The volume of new business in January-September 2017 amounted to about 710 billion rubles, which is 58% higher than in the same period last year (see Chart 1). It should be noted that in the third quarter of this year, the value of property leased / leased reached 285 billion rubles, which is 63% higher than in July-September last year. According to a survey of leasing companies, an increase in the volume of the leasing business over the first 9 months of 2017 was shown by two-thirds of the respondents, who together account for more than 90% of the market in terms of the volume of the leasing business. At the same time, not a single lessor from the top 20 was characterized by a negative dynamics in the volume of new business. The reason for such an active growth of the market was the execution government programs on subsidizing leasing / rent certain types transport amid the implementation of pent-up demand from customers. The action of state programs of preferential leasing provided support, first of all, to transport segments, whose share in the volume of new business in 9 months of 2017 reached about 78% against 72% a year earlier.
It should be noted that due to state programs to subsidize leasing / rent, primarily domestic aircraft and vehicles, the market grew by 160 billion rubles, which is about 23% of new business. Thus, the growth of the leasing market, excluding government support programs, according to our estimates, would be about 53%.
The fact that the leasing market has moved from recovery to growth is confirmed not only by the positive dynamics of the volume of new business, but also by the fact that for the first time since the pre-crisis 2013, the number of employees of leasing companies began to grow. According to RAEX (Expert RA) estimates based on the results of the survey, as of October 1, 2017, the number of employees of leasing companies is at least 11,300 people, which is 15% more than a year earlier (see Chart 2).
The amount of new leasing agreements for January-September 2017 amounted to more than 1.1 trillion rubles against 680 billion rubles a year earlier, and the volume of the leasing portfolio reached 3.3 trillion rubles as of October 1, 2017 (see Table 1). The volume of payments received in the first three quarters of 2017 amounted to 680 billion rubles, which is slightly more than last year. The average ratio of lease payments received to the portfolio as of October 1, 2017 was 43% against 44.2% as of October 1, 2016. The average portfolio turnover of companies specializing in retail segments remained at the level of the previous year (about 46-47%), however, for lessors working with large and expensive equipment, this indicator decreased from 30 to 23%. The reason for the decrease in this level was the active growth in the last two years of transactions with operational leasing, in which lease payments are unevenly distributed, and the bulk of the debt falls at the end of the contractual terms. In addition, a number of major players had problem clients in their portfolios, whose non-payment led to a drop in the flow of leasing payments. In this regard, during 2016–2017, contracts with problem clients were terminated, which led to a short-term drawdown in the size of the portfolio of individual leasing companies.
Table 1. Leasing Market Development Indicators
| Indicators | 9 months 2014 | 2014 | 9 months 2015 | 2015 | 9 months 2016 | 2016 | 9 months 2017 |
| Volume of new business (property value), billion rubles | 522 | 680 | 385 | 545 | 450 | 742 | 710 |
| -10,4 | -13,2 | -26,2 | -19,9 | 16,9 | 36,1 | 57,8 | |
| Amount of new leasing agreements, billion rubles | 754 | 1 000 | 590 | 830 | 680 | 1150 | 1 140 |
| Growth rates (period to period), % | -19,8 | -23,1 | -21,8 | -17 | 15,3 | 38,6 | 67,6 |
| Concentration on the top 10 companies in the amount of new contracts, % | 61 | 66 | 68 | 66 | 62 | 62 | 68 |
| Retail index, % 1 | 45 | 44 | 45 | 44 | 50 | 45 | 48 |
| Volume of lease payments received, billion rubles | 550 | 690 | 465 | 750 | 670 | 790 | 680 |
| Amount of financed funds, billion rubles | 505 | 660 | 400 | 590 | 550 | 740 | 635 |
| Aggregate portfolio of leasing companies, billion rubles | 2 950 | 3 200 | 2 950 | 3 100 | 2 900 | 3 200 | 3 300 |
| Russia's GDP (in current prices, according to Rosstat), billion rubles | 57 277 | 79 200 | 60 393 | 83 233 | 61 967 | 86 044 | 64 912,3 |
| Share of leasing in GDP, % | 0,9 | 0,9 | 0,6 | 0,7 | 0,7 | 0,9 | 1,1 |
Source:
The retail index, calculated as the sum of the shares of retail segments, in the volume of new business decreased from 50% in January-September 2016 to 48% compared to the same period of the current year. The decrease in the index was due to a significant increase in the volume of new business in large segments, which led to an increase in the average amount of a leasing agreement from 6.2 million rubles to 8.8 million rubles. At the same time, the number of leasing agreements concluded during 9 months of 2017, according to the agency's estimates, amounted to at least 130 thousand (see Chart 3).
