What is in Store for Belarus' Leasing Market?
The demand for leasing services in the corporate segment has shrunk while individuals are now more willing to use leasing instruments
The leasing market in Belarus is going through an intricate period. On the one hand, potential lessees are now struggling and the resources needed by leasing companies are still expensive. On the other hand, the leasing sector has extended its reach into the retail segment. The National Bank keeps removing barriers for business working in close cooperation with the market players. How is the leasing market doing now, and what are the prospects for the future?
More Transparent and Targeted?
Two years ago, Decree No.99 of 25 February 2014 authorized the National Bank to regulate leasing operations and to secure law enforcement in this field. The document sets forth the terms and conditions of conducting leasing operations. The most important thing about the decree is that it stipulates the establishment of a register of leasing companies and the possibility of leasing property to individuals. What has changed since the new document was enforced?
“The leasing market became more systematized, measurable and transparent. In particular, in order to make this business more transparent and understandable, leasing companies were instructed to post the information about their activities and their financial standing on their websites,” said Alexander Dedkov, head of the leasing operations division at the National Bank.
According to the National Bank, as of 1 July 2016, the register featured 96 leasing companies. Besides, one foreign company provided leasing services in Belarus via its Belarusian office. The 2015 Belarusian leasing market review compiled by the Belarusian Association of Leasing Companies indicates that the biggest leasing companies included Promagroleasing, ASB Leasing, Reiffeisen-leasing, RESOBelleasing, Global Leasing, Aktivleasing, Agroleasing, Rietumu Leasing, Micro Leasing, and Belbusinessleasing. The top five account for over two thirds of the overall new business (contracts signed in 2015) and the lease portfolio.
The leasing companies set up with the use of bank capital (there are six of them in the abovementioned list) remain the biggest market players. They account for over 60% of assets of all the lessors. At the same time, the fastest growing leasing companies in 2015 were Intellect Leasing, Status Leasing, Global Leasing, and Open Line. The companies with the highest new business volume growth include Global Leasing, Unicomleasing, Status Leasing, Open Line and Intellect Leasing.
One of the most important indicators of the leasing market development is the value of lease portfolio, which reflects the amount of liabilities of lessees. As of 1 January 2016, the aggregate lease portfolio of companies and banks made up almost Br26 trillion, up by 32% over 1 January 2015. The robust growth of the lease portfolio amidst the shrinking volume of new business has an explanation. In previous years, up to 75% of leasing contracts were denominated in foreign currency, therefore any change in the ruble exchange rate necessitated revision of liabilities stipulated by contracts.
In 2015 the cost of contracts signed by the leasing companies featured in the National Bank register amounted to Br10.5 trillion (5.9% of them were concluded with individuals and 94.1% with legal entities and self-