The UK asset finance market reached a record level during 2018 with new business totalling almost £33 billion.
The rise of 3% compared to 2017 represents the eighth consecutive year of growth for the industry, according to the Finance and Leasing Association, and comes despite the disruption of ongoing Brexit negotiations.
Asset finance new business (primarily leasing and hire purchase) grew in December by 7% compared with the same month in 2017, and by 5% during Q4 2018 as a whole.
The plant and machinery finance and commercial vehicle finance sectors reported new business up in December by 29% and 18% respectively, compared with 2017, while new finance for IT equipment was up by 16% over the same period.
Direct finance was the main form of funding approved during the year, accounting for £15.3 billion, a rise of 2% year-on-year, while sales finance was down 1% to £9.1 billion. Broker-introduced finance grew strongly, rising 12% year-on-year to £6 billion.
Lease/hire purchase remains the most popular form of funding, accounting for more than £18 billion of finance last year, a rise of 8% compared to 2017.
Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The temporary increase in the Annual Investment Allowance for plant and machinery from January 1, 2019 announced in the last Budget should support further growth in this sector over the next few months.”
During 2018, FLA members provided a total of £137 billion of new finance to UK businesses and households. FLA members financed around third of UK investment in machinery, equipment and purchased software in the UK in 2018.
UK asset finance market 2018
| Dec 18 | % change on
prev yr |
3 mths to
Dec 18 |
% change on
prev yr |
12 mths to
Dec 18 |
% change on
prev yr |
|
|---|---|---|---|---|---|---|
| Total FLA asset finance (£m) | 2,788 | +7 | 8,236 | +5 | 32,571 | +3 |
| Total excluding high value (£m) | 2,501 | +8 | 7,656 | +4 | 30,472 | +3 |
| By asset: | ||||||
| Plant and machinery finance (£m) | 660 | +29 | 1,786 | +18 | 6,849 | +5 |
| Commercial vehicle finance (£m) | 673 | +18 | 2,218 | +14 | 7,984 | +7 |
| IT equipment finance (£m) | 342 | +16 | 674 | -9 | 2,714 | +15 |
| Business equipment finance (£m) | 247 | +11 | 735 | +16 | 2,659 | +4 |
| Car finance (£m) | 617 | +3 | 2,040 | -7 | 8,893 | -5 |
| Aircraft, ships and rolling stock finance (£m) | 30 | -17 | 123 | +105 | 312 | -43 |
| By channel: | ||||||
| Direct finance (£m) | 1,268 | +13 | 3,833 | +5 | 15,259 | +2 |
| Broker-introduced finance (£m) | 502 | +8 | 1,629 | +12 | 6,090 | +12 |
| Sales finance (£m) | 731 | -1 | 2,195 | -5 | 9,123 | -1 |
| By product: | ||||||
| Finance leasing (£m) | 381 | -4 | 1,134 | +11 | 4,094 | +8 |
| Operating leasing (£m) | 511 | 0 | 1,531 | -6 | 5,981 | -11 |
| Lease/Hire purchase (£m) | 1,532 | +28 | 4,658 | +13 | 18,158 | +8 |
| Other finance (£m) | 249 | -3 | 637 | -5 | 3,052 | -3 |
Source: Asset Finance International