Equipment leasing and asset finance is expanding in many Latin American countries, but the stark decline of Brazil’s leasing market in recent years has affected overall portfolio values in the region, according to the Alta LAR 100 report.
The Alta LAR 100, produced by The Alta Group Latin American Region (Alta LAR) since 2004, identifies industry trends, estimates country-by-country portfolio values, and ranks the region’s top 100 leasing companies. Alta is the leading global consultancy focused on equipment leasing and asset finance.
The firm introduced the latest Alta LAR 100 at its recent Latin American Leasing Conference, estimating that the region’s overall portfolio value in 2012 decreased 12%. Brazil’s, which represents two-fifths of the Latin American leasing market, fell 39%. Taking Brazil out of the equation, overall portfolio values would have increased 9.8%.
“Lessors in Brazil are victims of their own success,” wrote Rafael Castillo-Triana, CEO of Alta LAR. “For more than 40 years, the leasing industry has enjoyed a favorable legal and tax environment. As a result, leasing became a tool to provide motor vehicle financing, mainly to consumers. The leasing industry was not motivated to innovate or differentiate their offerings.” The report cites several specific developments that have contributed to Brazil’s falling numbers.
“Fortunately for the rest of Latin America, there are still dynamic economies that use leasing as a tool to generate more capital investment….” Castillo-Triana added. “These are mainly the leasing industries in Mexico, Chile, Peru and Colombia. It is interesting and satisfying to mention that countries such as Bolivia and Costa Rica are also joining that team, at a lower scale but moving in the right direction.”
Among other findings, the report noted that four leasing companies that made the latest ranking are government owned. Additionally, most multinational groups active in Latin American leasing are “multilatinas” from the region, namely Itau, Bancolombia, and GrupoAval. European-based multinationals showed a mixed performance in 2012, the presence of U.S.-headquartered multinationals declined significantly, and a relative newcomer, Canada’s Scotiabank, gained ground.
To download a complimentary summary of the report, click here.