UZBEKISTAN LEASING SECTOR OVERVIEW AT YEAR-END 2016 Uzbekistan Lessors Association Tashkent 2017
Macroeconomic Indicators Following the results of the current year the gain in gross domestic product has made 7.8%. Industry volume has increased by 6.6%. Scopes of construction works have increased by 12.5%, services by 12.5%. The state budget is performed with surplus at the rate of 0.1% to GDP. Rate of inflation has not exceeded predicted parameters and has made 5.7%. Leasing Sector Overview Increase in volume of new leasing transactions for 2016 has made 14%, and leasing portfolio has shown a growth more than by 5.5%. For the first time in 20 years of leasing market existence the process equipment sector has pulled ahead with a market share of 36%. In preparation of Uzbekistan lessors rating, based on the data of the State Statistics Committee of the Republic of Uzbekistan, it has been established that in 2016 there were registered 126 organizations rendering leasing services. However, 69 organizations were actively engaged in leasing transactions, including 21 commercial banks. Other lessors were engaged in monitoring and redemption of leasing payments for the projects concluded in prior years. New Leasing Transactions Volume Growth Dynamics (billion UZS) The leasing market as one of the economy activity indices has shown active growth, in particular, the lessors have concluded more than 5540 new leasing transactions, and their volume, however, has made more than 973.1 billion UZS and has increased by 121.9 billion UZS as compared to 2015. In the first half of 2016 the lessors have concluded leasing transactions to the amount of 430.4 billion UZS, in the second half the lessors became more active and have increased volume by 542.7 billion UZS.
Leasing Transactions Portfolio Growth Dynamics (trillion UZS) Based on the analytical data provided by the lessors, including banks, the aggregate leasing transactions portfolio has made 2 trillion 590 billion UZS, and as compared to 2015 this indicator has increased by 5.5%. Leasing portfolio of commercial banks has made 973.1 billion UZS. New Leasing Transactions Number Dynamics The essential trend defining current development of the domestic leasing market is the fact that the small business and private enterprise sector aspires to work on the modern and hitech liquid equipment which can be provided subject to leasing conditions. In other words, in speaking of growing value of leasing demand as effective type of financial services, we, first of all, suppose a growth of economic activity of our republic, growth of entrepreneurship currently interested not so much in receipt of financial resources, as in means of production which are provided by leasing.
Players Leasing Market Share New leasing transactions volume growth trend is distributed among leasing market players as follows: Leasing companies 2011 2012 2013 2014 2015 2016 - property value, billion UZS 325,1 381,0 560,2 592,6 668,2 630,8 - share 67,1% 64,5% 69,6% 71,7% 78,5% 64,8% Banks - property value, billion UZS 159,4 209,6 244,9 233,6 183,0 342,3 - share 32,9% 35,5% 30,4% 28,3% 21,5% 35,2% Total 484,5 590,6 805,2 826,2 851,2 973,1 As in prior years, at year-end 2016 the leasing market distribution trend among the lessors has remained, and 65% of market is owned by leasing companies. As for commercial banks, in comparison with results of 2015, banks have increased scope of leasing services. As a result, their market share has increased up to 35.2%. Restraint from commercial banks can be characterized by the applicable legislation in accordance with which the amount of leasing transactions of commercial banks shall not exceed 25% of the first level capital (Tier 1). TOP-5 of Leasing Companies No. Name of Leasing Company Volume of Leasing Transactions (billion UZS) 1 JSLC O zagrolizing 273,7 2 LC O zavtosanoat-leasing LLC 80,1 3 JSC Uzbek Leasing International А.О. 74,7 4 FE Taiba Leasing LLC 24,9 5 SLC O zmeliomashlizing 20,5 473.9 billion UZS or 48.7% of leasing market in terms of new leasing transactions concluded in 2016 is accounted for five leasing companies above, three of which are the state specialized leasing companies. JSC Uzbek Leasing International A.O. and FE Taiba Leasing LLC are the full-range leasing companies established with the participation of foreign founders and focused on small and medium private enterprise development. TOP-5 of Banks No. Name of Bank 1 АКБ «Kapital Bank» 117,9 2 АКБ «Asaka Bank» 54,9 3 АКБ «Qishloq Qurilish Bank» 36,1 4 АКБ «KDB Bank Uzbekistan» 27,8 5 АКБ «Hamkorbank» 26,9 Volume of Leasing Transactions (billion UZS) Analyzing Uzbekistan leasing market it should be noted that JSCB Kapital Bank not only has lead for the first time the bank ranking by volume of new leasing transactions, but also became the second largest lessor in the market. In the accounting year JSCB Kapital Bank has concluded 41 leasing transactions for an overall amount of 117.9 billion UZS, where imported equipment has acted as subject of leasing. The projects are financed by bank at its own cost and expense.
Sources of Lessors Financing Based on the data provided by the lessors it turns out that more than half of concluded leasing transactions have been financed by proprietary funds of the lessors and only 30% on account of the capital borrowed from banks. This trend may be caused by the reason that the capital borrowed from banks as credit turn out more expensive for lessee, consequently, the lessors, in particular, leasing companies, prefer to finance projects at their own cost and expense. Distribution of Leasing Transactions by Asset Types The process equipment sector was for the first time in the lead in 2016 by all asset types with an indicator of 36%. This points to the fact that currently a leasing serves for enterprises of any type of ownership as financial resources optimization wherein, as business class activity practice shows, there is trouble-free upgradeability of the process equipment, and so to restore or even to increase production potential. Construction machinery and construction materials manufacturing equipment is in special demand in the process equipment market
115.5 billion UZS, food manufacturing equipment 29.2 billion UZS and textile equipment 26.9 billion UZS. JSCB Kapital Bank is in the lead among the lessors by volume of the leased process equipment facilities (47.6 billion UZS), JSC Uzbek Leasing International А.О (46.2 billion UZS), and then JSCB KDB Bank Uzbekistan (27.8 billion UZS). Immediately after the process equipment, the agricultural equipment takes the second place with leasing transactions distribution share of 32.5%. In the third place real estate 16.7%, and in the fourth motor transport 14.8%. Regional Distribution of Transactions Republic-wise distribution of leasing transactions is sufficiently uniform, except for Tashkent to which share falls 38.1% of all effected new leasing transactions in the home market. Also, at year-end 2016, Tashkent region (7.4%) and Samarkand region (7.1%) are in the lead in the republic.
Uzbekistan Leasing Market Outlook Analyzing leasing services market of the Republic of Uzbekistan for 2016, we can reveal the following trends: Leasing services home market has huge growth capacity. Competition in the lessors market grows from year to year, that indicates an increase in leasing services level. We can highlight the following directions mostly perspective for Uzbekistan leasing market growth: Access for local leasing companies to foreign markets/establishment of captive leasing companies on the base of JV JV MAN Auto-Uzbekistan, Samarkand Automobile Plant LLC, JSC General Motors Uzbekistan ; Micro-leasing (support of private and small firms, family-owned enterprises and cottage industry, in particular, leasing of small vegetables and fruits, food processing equipment, cattle breeding, sewing equipment); Leasing of real estate; Operative leasing. According to expectations, the home leasing market will actively grow over the longer term. To some extent, it will be promoted by implementation of new approved Uzbekistan Development Performance Strategy for 2017-2021. First of all, introduction of innovative technologies, modernization of productions and economy as a whole where development programs almost in all directions and branches of industrial production to be aimed to development of new types of competitive products will guide and provide output of products absolutely new for Uzbekistan.