Wells Fargo (NYSE:WFC)
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A survey of credit providers showed that loans and leases for business equipment in the U.S. rose nearly 20% in April from a year earlier, suggesting that companies are continuing to accelerate their capital spending.
Respondents to the Equipment Leasing and Finance Association's monthly survey said they financed $6.1 billion of new equipment last month, up from $5.1 billion in the year-earlier period. April's volume was down 10% from March, the highest month for spending so far this year. Since the beginning of 2012, spending is up 16.8% at $22.9 billion.
April survey results show that spending on equipment continues to outpace the performance of the slowly expanding U.S. economy. Companies have been replacing worn-out or obsolete equipment after deferring such activity during the U.S. economic recession in 2008 and the subsequent sluggish recovery.
"The ongoing historically low interest rate environment has made today an attractive time to replace and finance that equipment," said Judson Snyder, president of BMO Harris Equipment Finance in Milwaukee. "We are also beginning to see requests for equipment relating to expansion and new contracts in the general manufacturing sector."
Credit portfolio quality measured by the survey improved from a year earlier and was mostly stable on a month-to-month basis. Loans and leases past due by more than 30 days fell to 2.7% of survey respondents' net receivables in April, from 3.3% a year earlier and down slightly from 2.8% in March.
Charge-offs amounted to 0.6% of respondents' net receivables last month, down from 0.8% a year earlier and down from 0.7% in March. The approval rate for loans and leases was 76.4% in April, compared with 75.6% a year earlier and 78.4% in March. Survey respondents continued to cite construction and trucking as the industry sectors within their loan portfolios that are underperforming.
A monthly confidence index of the U.S. capital-equipment finance industry slipped to 59.2 in May from 62.1 in April.
The 25 respondents to the association's survey included banks Wells Fargo & Co. (WFC), Bank of America Corp. (BAC) and Fifth Third Bancorp (FITB), as well as finance units for manufacturers Caterpillar Inc. (CAT), Deere & Co. (DE), Volvo Group and Dell Inc. (DELL).
-By Bob Tita, Dow Jones Newswires; 312-750-4129; firstname.lastname@example.org