CEE leasing market in 2008

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10/10/2009 22:58PU\ING\ING L – GMM\Z20091009_SS

State of play CEE countriesLeasing in Central Eastern Europe

ING Lease, Krzysztof Bielecki

5th of October 2009




8,46%

11,28%16,52%

31,08%

31,20%

34,23%

64,95%

68,85%

103,62%

0% 20% 40% 60% 80% 100% 120%

RU

BG

PL

BA

EE

SK

SICZ

HU

High growth figures for CEE in the past

New lease production growth 2005 - 2006

Based on members reporting in Leaseurope’s 2006 Annual Survey 1




12,20%

0%

10%

20%

30%

40%

50%

60%

2000 2001 2002 2003 2004 2005 2006 2007 2008

Development of new lease production growth inthe CEE

2



10/10/2009 22:58PU\ING\ING L – GMM\Z20091009_SSNew lease production for CEE showed an average

growth of 12,2% in 2008

Data from Leaseurope and Eurostat

<< --5%5%

--5%5% –– 0%0%

0%0% –– 5%5%

> 5> 5--10%10%

GDP growth 2007GDP growth 2007 -- 20082008

59%

-2%

-22%

-2%

-42%

9%

23%

-18%

19%

15%

-35%

41%

Growth new leasingGrowth new leasing

production 2007production 2007 -- 20082008

> 10%> 10%

00 -- 10%10%

--1010 –– 0%0%

<< --10%10%

GDP growth is still high in CEE as well

3



10/10/2009 22:58PU\ING\ING L – GMM\Z20091009_SSThe 2009 outlook for CEE is very different

-74%

-75%

-70%

-38%

-70%

-42%-50%

-70%

-74%

-2%

-65%

-76%

<< --5%5%

--5%5% –– 0%0%

0%0% –– 5%5%

> 5> 5--10%10%

2009 GDP growth2009 GDP growth

Growth new leasingGrowth new leasing

production 1production 1stst half 2009half 2009

> 10%> 10%

00 -- 10%10%

--1010 –– 0%0%

<< --10%10%

Data from country estimates, national leasing associations and Eurostat 4




Developments for some specific CEE countriesPoland

1st quarter 2009 new lease production -39%

A collapse in road freight brought transport finance down by 46%

Czech Republic

1st half 2009 new lease production -50%

Light commercial vehicles and trucks dropped while machinery leasing business gained

Hungary

1st half 2009 new lease production -70%

Commercial vehicles fell by 66%

Upward trend in down payments (+17%)

Romania 1st quarter 2009 new lease production -74%

Industrial equipment and vehicles recorded the highest drop while real estate leasing increased

Major trend is increased financing of second-hand assets, particularly vehicles, at the expense of new ones

Russia

New lease production -18% in 2008 Rail car equipment was hit most in 2008 and dropped by 45%

Forecast 2009 new lease production -65%

In general we see specialised players/captives increase market share. Occasionally RE improves as well (mostly sale andlease back).

Data from own country estimates, national leasing associations and Leasing Life 5




2007 penetration rate high in most CEE countries

0%0% -- 15%15%

15%15% -- 20%20%

20%20% -- 25%25%

> 25%> 25%

Penetration rate showsPenetration rate showsthe amount of investmentthe amount of investment

financed by leasingfinanced by leasing

6Data from Leaseurope, country estimates, national leasing associations and Eurostat



10/10/2009 22:58PU\ING\ING L – GMM\Z20091009_SSIn 2008 the penetration rate drops in most CEE

countries

0%0% -- 15%15%

15%15% -- 20%20%20%20% -- 25%25%

> 25%> 25%

Penetration rate showsPenetration rate shows

the amount of investmentthe amount of investment

financed by leasingfinanced by leasing

7Data from Leaseurope, country estimates, national leasing associations and Eurostat




0

100

200

300

400

500

600

2008Q3 2008Q4 2009Q1 2009Q2

Index of Risk Costs (Q3 2008 = 100)

Risk costs are rising in the CEE2008 - 2009 1st half

Data from own country estimates 8




50

150

250

350

450

550

650

750

850

950

2007Q1

2007Q2

2007Q3

2007Q4

2008Q1

2008Q2

2008Q3

2008Q4

2009Q1

2009Q2

Bond spread

Development creditspreads syndication

Average CDS BB+

Evolution of global market spreads 2007 - 2009 1st half

In basis points

Evolution of lease margins not available but upwardmargin development from mid 2008 onwards

9Data from various sources



10/10/2009 22:58PU\ING\ING L – GMM\Z20091009_SSThe structure of the CEE market changed over time

CEE new lease production per asset category (2006 - 2008)

Amounts in € x billions

2007

19; 41%

3; 7%

12; 26%

12; 26%

2008

13; 26%

13; 25%

21; 41%

4; 8%

Non auto equip

Real estate

Cars

CV

2006

10; 30%

3; 8%

10; 32%

0; 30%

51% 49%

62%

38%

52% 48%

Data from Leaseurope 10




Mitigating vulnerability in the CEE

Geographic scope?

• CEE region is not homogeneous;

there are markets performing betterthen others

Focus on different asset types?

• Cars & LCV more cyclical

• In SME segment, assets are lessimportant

• RE seems to be more immune forthe crisis

Enlarge target customer segments?

• Corporate clients perform better than

average• Public sector

• Product proposition for different clientsegments

Specialise in specific industries?

• Lessors focused on transportation

industry suffer higher losses• Leasing is natural choice for financing

cyclical industries

11




Summarising

• CEE leasing markets are very volatile due to their size and immaturity

• SME customer segment dominates the portfolios of CEE Lessors therefore theindustry is exposed in the early phase of the crisis

• There is a substantial asset concentration on cars and transportation assets as the

consequence of focusing on the client segment

• Diversification could mitigate the risk but only for European players

• Liquidity crisis might be a good moment for Lessors to review their strategies and

portfolios

12




Thank you for your attention

Questions?

13

CEE leasing market in 2008

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