Latin American equipment leasing expands despite headwinds
South America--The equipment leasing and asset finance industry in Latin America grew 18.7% in US dollars, or 38% in local currencies, in 2014, according to the latest Alta LAR 100 report. Growth was significant given the negative forces affecting economies in many Latin American countries, said Rafael Castillo-Triana, CEO of The Alta Group Latin American Region (Alta LAR), which has produced the report annually since 2004.
Results of the report will be discussed at the XIII Latin American Leasing Conference Nov. 12-13 in Miami.
“Latin American economies experienced headwinds driven by the overall decline in the price of commodities, in particular those related to oil, coal and other mining. This led to a sharp and unexpected devaluation of some Latin American currencies,” Castillo-Triana explained. “Therefore, the Latin American leasing industry’s calculated growth in US dollars in 2014 must be contrasted with the growth rate expressed in local currencies to obtain an accurate view.”
“The leasing industry's growth rate in real terms, for example purchasing power parity, was 26% – more than six times the average GDP growth of the Latin American economies,” he noted.
The Alta LAR 100 report also estimates portfolio values and new volume origination per country, tracks leasing trends, and ranks the top 100 leasing companies in the region. Key findings of the most recent report include the following:
- Colombia, with the second largest leasing industry in the region, generated impressive 66% growth in 2014. In fact, the largest leasing company in Latin America is a Colombian lessor, Leasing Bancolombia.
- Other countries experiencing growth included Mexico, Chile, Argentina, Bolivia and Venezuela.
- Despite its rank as the region’s largest leasing industry, Brazil’s industry continues to decline. Portfolio values dropped an estimated 15% in 2014. The Alta LAR 100 report explores reasons why and some bright spots.
- Other countries with declining leasing portfolio values included Peru, Puerto Rico, and Ecuador.
- “Multilatinas” – multinational groups from within the region – lead the industry. European multinational groups show a mixed performance, and the presence of multinationals with US headquarters has continued to decline.
- Chinese companies increased their leasing investments in Latin America through the acquisition of two banks in the top 100.
- Four of the 100 largest leasing companies in Latin America are government owned.