22nd November 2013

Strongest ever quarter for asset based finance clients – total turnover breaks £71 bn

The latest quarterly figures (Q3 July – September 2013) from the Asset Based Finance Association have been released today, showing the industry and its clients are continuing to perform strongly. The industry is supporting over 43,000 well-funded businesses, helping to drive the economic recovery in the UK and Ireland.

Total sales from businesses supported by asset based finance broke £71 bn for Q3, the strongest ever quarterly performance. This is up by some 14 per cent on the same period last year. Total client turnover for 2013 to date stands at more than £202 bn; with asset based financiers projected to support over £270 bn of client turnover for the full year. This would be an increase of over 6 per cent on 2012’s record total.

At the close of Q3, ABFA Members had total advances out to clients of some £17.4 bn, up 6 per cent on the same period in 2012 (£16.4 bn). This is only the fifth time the funding balance has been above £17 bn and the industry has achieved this milestone in both of the last quarters. This demonstrates that the demand for asset based finance is strong and growing, with firms increasingly using it to fund growth and their working capital requirements.

This contrasts markedly with the wider lending picture, with net lending overall continuing to fall at an alarming rate. Net lending to SMEs contracted by £1.4 bn in Q3 2013 continuing its general trend throughout 2013. At a time when the wider UK economy is generally recovering with rising GDP figures and positive forecasts, firms should be able to take advantage of new growth opportunities, not struggle to raise capital.

The asset based finance industry continues to support smaller businesses, with almost 15,000 of the over 43,000 clients being found in the £0 – 0.5 m turnover bracket, and over 30,000 in the sub £5 m bracket. However, the data shows that asset based finance is being used by more larger businesses as well; the biggest increase in client numbers was seen in the £100 m+ turnover bracket, up 8 per cent on the previous quarter.

This serves to demonstrate the role the asset based finance industry is playing in the economic recovery supporting businesses of all sizes.

Asset based financiers are most active supporting the services (30 per cent), manufacturing (29 per cent), distribution (24 per cent), transport (7 per cent) and construction (5 per cent) sectors. The industry is reporting particularly strong demand in the services sector from the recruitment industry. This is good news for the wider economy, with this sector often seen as a bellwether and with demand in this area indicating firms are increasingly confident and looking to take on more staff.

Kate Sharp, chief executive of the Asset Based Finance Association, commented on the latest figures: “With the OECD revising upwards their predictions for the UK economy and stronger than expected GDP figures, the recovery is clearly well underway. The latest figures show that the asset based finance industry is playing a central part in the recovery, with record client sales figures for the last quarter and continued growth year on year in the funding balance. The strong demand for this type of funding from small and large companies alike is heartening; so too is the diverse sectoral split. Firms which need finance should be speaking to their funders and advisers about asset based finance as the industry can help many more firms grow and take full advantage of the economic recovery.”

Full details of the Q3 statistics can be found on the Industry Figures and Statistics page.