The volume of financed funds for 9 months of 2017 increased by 15% compared to the same period last year. In addition to the increase in funding sources, there have been structural changes. Thus, over the period under review, the share of bank loans in the structure of financed funds decreased by 4 percentage points, to 56.6%, however, loans still remain the key source of financing for leasing transactions. During the first 9 months of 2017, it is noted that lessors in more began to rely on advance payments, the share of which is 14.4% (+2.2 percentage points compared to the same period last year), while the share of own funds, on the contrary, decreased by 2.5 percentage points, to 10.6 %. The share of bonds in the structure of financed funds reached 10.5%, it should be taken into account that this level is largely provided by the company "GTLK", which actively uses bond issues to finance the leasing business. Excluding STLC, the share of bonds in the sources of financing leasing transactions for 9 months of 2017 would have amounted to 4.3%, which is slightly higher than last year's level (see Chart 4).
According to the survey of leasing companies, the average level of margin 2 of the leasing business for the first 9 months of 2017 was 4.3%, which corresponds to the level of 2014. The return of the margin to the pre-crisis level indicates a decrease in lessors' fears about their clients, leasing companies began to include credit risks in the leasing interest to a lesser extent. Companies specializing in construction equipment, cars and trucks showed the highest margin (maximum margin reaches 14%). The lowest difference between the cost of borrowed and placed funds (about 1.5–2%) is typical for companies working with leasing of railway and aircraft equipment. The marginality of the business of lessors owned by foreign owners has fallen over the past three years by 2.3 percentage points, to 3%. As a rule, lessors with foreign structures work with imported equipment, which has risen in price significantly due to the devaluation of the ruble, which forced leasing companies to reduce margins in order to maintain client base. It is worth noting the increase in the margin of leasing companies affiliated with Russian banks (+1.4 p.p., to 4.6%), which is largely due to the lag in the revision of the interest rate on leasing after the reduction in interest rates on borrowed loans from the leasing company. Therefore, the reduction in the rate of the Bank of Russia has not yet fully reflected on the cost of leasing.
Dynamics and structure of operational leasing
In January-September 2017, the volume of operational leasing amounted to about 147 billion rubles, which is 263% more than the results of the same period last year. In addition, the volume of operating leasing achieved in the first 9 months of this year is the highest in the history of the Russian leasing market. In general, in the first three quarters of 2017, leasing accounted for about 21% of new business, compared to 12% a year earlier (see Chart 6). The share of lease in the leasing portfolio also increased significantly to 17.4% as of October 1, 2017 against 5.3% as of October 1, 2016.
The concentration on the leaders in the new operating leasing business is much higher than in the financial one: for example, the top 3 lessors account for 72% of the market (see table 2), while the share of three largest companies in financial leasing is 37%. The high level of market concentration on a limited range of leasing companies is associated with the specifics of operating leasing, which is more in demand by large clients. This type leasing is in demand by corporate clients, as it allows more flexible management of the transport fleet in conditions of instability and does not oblige to buy property at the end of the contract.
Table 2. Top 10 leaders in terms of operational leasing
| № | Company name | New business on operational leasing / rent for 9 months. 2017, million rubles | Share of operational leasing in the new LC business, % | The company's share in the operational leasing market, % |
| 1 | SBERBANK LEASING (GK) | 55 536 | 54,5 | 37,8 |
| 2 | VEB Leasing | 25 677 | 45,5 | 17,5 |
| 3 | State Transport Leasing Company | 24 810 | 27,4 | 16,9 |
| 4 | "TransFin-M" | 14 269 | 58,9 | 9,7 |
| 5 | "RAIL1520" (GK) | 7 841 | 100 | 5,3 |
| 6 | "Transleasing Service" | 6 065 | 100 | 4,1 |
| 7 | "Major Leasing" | 1 356 | 18,0 | 0,9 |
| 8 | Gazprombank Leasing (GK) | 1 055 | 4,8 | 0,7 |
| 9 | "Option-TM" | 582 | 59,2 | 0,4 |
| 10 | KAMAZ-LEASING (GK) | 329 | 6,3 | 0,2 |
Source: RAEX (Expert RA), according to the results of the LC survey
According to the results of 9 months of 2017, the operating leasing segment is mainly formed by railway and aircraft equipment, these segments together account for about 97% of all leases (see Chart 7). Operleasing support aircraft in 2017, first of all, it provided state subsidies for rental payments. “Without state support to subsidize the lease of domestic aircraft, regional aviation will not be viable. All over the world, one way or another, it is supported by the state. Another issue is that measures state support should not relax manufacturers, who should strive to reduce costs,” notes Vladimir Dobrovolsky, Deputy General Director for work with clients of PJSC STLC.
