INTERVIEW - Serbia's leasing sector to keep growing in 2018

INTERVIEW - Serbia's leasing sector to keep growing in 2018 anuphadit/Shutterstock.com

BELGRADE (Serbia), May 29 (SeeNews) - The aggregate value of new leasing contracts in Serbia rose by 12% on the year in the first quarter and is expected to keep a similar pace of growth throughout 2018, a senior industry official told SeeNews.

The segment of passenger cars, commercial vehicles and trucks contributed the most to the steady growth of Serbia's leasing sector in the last few years, the secretary general of the country's association of leasing companies, ALCS, Teodora Milenkovic, said in an e-mailed interview with SeeNews. 

"We are doing analyses every four months, while we also exchange data with Leaseurope and both of our associations are expecting the growth to continue," Milenkovic said. 

ALCS is a member of the European federation of leasing company associations, Leaseurope, which brings together 44 member associations in 34 countries, enabling the exchange of internationally accepted standards and best practices. Leaseurope represents approximately 92% of the European leasing market, according to ALCS data.

The aggregate value of new leasing contracts signed by the members of ALCS in 2017 rose by 27.2% to 430 million euro ($500 million) - the highest annual value in the last five years, the association said in February. The highest share of the value of new leasing contracts, of 184 million euro, was recorded in the segment of passenger cars. The leasing contracts for commercial vehicles and trucks signed in 2017 had a total value of 165 million euro.

"The transport and IT sectors are the most active and are followed by the wholesale and retail industry," Milenkovic explained.

Leasing growth in Serbia is tightly connected to the economic cycle, she added.

"In the last few years, we noticed increased economic activity which resulted in stronger needs of companies to invest. Furthermore, leasing is recognised as the optimal solution for small and medium-sized enterprises (SMEs) which are the main driver of our economy. This can be applied to the passenger car segment, too."

One of the goals of ALCS is to promote leasing as the most suitable source of financing, to communicate its advantages compared to other sources, and to improve the service in order to make it more convenient for SMEs, Milenkovic said.

Still, the sector faces some regulatory setbacks that limit the spectrum of available leasing products. Therefore, the association has launched a drive to change in the leasing law in order to expand the offer, she noted.

The initiative, launched in 2015 with the support of the United States Agency for International Development (USAID), is aimed at enabling a long-term lease of assets, which is expected to have a positive impact on operational leasing and lending to companies. In November, the president of ALCS, Boris Stevic, said the operational leasing segment is very underdeveloped in Serbia, because the principles of its functioning are not clear.

"It is very important to emphasize that changes to the law should bring improved legal protection for the leasing companies. In addition, the fixed capital requirements for the companies that want to enter the segment of real estate financial leasing should be also reduced," Milenkovic opined.

The 16 financial leasing companies operating in Serbia had total assets of 75.3 billion dinars ($742 million/638 million euro) at the end of December, up 4.7%, according to data from Serbia's central bank. The biggest player in the sector was Intesa Leasing with a market share by assets of 19%, followed by Sogelease Srbija with 17.6%, Raiffeisen Leasing with 12.7%, and UniCredit Leasing with 12.0%.

All four biggest leasing companies in Serbia are members of ALCS, founded in June 2004 as a non-profit organisation as part of the South-East Europe Enterprise Development (SEED), a multi-donor initiative managed by the International Finance Corporation (IFC).

ALCS is working to improve, promote and develop the leasing industry in Serbia, creating a better business environment while also improving the legal framework of the sector, according to data from the website of the association.

($ = 0.860199 euro)

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