On May 21, a round table discussion was held on “Financial leasing in Ukraine: current state and prospects”, where key representatives of the market and regulatory bodies summarized 2018, discussed problematic issues as well as prospects for the development of the industry.
Oleksandr Zaletov, a member of the National Financial Services Commission, reported that financial leasing market volume grew by 67.9% in 2018 to UAH 21.5 billion. “Deregulation has led to an increase in demand for investment in leasing organizations, and this has expanded the leasing range of financial leasing not only to transport, which has been leading for the last five years, but also to such an important sector of the economy as agriculture,” said Alexander Zaletov. At the same time, the problem of faster market development is the financing of financial leasing companies. «The problem is that there are not enough issues of bonds of leasing companies, the loans are quite expensive. In this case, the money are not rushing to this market because of a number of unresolved problems. In order to get funding into this market, it is necessary to protect the lessor, as there are issues related to fraud by some lessees. And this problem is much deeper, it must be solved by adopting a new version of the law on financial leasing, ” Zaletov emphasized.
Popular industries include transport and agriculture, as well as construction, mining, metallurgy, services, including medicine. “These are the main areas of financial leasing,” the official summarized.
Maryna Masich, CEO of the Association “Ukrainian Union of Lessors”, confirmed that the volume of new business of the Association’s member companies is growing rapidly. “The market is developing very actively. According to our data, over the past year we have increased by 63% compared to the previous year, and before that – by 50%. This is the highest figure among other segments of the financial market and the industry’s potential is still extremely powerful, ” said Maryna Masich during the discussion. In her opinion, the disclosure of potential is hindered, above all, by the low level of awareness of the essence of financial leasing, its capabilities and advantages. “Throughout the world, the leasing market is developing thanks to preferences and benefits. You can encourage both the lessor and the lessee, and it may be even better. We do not ask for benefits for ourselves, we ask to support the program of encouragement of those who will use the leasing, will update fixed assets, especially agrarians »- emphasized Maryna Masich.
The Association, with the support of the USAID Financial Sector Transformation Project, conducts extensive educational work for small and medium-sized businesses as well as individuals, including in the form of seminars, trainings and fairs in major cities of Ukraine. Penetration of Ukrainian leasing (the level of penetration into capital investment) is only 6% while in the European countries this figure reaches 40% and in the EU leaders more than 80%.
Ms. Masich described as a “good sign” that several leasing companies had issued bonds, and the EBRD paid special attention to Ukrainian leasing. “The recipient of the first ever loan in UAH was the leasing company OTP Leasing, which received UAH 500 million from the EBRD for the development of small and medium-sized businesses, ”says Masich. This is a signal for foreign investors that in Ukraine it is possible and necessary to work, in particular, with the Ukrainian leasing.
Ms. Masich also expressed her hope that the Draft Law on Financial Leasing No. 6395, which has been under consideration by the Verkhovna Rada for the third year, will be finally adopted by the VR.
Ivan Vyshnevsky, Head of Development for Non-Banking Financial Institutions at USAID Financial Sector Transformation Project, spoke about global leasing trends. For example, leasing of equipment is already beginning to be dominated by auto leasing, which in the EU countries is over 80%. In Japan, for example, only 30% of auto leasing and the rest is IT equipment. Europe today focused on individuals. In Ukraine, consumer leasing is also gaining significant growth. So, the total value of assets for which financial leasing agreements were concluded with individuals by non-bank lessors for 2018 increased by 26% to UAH 871.9 million. And the banking portfolio of contracts with individuals (reduced by the amount of reserves) has more than tripled from UAH 180.8 million. in 2017, to UAH 600.8 million. in 2018.
Representatives of the leading banks spoke about the banking specifics of the leasing business and appealed to the regulator to relax the regulatory requirements for the lessor banks in order to facilitate equal competition with the leasing companies.
A new member of the Association, PUMB Bank also sees great possibilities for financial leasing, based on the data of their research. “We are in the leasing market for a year and a half. In 2018, we made 159 million UAH in sales, ”said Vladimir Rudenko, Head of Financial Leasing Department of PUMB. All the participants of the round table, without exception, share the opinion that leasing can be a catalyst for the development of the state economy with the proper support of the Government and active promotion of this service.
Association “Ukrainian Union of Lessors” – established in 2005 as a voluntary association of professional participants in the leasing market. The main purpose of the Association is “to promote the development of an open and equitable market for operational and financial leasing in Ukraine by coordinating the activities of united enterprises to protect common interests.” At the same time, it was announced that the union would not serve to reach any agreement among its members on the distribution of the leasing market.
The members of the Association are 25 leading players, representing more than 80% of the market. Membership in the Association automatically confirms the credible image of the lessor, which operates in accordance with the Code of Ethics of the Association.