In an operating lease, the use of the leased asset is limited by the term of the contract, which allows the lessee to quickly replace the equipment in case of obsolescence. In addition, the reduction in interest rates due to the revision of the key rate of the Bank of Russia will help increase the attractiveness of operating leasing. “As the interest rate decreases, the efficiency of leasing increases, as the interest burden on the entire investment decreases,” notes Kirill Tsarev, CEO JSC Sberbank Leasing. – In operational leasing, due to the large balloon payment, the percentage affects more significantly than in financial leasing. And the lower the interest, the more competitive the offer of operational leasing becomes.”
Market leaders
According to the results of 9 months of 2017, Sberbank Leasing JSC became the market leader, increasing the volume of new business by 163%, a year earlier the company was on the third line in the ranking. The second place in terms of the volume of new business in the leasing market is held by PJSC STLC, and the third position in the ranking is occupied by VTB Leasing. As before, there is a high concentration of the market on the largest lessors, which continues to grow. Thus, according to the results of three quarters of 2017, the top 3 leasing companies account for about 37% of new business (35% a year earlier). It is worth noting that the business of the three largest players forms 88% of the aviation segment, 38% of rail leasing and a quarter of the truck leasing market. The share of the top 10 in the volume of new business in January-September of this year increased from 64 to 67%, and the 20 largest lessors already account for 80% against 78% a year earlier.
Table. Top 20 market leaders in the first 9 months of 2017
| Place for new business | Company name | RAEX credit rating (Expert RA) as of 06.12.2017 | The volume of new business (property value) for 9 months. 2017, million rubles | Growth rate of new business 9 months. 2017 / 9 months 2016, % | The amount of new lease agreements for 9 months. 2017, million rubles | The volume of the leasing portfolio as of 01.10.17, million rubles | |
| 01.10.2017 | 01.10.2016 | ||||||
| 1 | 3 | SBERBANK LEASING (GK) | 101 980 | 163 | 132 174 | 397 241 | |
| 2 | 2 | State Transport Leasing Company | 90 492 | 55 | 180 070 | 490 797 | |
| 3 | 1 | "VTB Leasing" | 67 377 | 7 | 104 295 | 394 295 | |
| 4 | 4 | VEB Leasing | 56 393 | 115 | 82 488 | 344 620 | |
| 5 | 5 | "LK Europlan" | ruA | 42 087 | 63 | n. d. | 52 552 |
| 6 | 7 | ||||||
Kirill Kirilin
When forming a lease payment schedule Special attention is given to reflecting the income of the leasing company in the calculation. A clear concept of the lessor's income in Russian leasing practice has not yet been fully established. Different leasing companies may name the income included in the calculations in different ways. In leasing practice, there are such names of income of a leasing company as margin, remuneration, profit, net profit. It is further proposed in this review to call the income of a leasing company included in the calculation of lease payments the margin.
There are two main approaches to the formation of the margin of a leasing company:
1) the lessor includes the net profit of the company in the calculations and adds income tax to it. Also, the leasing company can separately allocate not the entire amount of income tax, but only the amount of the so-called mandatory income tax, calculated on the basis of the costs of the lessor paid from net profit (for example, such costs may be interest on a loan in excess of the norms established by Article 269 of the Tax Code). code of the Russian Federation);
2) margin means “dirty” profit, from which the leasing company pays income tax, but this tax is not taken into account separately in the calculations, but “sits” in the margin.
Theoretically, the margin of a leasing company can also be called the entire amount of the excess of lease payments over the value of the property. It is assumed that with this approach, the margin includes interest on borrowed funds, taxes, other expenses, as well as the income of the lessor itself. However, such an interpretation of the leasing company's margin does not seem correct, since it does not reflect the profitability of the leasing operation.
