Brokers are targeting new equipment sectors to underpin asset finance growth, in the face of uncertainty from Brexit and increasing market competition, according to a survey by Investec.
Of the more than 100 brokers surveyed, only 23% expected business volumes to increase by more than 15%. A further 40% of respondents expect volumes to increase by between 5-15%. 6% of the respondents expected business volumes to decrease over the next year.
Investec reported that economic uncertainty featured very strongly in the feedback, particularly Brexit, and some brokers had noted that clients were still deferring purchases due to the perceived additional risks hurting growth.
When asked how they would achieve their growth targets, 57% said that they would expand into new and alternative asset finance sectors, with potential targets including the fitness industry, recycling and datacentre equipment.
In relation to the FLA results for Q2 2018, IT equipment finance and commercial vehicle finance reported new business for July 2018 up by 60% and 15% respectively. By comparison, plant and machinery finance and business equipment finance saw growth of only 1% and 4% over the same period.
The plan to diversify into new sectors was identified as an attempt to hedge against the risk to asset finance growth presented by Brexit. 57% of respondents also identified increasing competition in the markets, noting that an overcrowded market was causing difficulties for both lenders and brokers.
In the Investec survey, 37% of brokers expected to shift towards different products, including specialist loans such as VAT finance or those with more complex structures, and according to Investec those surveyed were looking at writing more deals with hard assets.
Stuart Hughes, head of IAF broker sales, said: “It is a good time to be in asset finance. Despite some obstacles ahead, it’s reassuring to see that brokers remain confident that they have what it takes to grow despite an uncertain economy.
“We remain committed to helping brokers grow in a sustainable way, and although brokers are aware of the challenges that the future holds, there are clearly opportunities for good brokers to flourish over the year ahead.”