008)

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

CZ FI SE PT NL BE FR NO DE IT GB ES

Approximately 74% of vehicle Approximately 74% of vehicle finance is to consumersfinance is to consumers


New Cars Used Cars

Consumer car finance – new Consumer car finance – new credit granted period on period credit granted period on period

growthgrowth

Consumer car finance – Consumer car finance – growth per member growth per member

(H1 2009 vs H1 2008) (H1 2009 vs H1 2008)

Vehicle Finance


-18%

-13%

-8%

-3%

2%

7%

12%

déc-03

juin-04

déc-04

juin-05

déc-05

juin-06

déc-06

juin-07

déc-07

juin-08

déc-08

juin-09

New Cars Used Cars

-14.2%

-16.1%-60%

-40%

-20%

0%

20%

40%

60%

ES GB SE FI IT NO PT FR BE CZ

DE

New Cars Used Cars


-13.9%

-9.8%


Consumer Credit Market in 2009 Following the downward pressure in H1, new consumer credit Following the downward pressure in H1, new consumer credit volumes in Europe will be significantly lower in 2009volumes in Europe will be significantly lower in 2009

However there are a few glimmers of hope: consumer confidence is slightly However there are a few glimmers of hope: consumer confidence is slightly increasing, increased savings rates can be viewed as strong potential for future increasing, increased savings rates can be viewed as strong potential for future consumptionconsumption

Governmental support has been (unequally) available to Governmental support has been (unequally) available to encourage lending in an effort to boost investment & consumptionencourage lending in an effort to boost investment & consumption

Lending conditions have eased but lenders remain concerned Lending conditions have eased but lenders remain concerned about the economic outlook and creditworthinessabout the economic outlook and creditworthiness

At the same time, EU is launching its responsible lending initiativeAt the same time, EU is launching its responsible lending initiative

Currently unclear what this will entail but it should not impede Currently unclear what this will entail but it should not impede lending to households at this crucial timelending to households at this crucial time

Leaseurope & Eurofinas Common Work Streams

Collective Redress

IMD

Anti-discrimination

Consumer Rights Directive

Responsible Lending Initiative

Thank you...

Documents

Richard Knubben Automotive Affairs Adviser ALB National Conference, Bucharest 12 November 2009 A Look at the European Leasing & Consumer Credit Markets