For any of the above margin formation options, the following methods of calculating the total margin amount can be distinguished:
1. The margin amount is calculated as a certain percentage of the initial cost of the leased property, this amount is not adjusted taking into account the lease term.
2. The margin amount is calculated as a certain percentage of the original value of the leased property, this amount is adjusted for the lease term (usually multiplied by the number of years the lease agreement lasts).
3. The amount of the margin is calculated as a certain percentage of the balance of the debt on the loan. In this case, a certain value is added to the interest rate on the loan, which forms the margin of the lessor. In this case, the total interest on the loan and the margin is sometimes referred to as the lease interest.
4. The margin amount is calculated as a certain percentage of the residual value of the leasing property at each moment of the leasing agreement. In this case, the margin depends on the lease term and the calculation algorithm is similar to the property tax calculation algorithm.
5. The amount of the margin is calculated as a certain percentage of the amount of the leasing agreement or of the amount of all expenses of the lessor under the leasing agreement.
6. The margin amount is a fixed amount. Such an algorithm can be used, for example, when leasing similar Vehicle, as well as inexpensive equipment, when the lessor fixes the minimum amount of margin.
In negotiations before signing a lease agreement, the lessor and the lessee usually discuss the margin rate of the leasing company. At the same time, the parties should immediately pay attention to three aspects when discussing this issue:
The leasing company specifies a margin rate that already includes VAT, or a rate without VAT;
The leasing company indicates the margin rate to which income tax is added in the calculations, or the rate that already includes income tax;
What is the basis for margin calculation.
Suppose the parties have agreed that the margin rate does not include VAT on the margin and includes tax on the profits of the leasing company. Let's consider how much the lessor's margin will be at the same absolute rate based on the above methods of calculating it. Let the margin rate be 4%, the term of the lease agreement is 3 years, the value of the leased asset is 118,000 units with VAT (book value - 100,000 units), the rate of the loan attracted by the lessor is 14% per annum, the loan term is 3 years, the repayment of the loan is made monthly in equal installments (under these conditions, the amount of interest on the loan is 25,468 units). The results of margin calculations are presented in Table No. 1.
Table No. 1 shows that the same margin rate can amount to a different absolute amount of the lessor's income based on different methods of calculating the margin. You can also notice that all methods of calculating the margin, given in table No. 1, except for the first and fifth ones, fix the dependence of the margin on the term of the leasing agreement. This can be considered a correct dependence, since the lessor provides services to the lessee during the entire lease term, and not at a specific point in time. The first and fifth methods do not take into account the time factor, while the first method is often more understandable and simple for the lessee and therefore is widely used in practice, the fifth method is somewhat more complicated and is used less frequently.
The lessee will always strive to understand the absolute size of the margin of the leasing company and, if possible, try to reduce it. The leasing company, on the contrary, is always trying to increase its own income. Thus, a certain market level of profitability of leasing operations is formed, at which this financial instrument becomes mutually beneficial for both parties.
In Russia, there is too much railway equipment for the transportation of goods, but the demand for it has not yet suffered much from this: the volume of transportation is still growing, and the retired equipment must be replaced with new one. However, already now leasing companies should think about expanding their business, for example, financing transactions for the purchase of locomotives.
It is pleasant to work with railway rolling stock, primarily freight cars: the asset is reliable, with a long life, low technical risks, and high liquidity. “That is why leasing companies are willing to invest in them, and banks lend to their buyers. At the same time, the supply on the market is still limited, so the prices for railcars are at a high level,” says Dmitry Bovykin, Executive Director of the RAIL1520 leasing company.
Sergei Dianin, CEO of the leasing company Arval, agrees with him. The risk component associated with such a leasing object as a railway car is minimal. When evaluating lessee clients operating in this segment, one should note the high reliability of these companies, he says.
Of course, all these pluses turn out to be lower in comparison with investing in other types of assets. But demand is guaranteed, Maxim Agadzhanov, general director of CJSC Gazprombank Leasing, is sure. It has significantly exceeded the supply of the last ten years, as a result of which prices are also increasing. “Of course, during the crisis, railcar prices almost halved, and this affected not only new, but also used equipment. rising cost," he says.
