By Bob Tita
A survey of credit providers showed that loans and leases for
business equipment in the U.S. rose 21% in May from a year ago and
loan delinquencies dropped to their lowest level in six months.
Respondents to the Equipment Leasing and Finance Association's
monthly survey published Thursday said they financed $7.5 billion
of new equipment last month, up from $6.2 billion in May 2012.
Financed purchases in May were flat with April's $7.5 billion. For
the year, business volume is up 11% over the same time in 2012.
Credit-portfolio quality measured by the survey continued to
reflect the strengthening financial condition of borrowers.
Loans and leases past due by more than 30 days dropped to 1.6%
of survey respondents' net receivables in May, down from 2.7% in
May 2012 and 2% in April, March and February of this year.
Delinquencies last fell to 1.6% in December, which was a lowest
since the survey was launched in 2005.
Charge-offs amounted to 0.3% of respondents' net receivables
last month, down from 0.5% a year earlier, but unchanged from 0.3%
in both April and March. The approval rate for loan and lease
applications was 78.8% in May, compared with 78.3% year earlier and
77.2% in April.
Observers said last month's robust financing volume, combined
with low delinquency rate and loan charge offs, suggest that
businesses aren't having difficulty meeting their loan and lease
obligations after elevated levels of borrowing.
"We hope that these trends will continue into the summer," said
William Sutton, president of the Washington-based leasing and
finance association. "American businesses are better able to meet
their financial obligations, creating a favorable environment for
additional capital investment and job creation."
The Equipment Leasing and Finance Foundation's confidence index
for June rose to 57.3 from 56.7 in May, signaling participants'
improving sentiment about spending.
The 25 respondents to the association's survey included banks
Wells Fargo & Co. (WFC), Bank of America Corp. (BAC) and Fifth
Third Bancorp (FITB), as well as finance units for manufacturers
Caterpillar Inc. (CAT), Deere & Co.(DE), Volvo Group, Dell Inc.
(DELL) and Siemens AG (SIE-ETR)
Write to Bob Tita at robert.tita@dowjones.com
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