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No Surprise: 2002 an Off Year for Leasing

By Adam J. Schlagman

For the first time in at least 7 years, the equipment leasing industry has failed to recognize net portfolio growth for a calendar year, according to the Equipment Leasing Association's Quarterly Performance Indicators Report (PIR). Although the participants in the survey differ from year to year, it is not an encouraging sign that portfolio growth for the fourth quarter of 2002 decreased 1.7% from the same period in 2001. In line with the weak economic climate, disappointing results were also seen in employment and charge-offs, while new business ended the year up slightly after an otherwise down year.

Total net portfolio at the end of the fourth quarter of 2001 was $58.6 billion, which then dropped to $55.7 billion in the first and second quarters of 2002. Portfolio growth then fell to the 12-month low of $54.4 billion in the third quarter of 2002 before rebounding to end the year at $57.6 billion. The industry's 1.7% decrease over the past 12 months marked not only the first overall decrease in portfolio growth in recent years, but the past year also presented another unusual statistic: the first time there has been no portfolio growth over a period of three quarters. Typically there is a decrease in portfolio growth in the first quarter of a new year following the flurry of year-end activity, but this year there was no quick rebound from the first quarter drop-off. In 2002, the rebound did not occur until year-end and at that, the recovery was incomplete, leaving the industry with negative annual growth.

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