For leasing companies financing railway transport These are, first of all, large volumes that allow you to significantly increase your portfolio. Such transactions cannot be compared, for example, with the automotive segment in terms of margin: the volume of financing and the rate of return are not comparable.
However, it is possible that the optimistic situation in the railway sector may change into a somewhat alarming one. Currently, the fleet of freight cars in Russia reaches 1.1 million units, which is a historical record in the entire history of the country. Will all available rolling stock fit on the existing rails and will there be a load for the entire fleet?
On the one hand, cars are purchased according to the volume - existing contracts, or, at least, according to possible future customers who will appear with a high degree of probability. In other words, the equipment that industrial and transport companies now have was purchased for some more or less specific needs. Industrial production in Russia is not falling and is even slowly recovering to pre-crisis levels, so there is nothing to worry about.
On the other hand, the need for wagons depends not only on the amount of cargo presented, but also on how efficiently they are managed. The more efficient, the fewer wagons will be needed to transport a large volume of goods, which leads to a decrease in the need for rolling stock. Without going into sectoral details, we note that over the past seven months, the Ministry economic development, the Ministry of Transport and JSC Russian Railways have taken a number of steps that have led to the optimization of car traffic on the railway network. This increased its productivity and thereby reduced the need for equipment, dropped the empty run by 12 times, and stabilized the rates that have been growing up to now. transport companies and generally eliminated the shortage in rolling stock - a situation that over the past ten years has been observed only during the crisis. According to Russian Railways estimates, there are currently about 50,000 extra wagons in Russia.
Moreover, the next steps are planned to optimize rail transportation. Does this pose a threat to lessors? “We can say that the market in the freight car segment is already saturated and we are moving to the stage of only replacing equipment that has outlived its useful life. Wagon wear in Russia is not very significant. at the operators this moment almost completely meets their needs," Vladimir Dobrovolsky, business development director of the State Transport Leasing Company (GTLK), believes, however, expressing confidence that the STLC portfolio in the segment under discussion will grow anyway. Mr. Agadzhanov from Gazprombank Leasing, in turn, draws attention to the lack of significant innovations in Russian railway transport that can optimize the economy of transportation. "The emergence of such innovations, and a number of rolling stock manufacturers are currently working on them, can cause a new wave of demand and contribute to the development of rolling stock leasing," I am sure Spokoen and Dmitry Bovykin of RAIL1520 estimate that there are currently 390,000 end-of-life railcars in operation in the CIS, and by 2020 the market will need at least another 700,000 units to replace retired rolling stock and ensure traffic growth. "Demand fluctuations are inevitable, but overall it will remain high. level," says the expert.
But even if the worst forecasts come true, leasing companies have room to grow. The reform of Russian railway transport provides for the involvement of private business not only in the management of wagons, but also in other sectors, primarily repairs, as well as locomotive facilities (traction rolling stock) and infrastructure - tracks, stations and stations.
It should be noted that there is still heated debate about giving the right to companies other than Russian Railways to operate locomotives, although the state's position on this issue is basically positive. But one way or another, a certain number - albeit insignificant - of private diesel and electric locomotives in the country are already operating on separate routes or non-trunk directions, and businesses are already actively studying the issue of acquiring their own traction.
It is the traction rolling stock sector that Mr. Bovykin calls promising. The fleet of locomotives is outdated, both physically and morally, and needs to be updated. In addition, there is already a physical shortage of them to ensure the transportation of the increased fleet of cars. "At the current stage of rail industry reform, private investor participation is still limited, but traction liberalization could potentially create a new leasing market comparable in size to the wagon market," says a RAIL1520 spokesperson.
"Gazprombank Leasing" is considering with great interest the financing of railway depots, traction stock and various special equipment for sidings, Mr. Agadzhanov admits. The point is that for corporate clients among the industrial enterprises with which the company prefers to work, the creation of transport infrastructure is an urgent task - this is required by the volume of transportation and transshipment of goods, in addition, this approach allows you to establish a kind of closed cycle.
Mr. Dobrovolsky is more cautious. He admits that the fleet of locomotives is already worn out by 70% (by the way, freight cars have only 40%), traction is indeed in great deficit, which makes the segment very interesting in the future. "But so far this is only a theory. Locomotive fleet on the tracks common use currently owned and operated by Russian Railways. If liberalization is carried out in this direction and private carriers are released on common routes, the locomotive segment will be in great demand," the STLC top manager shares his thoughts.
