Signatulin M.
Estimation of Leasing
Companies’ Portfolio Risk
Last years in
Investors are to be firmly convinced
about their expected profit from leasing projects implementation required to
clear costs, to pay off debts and to provide capital investment recoupment.
Evidently investment leasing projects are always exposed by the share of risk
not to gain estimated profit or to loose capital being invested.
Gurantees for leasing companies can
be not only mortgage liabilities but also confidence availability in possible
existence of successful market for lesee’s production, therefore assurance in
general project vitality.
Leasing company portfolio constitutes
the set of leasing contracts, which have the parameters of risk and income [1],
able to change under influences of:
- the
portfolio structure change. For example, sale of the assets being transferred
in leasing, with due operation term will influence on portfolio value reduction
and profitability raise of the deal incase of such sale of price higher than
the residual value of such property. On the other hand, new fixed assets
aquiring and their further transaction in leasing will result in general
portfolio value increase.
-
the change of risk and
profitability of assets forming portfolio in view of changes of such assets and
other states of the market. For example, lessee can face short-term changes in
the states of the market, reductuion in demand of produced output or its prices
fall. It will negatively effect the solvency of lessee
and cause the hold back of leasing payments reducing general profitability of
portfolio of leasing company.
In the majority of cases portfolio
risk appears as a result of noneffective division of leasing contracts [2].
Those leasing companies that practice specialized approach to running their
businesses are greatly risky in contrast to the firms that promoted themselves
as universal ones. It is connected, for example, with work of a lessor in one
branch of economic activity or one region with definite type of assets or
specific class of clients.
For
estimation of portfolio risks it is required to imlement portfolio
diversification mechanisms of leasing contracts. Companies-lessors are
specialized on the deals of the fixed assets transfers to the specific branch
of economic activity, on the specific type of such assets or according to the
regional allocation.
For branch specialization diversification
and reduction of risks arising it is necessary to analyze in details
present-day situation and development dynamics of this or that industry. Leasing
companies transfering in leasing, for example, agricultural machinery, auto
transport, computer equipment to the firms occupying in the sphere of
agricultural industry are run risks of lessee insolvency as a result of failure
of crops or seasonal fluctuations of demand for production. For this it is
necessary to learn the figures of of the production
cycle, the state of the fixed assets, presence of monopolists and big
investors, also competitors-lessors, level of influence and interests of the
country in this field. JSC NSC “Ukragroleasing” can be an example of such large
leasing companies in Ukraine, which deliver to the farming enterprises not only
equipment of special agricultural purpose such as grain harvester machines,
tractors, spray machines, ploughs and seeding machines, but also for servicing
of administrative managarial staff such as computer equipment, cars and others.
Deversification
of leasing companies specialized on the specific type of fixed assets is
required because of dependence of such property transfering in leasing upon the
state policy, taxation system, demand fluctuations and others. The most popular
fixed assets of Ukrainian companies-lessors are cars and cargo-carrying
vehicles as the most liquid items easily selling on the secondary market [3].
But protectionism of the state that took place in 2005 in the automobile
industry brought to sudden leap of customs on the imported vehicles that
resulted in lessors’ activities specialized on leasing of the transport of
foreign production.
Concentration
of leasing companies on one region (segment) according to the place of their
location leads to the necessity of regional specialization
diversification. Such diversification can result in the unsteady state of the
company as a consequence of the advent of powerful competitor, change of the
policy of local authorities, limited range of clients-lessees in the borders of
the region. Acoording to the data of the State Statistics Department leasing
companies concentrated in the center of the most industrially attractive
regions of
Based
on the mentioned above it is followed that risks which appear to be generated
during specific leasing agreement realization can not be examined individually.
Before signing the next leasing contract, leasing company is to analyze its
influence on the change of profitability and level of the impact of investment
risks on the total summarized size of leasing portfolio. For reducing the grade
of portfolio risk influence leasing companies are required to use the mechanism
of diversification of the branch specialization, specialization on the specific
type of fixed assets and regional specialization.
1.
Doropheeva
O. Innovations in Risk Management of Leasing Activity Financing // Scientific
Bulletin of the
2.
Khobta V., Gayduck V. Problems And Perspectives of Leasing Development in
3.
Express
Results of Leasing Market Research in Ukraine 2004-2005. Sociological Research // Information
Analytical Journal “Leasing in