Leasing industry advancing at double-digit speed

In recent years Chile has become one of the most advanced Latin American countries in terms of financial services.

Bank credit is still the major source of financing in the country's financial system although other types of financing - like leasing - are growing fast in popularity among companies.

To find out more about the local leasing industry's growth and future prospects, BNamericas spoke to the head of the Chilean leasing association Achel, Javier Pérez Zañartu.

BNamericas: What level of growth has the leasing industry in Chile seen in recent years?

Pérez: During the last 10 years, the leasing market in Chile has not only consolidated its product as being one of the most convenient and efficient sources of financing, but it has also showed signs of a very significant dynamism.

In this context the leasing industry in recent years has grown steadily, with an expansion of 13% last year. The Eurozone crisis has affected us because we finance capital goods and against a backdrop of economic instability, markets contract and investments in goods also tend to decrease.

BNamericas: What have been the industry's main growth drivers?

Pérez: Leasing is a financial service that reflects the need for capital goods financing among companies. In the case of SMEs, their growing participation has been strengthened by Corfo's state guarantees - through its Fogain program - with 20% of contracts now backed by these guarantees. In this sense, state support has been the major trigger for SMEs obtaining access to financing through leasing.

Moreover, Chile's economic stability has allowed the effects of the current crisis to be substantially lower than the previous one. During the subprime crisis, for example, the industry saw a drop of 20%, and as of June this year the drop was only 1.9%.

BNamericas: At what rate is the industry expected to grow this year and in the coming years?

Pérez: As of July this year, we've achieved a growth rate of 2.4% and we expect to finish 2012 with an increase of close to 10% - since the second half usually has increased activity.

In June this year, we had 27,000 clients, of which 60% were SMEs, so about 16,000 clients belong to this business segment. This year we expect to reach a total of 32,000 clients, and in two years reach 35,000.

BNamericas: How advanced is the leasing industry in Chile compared to the rest of Latin America?

Pérez: In relation to GDP, the leasing industry in Chile is Latin America's leader. This is despite the fact that banks can only provide financial leasing, since by law they can't provide operating leasing - unlike what happens in other countries in the region. Currently, we have a stock of US$10.6bn in assets, which is second only to Brazil and Mexico.

In our country, leasing began to become more widespread 10 years ago and in the last five years we have opened up to the SMEs.

BNamericas: Is the industry is still strongly dominated by banks or have other players gained market share?

Pérez: The leasing industry is indeed dominated by banks with an estimated market share of at least 90%. There is no official information in regard to other market participants.