In all likelihood, in the future, leasing companies will benefit from a comprehensive strategy for working with clients: start by financing transactions for the purchase of railcars, and then, when the lessee grows up, you can help him with the purchase of a locomotive and equipment to service the entire rolling stock. With skillful management, a railway carrier in Russia will not remain without profit. As practice shows, the shortage of freight and bandwidth leads to the fact that cargo owners are willing to pay more just to guarantee the export of goods and not disrupt the contract terms. In the medium term, the situation will definitely not change much.
Alexey Strigin
Purpose: to compare methods of acquiring fixed assets and choose the most profitable among them. How to proceed: consider the terms of the transaction, compare the costs and benefits of various financing instruments, calculate the effective interest rate.
Credit and leasing are the two most accessible and common ways of acquiring property through debt financing. The conditions for its involvement with the help of these tools are largely similar. In both finance leases and bank loans, the borrower must pay a portion of the value of the property—usually 10 to 30 percent—either on their own or post a security deposit. When attracting bank financing, this is called “participation with own funds”, and when leasing it is called “advance”. Both the leasing company and the bank will require to insure the property that is the subject of the transaction, which in the first case is the property of the lessor, and in the second, as a rule, acts as collateral.
If we talk about the main expenses, then in both cases they will include payment of the principal debt, interest and bank commissions, since the leasing company will also receive a loan to purchase equipment. However, being, in fact, an intermediary between the bank and the client, the lessor will add its margin to the cost of services.
As for taxation, in the case of a leasing transaction, the company applies an accelerated depreciation rate, thereby reducing the amount and terms for paying property tax, while when attracting bank financing, fixed assets will be depreciated, reducing the income tax base. With leasing, income tax savings are achieved due to the fact that all payments are charged to the cost. A significant difference between financial lease and lending is that VAT is charged on lease payments. And with a loan, payment of the principal debt, interest and bank commissions is not subject to this tax, it is paid by the borrower when acquiring property and is credited after the fixed asset is put into operation.
Leasing margin and tax effect
Usually, the choice of financing instruments is made on the basis of a simple calculation of costs and savings in property tax and income tax. Ceteris paribus, preference is given to the cheapest way to attract financial resources. Comparison absolute indicators spending and tax savings is a simplistic approach that does not take into account a number of important points. But the main difficulty when comparing bank lending and finance leases is that lessors offer their clients only the final payment schedule for consideration and, as a rule, do not disclose the intrinsic cost of financing and the margin that is included in lease payments. Therefore, the author proposes to determine the most profitable way to acquire property based on the effective interest rate. But first, let's compare leasing and lending by simply calculating the amount of payments and comparing the tax effect. It is useful to understand the structure of the lease payment and the tax implications of the two financing methods. The initial data are given in Table 1. They roughly correspond to the average market conditions for bank loans and leasing transactions.
Table 1. Terms of financing the transaction for the purchase of equipment
| Basic conditions | Credit | Leasing |
| The cost of equipment with VAT, thousand rubles | 11 800 | |
| VAT, thousand rubles | 1800 | |
| Depreciation group | 5 | |
| Term beneficial use, months | 85 | |
| Repayment of principal | monthly, in equal installments | – |
| Interest rate, % | 13 | |
| Leasing margin, % | – | 4 |
| Property tax rate, % | 2,2 | |
| Participation with own funds / advance payment, % | 20 | |
| Financing period, months | 29 | |
| Accelerated depreciation rate | – | 3 |
To simplify the calculations in the conditions, a number of assumptions are made:
- the cost of attracting credit resources for the organization and the leasing company is the same;
- the value of the leasing margin is given as an example. In practice, it is usually not disclosed. Margins are often greater than 4–5 percent, especially in retail transactions (for example, financing the purchase of vehicles);
- the advance payment in the case of the acquisition of fixed assets at the expense of credit resources and leasing is the same;
- the loan is repaid by the borrower on a monthly basis, in equal installments;
- the costs of insuring the leased asset are also the same, but they are not taken into account in the calculation example;
- the period was chosen based on the full depreciation of equipment during leasing for 29 months, taking into account the application of an accelerated depreciation coefficient of 3. While in practice it is often lower, and for property of the first–third depreciation groups it is not applied at all (in this regard leasing of property related to the first or third depreciation groups, usually more expensive than a bank loan, if the leasing company does not receive a discount from the supplier. This is how the marketing ploy "Leasing at 0 percent" is formed).
