Survey: US Capital Equipment Financing Up 11% In April Vs Year-Ago

Financing volume for business equipment rose 11% in April from a year ago and the delinquency rate on existing equipment loans declined, signaling further improvement in the equipment-financing industry, according to a monthly survey of banks and finance companies released Monday.

Respondents to the Equipment Leasing and Finance Association's survey said they financed $5.1 billion of new equipment last month, compared with $4.6 billion a year ago. March's volume was down from the $6.2 billion reported in March. The $521 billion-a-year commercial leasing and financing industry has been steadily recovering after the U.S. economic recession and limited access to credit sent the industry into a tailspin in 2009. From January through April, survey respondents provided financing for $19.6 billion of equipment purchases, up 27.2% from the same period in 2010.

"All of April's business performance indicators appear to provide evidence that the equipment-finance sector continues to gain momentum," said William Sutton, president of the Washington-based finance association.

Loan portfolio quality indicators in the survey improved in April, suggesting the industry is beginning to overcome the bad loans and tenuous credit of some loan recipients.

Loans and leases past due by more than 30 days amounted to 3.3% of survey respondents' net receivables last month, down 3.6% from a year ago and down from 3.5% in March.

Loan charge-offs amounted to 0.8% of respondents' net receivables in April, down from 1.6% in April 2010, and down from the 1.3% in March. Seventy-six percent of the loan applications submitted during April were approved, up from 69% a year earlier and up one percentage point from March. The year-over-year improvement reflects easing credit standards as lenders displayed improved confidence in loan applicants' business outlooks.

Survey respondents continued to cite construction and trucking as industry sectors within their loan portfolios that are under-performing.

The 25 respondents to the Washington association's survey included banks Wells Fargo & Co. (WFC), Bank of America Corp. (BAC) and Fifth Third Bancorp (FITB); independent financing companies including CIT Group Inc. (CIT); and 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; robert.tita@dowjones.com

Fifth Third Bancorp (NASDAQ:FITB)
Historical Stock Chart
From May 2024 to Jun 2024