SPECIALISED FINANCING SUPPORTS THE PORTUGUESE ECONOMY
After a 1st quarter in 2020 that indicated good growth in specialised financing in Portugal, the Covid19 pandemic caused a sharp reduction in the economic activity of several sectors that are traditionally Customers of specialised financing products in the 2nd quarter. Specialised Financing maintained, however, its support for the national economy and closed the 1st half of 2020 with falls below those expected, as shown by the estimates of the Portuguese Leasing, Factoring and Renting Association (ALF).
In the first six months of 2020, the final results of the Renting sector show a drop of 13.7% both in the number of vehicles acquired (12,669 vehicles, of which 10,201 were passenger cars and 2,468 were commercial vehicles) and in production (258 million Euros).
Despite the drop in new production, the total fleet managed by the Renting companies continued to show a positive evolution, reaching 119 thousand vehicles, worth 1.9 billion Euros, resulting in a growth of 3.0% and 5.5% respectively.
The Leasing sector, in the first half of 2020, supported investments worth 1.13 billion Euros, a 25.7% reduction when compared to the same period in the previous year, when the amount of new contracts signed reached 1.53 billion Euros, according to ALF estimates.
Leasing accounted for 756 million Euros in investments, a fall of 31% compared to the first half of 2019, when the value amounted to 1.1 billion Euros. Car Leasing was the largest contributor to this figure, accounting for 501 million Euros, associated with 14,991 vehicles, of which 13,052 were light vehicles (363 million Euros) and 1,939 were heavy vehicles (138 million Euros).
Equipment Leasing was responsible for 3,754 new contracts worth 255 million Euros.
The smallest drop was felt in Real Estate Finance Leasing, with a reduction of 12.1%. In the first six months of 2020, this product of specialised financing supported investments worth almost 378 million Euros, while in the same period last year it had supported 430 million Euros. The vast majority (87%) of Leasing Real Estate contracts were signed by companies or public entities, for a total of 329 million Euros, with individuals and professionals representing contracts worth 49 million Euros (13%).
Overall, the Factoring sector fell by 9.0% compared to the first half of 2019, with ALF member institutions taking up 15.1 billion Euros in invoices in the first six months of 2020.
Domestic Factoring figures show a decrease of 12% compared to the same period last year, with 7.1 billion Euros in credits taken. In Confirming (a service in which the factoring institution makes payment to its client's suppliers, who may request the payment in advance) there was a decrease of 0.3% compared to last year, resulting in 6.1 billion Euros.
On the international side, Export Factoring registered 1.8 billion Euros in credits taken, a decrease of 20.8% compared to the previous year, and Import Factoring 93 million, a decrease of 24.1%.
Regarding the challenges facing the sector, the president of ALF, Alexandre Santos, highlights: "This first half of 2020 shows a performance of the three sectors we represent in line with forecasts due to the paralysis of the economy following the Pandemic of COVID-19, which strongly impacted the 2nd quarter. The extremely uncertain economic environment is reflected in business investment, but we are nevertheless optimistic about a recovery once the situation stabilises with the help of an 'accommodative' monetary policy by the European Commission. However, in these more turbulent times, the priority of the ALF members remains: to collaborate and support companies, particularly SMEs, so that they can face the serious economic recession that is expected".
The spokesman for the association, which represents almost 100% of the sector, adds: "ALF members are reacting very positively, adapting to these unique moments, creating new opportunities and new services to maintain the support provided to the national business structure, at this time when they need it most".
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