When calculating, we proceed from the fact that the lease payment (without VAT) is equal to the loan payments, increased by the margin of the leasing company and the amount of property tax (we assume that it is paid by the lessor). In other words, the task comes down to comparing what tax preferences give us and what “takes away” leasing margin. The following results were obtained (calculations are presented in Tables 2 and 3). Savings in property tax in the case of acquiring equipment under a leasing scheme during the leasing period will amount to 175 thousand rubles, for 85 months (depreciation period) - 513 thousand rubles. The difference in income tax savings for 29 months will also be in favor of the leasing scheme and will amount to 1,212 thousand rubles, and the total effect, taking into account the margin deduction, will be 915 thousand rubles. After the expiration of the lease agreement, there will be no more savings in income tax. At the same time, depreciation continues to accrue with the loan, and as a result (at the end of the depreciation period), the savings effect will be reduced to 33 thousand rubles.
table 2. Calculation of annual income tax savings for loans and leasing, rub.
| Year | Credit | Leasing | |||||||
| Redemption main debt |
Pay percent |
Depreciation | Tax on property |
Saving tax at a profit ((2 + 3 + 4) × 20%) |
Leasing payment without VAT |
including margin |
including tax on property |
Saving tax at a profit (6×20%) |
|
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | |
| 1 | 3 906 207 | 994 816 | 1 411 765 | 204 471 | 522 210 | 6 785 630* | 305 986 | 174 483 | 1 357 126 |
| 2 | 3 906 207 | 485 478 | 1 411 765 | 173 412 | 414 131 | 4 029 009 | 149 738 | 83 448 | 805 802 |
| Total for 29 months |
9 440 000 | 1 533 278 | 4 235 294 | 440 971 | 1 241 909 | 12 271 111 | 472 000 | 265 833 | 2 454 222 |
| 3 | – | – | 1 411 765 | 129 412 | 308 235 | – | – | – | – |
| 4 | – | – | 1 411 765 | 98 353 | 302 024 | – | – | – | – |
| 5 | – | – | 1 411 765 | 67 294 | 295 812 | – | – | – | – |
| 6 | – | – | 1 411 765 | 36 235 | 289 600 | – | – | – | – |
| 7 | – | – | 1 411 765 | 6902 | 24 910 | – | – | – | – |
| Total for 85 months |
779 167 | 2 462 489 | 265 833 | 2 454 222 | |||||
*In the first year, an advance payment is included.
It would seem that the benefits of using a leasing scheme are obvious, especially if discounting is applied. But on the other hand, the situation looks somewhat different, because we not only do not take into account the time value of money, but also lose sight of the moment of VAT refund.
table 3. Calculation of the effect from the use of a leasing scheme in comparison with a loan by years, rub. (simplified approach)
| Year | Tax Savings on property Art. 4 Tab. 2 - Art. 8 Tab. 2 |
Tax Savings at a profit Art. 9 Tab. 2 - Art. 5 Tab. 2 |
Effect* Art. 10 + Art. 11 - Art. 7 Tab. 2 |
| 10 | 11 | 12 | |
| 1 | 29 988 | 834 916 | 558 917 |
| 2 | 89 963 | 391 671 | 331 896 |
| Total for 29 months | 175 137 | 1 212 314 | 915 451 |
| 3 | 129 412 | –308 235 | –178 824 |
| 4 | 98 353 | –302 024 | –203 671 |
| 5 | 67 294 | –295 812 | –228 518 |
| 6 | 36 235 | –289 600 | –253 365 |
| 7 | 6902 | –24 910 | –18 008 |
| ... | ... | ... | ... |
| Total for 85 months | 513 333 | –8267 | 33 067 |
* The total amount of savings on property tax and income tax, minus the margin of the leasing company.
Construction of cash flow and calculation of EP
Leasing companies usually offer the borrower for consideration the final payment schedule, which includes all expenses for the acquisition of property - bank interest and own margin, but without detailing. The financial director of an enterprise can easily compare the conditions for acquiring property in several leasing companies, taking into account payments and the size of the advance, however, comparison with a loan offer is difficult for the reasons mentioned above.
