Leasing sector: Steps towards sustainable growth

The global leasing sector reached 884 billion dollar in 2013. North America (335.1 billion dollar), Europe (333.6 billion dollar) and (with the impact of China) Asia (177.3 billion dollar) represent the top 3 regions respectively. Turkey has 7.6 billion dollar transaction volume.

Turkey, with a penetration rate of 0.63 (ratio of leasing transaction volume to gross domestic income), currently ranks 41st out of 50 countries and the sector size is below its potential.

Turkish leasing sector consists of 31 leasing companies and serves 50.000 customers with its 1500 employees. The top 10 companies by size are subsidiaries of banks which results in banking and leasing operations moving in line with each other in Turkey compared to other countries. The report indicates that although Turkish leasing sector grew with the credit market expansion before 2007, since the global crisis, the sector could not achieve the same success especially due to the changes in tax regulations.

It is expected that leasing sector which has regained acceleration since 2013 will double its volume and reach 33 billion TL between 2014 and 2018 in Turkey. In the same time period, the sector asset size will reach 64 billion TL and the net lease receivables will reach 41 billion TL. 

Globally, the industries where leasing is most commonly utilized range in a wide spectrum of industries such as manufacturing, agriculture, public, mining, construction, and health care. On the other hand, the construction and real estate sectors represent the half of the leasing activities in Turkey. As there will be difficulties in access to funding and capital investments by companies in 2015 and onwards, it is important that leasing is not limited to the sectors which are highly sensitive to economic conditions and be leveraged in strategic sectors that are critical for Turkey’s sustainable growth.

The report indicates that the growth of leasing sector will have positive impact on small to medium sized enterprises as well as development of competitive sectors.