The Romanian leasing market, that is the cumulated value of all contracts, will reach 1.5 billion euros in 2002. This forecast was repeated all through last year by the players and analysts from the Romanian leasing market. But they were proved wrong.
Not only did the market fail to reach the estimated levels, it even went down, according to the National Union of Leasing Companies (UNSLR).
"The Romanian market amounted to 900 million euros last year," said Cornel Coca Constantinescu, UNSLR chairman. "However, the value of contracts concluded by the UNSLR members went up and came to account for 70% of the total," Constantinescu added.
According to the UNSLR official, Law 414/2002 on profit tax is to blame for this weak market evolution.
"Under article 10, the law imposed restrictions on the interest deductibility for the leasing companies and the end users. This led to a plunge in the activity of leasing companies, since the end users turned to other financing options," the UNSLR chairman believes.
After explaining the situation to the Finance Ministry and the National Bank, leasing companies were finally granted a status similar to that of credit institutions.
"This was stipulated in Emergency Ordinance 36/2003, which does not apply retroactively, though," Constantinescu states.
Consequently, market players have big plans for the Romanian leasing this year. Last year's forecasts are reiterated. "We believe the market will reach 1.5 billion euros this year," the UNSLR chairman says.
Where will this growth stem from?
"Many banks and financial groups have entered the market lately and they will help boost activity in this field," says Constantinescu, who is also the CEO of Romexterra Leasing, the company established this year by Romexterra bank.
Real estate leasing, which should have fuelled last year's growth, will only develop this year and the next.
"Real estate leasing accounts for less than 1% of the market at the moment, but the outlook is good, especially since the banks are also building mortgage loan systems," the UNSLR chairman added.
According to Constantinescu, the increased number of leasing contracts will not trigger soaring profits.
"The leasing companies are working with increasingly narrower margins, as the rates are going down and, in order to attain the profit targets, they must boost the number of contracts. This is the explanation behind the 1.5bn euros forecast for this year," Constantinescu claims.
There are thousands of trade companies which also operate in leasing and have more than 500 million ROL in capital on the Romanian market.
ionut.bonoiu@zf.ro
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