To solve this problem, you can use the effective interest rate (EPR). This is a value that allows you to compare different cash flows. It should be noted that EIR is not a rate of return and does not show how much interest the borrower will pay for a loan or lease. But it can be used to compare various ways financing and conclude which one is more expensive and which one is cheaper.
When determining the effective interest rate central bank RF previously recommended the use financial function Microsoft Excel program CHISTVNDOKH (in the English version - XIRR). The methodology for calculating the EPS is given in Microsoft Excel Help.
Let's compare a loan and a lease using the effective interest rate on a conditional example, using the data from the same table 1.
To calculate the EIR, it is necessary to take into account all income and expenses by type of financing. The procedure is as follows. First, expense schedules are built - payments for leasing and credit, taking into account advances and payments on property tax. Then incomes are summed up (obtaining a loan or paying for equipment with the funds of a leasing company), adjustments are added - savings on income tax and VAT refunds. The difference between income and expenses is the cash flow, on the basis of which the effective interest rate is calculated. Next, the Microsoft Excel function CLEANING is applied, and the results are compared. The method of financing is chosen, in which the effective interest rate is lower. EPS can take on completely different values, including negative ones, but it is important for a company to compare them and choose the smallest one.
When calculating the cash flow of the first month (see Table 4), income is taken into account, which is understood as the amount of financing in the amount of 9440 thousand rubles.
table 4. Calculation of cash flow, taking into account savings on income tax and VAT refunds, monthly, rub. (extract) *
| Month | Credit | Leasing | |||||
| Expenses borrower |
Saving on tax at a profit |
Monetary flow |
Expenses leasing recipient |
Saving on tax at a profit |
offset (perhaps schenie) VAT |
Monetary flow |
|
| 1 | –2 360 000 | – | 8 880 000 | –2 360 000 | – | 360 000 | 7 440 000 |
| 2 | –444 608 | 47 348 | –397 261 | –502 930 | 99 035 | 76 718 | –327 176 |
| 3 | –444 161 | 47 258 | –396 903 | –500 630 | 98 646 | 76 367 | –325 617 |
| 4 | –437 221 | 45 870 | –391 351 | –490 669 | 96 957 | 74 848 | –318 864 |
| 5 | –436 418 | 45 710 | –390 708 | –487 949 | 96 496 | 74 433 | –317 020 |
| 6 | –432 486 | 44 923 | –387 563 | –481 538 | 95 410 | 73 455 | –312 673 |
| 7 | –423 136 | 43 053 | –380 083 | –468 734 | 93 239 | 71 502 | –303 992 |
| ... | ... | ... | ... | ... | ... | ... | ... |
| 86 | –108 ** | 23 551 | 23 443 | – | – | – | – |
| 5,72% | Effective interest rate | 4,39% | |||||
* All expenses (for a loan - equity participation, principal repayment, interest, property tax, for leasing - advance payment, lease payment with VAT) are calculated in strict accordance with the payment dates. Obtaining a loan - 9440 thousand rubles, offset (reimbursement) of VAT on the loan - 1800 thousand rubles.
** The lease agreement has expired - no lease payments are paid, and in the case of a loan, property tax payments and income tax savings due to depreciation continue, which will be included in the calculation of the effective interest rate.
In the above example, the value of the effective interest rate on cash flow is 5.72 percent for loans and 4.39 percent for leasing. This means that in this case, raising funds from the bank will cost the company a little more than leasing financing. If the margin of the leasing company is more than 4-5 percent, then the financial lease will be more expensive than the loan. In other words, under the given conditions (advance 20%, term - 29 months), property leasing is unprofitable if the difference between the interest rate on the loan and the cost of financing from the lessor (loan rate + margin) exceeds 4–5 percent.
Let's change the initial conditions and calculate the effective interest rate for evaluating the same methods of acquiring property belonging to the seventh group with amortization period of 181 months. The total amount of funding remained the same. As a result of the calculations, the following data were obtained: with bank lending, the EIR will be 13.34 percent, with leasing - 12.38 percent. Thus, a 60-month financial lease of equipment under the newly set conditions is more profitable than a loan, since the effective interest rate is lower.
Comparison of financing instruments based on the effective rate can be applied to a wide variety of lending and leasing conditions that exist in the market. The results of the calculations may be different, but there are no standards for the value of EPS, so you need to take into account the ratio of indicators, and not their specific value. In addition, when choosing a method for attracting credit resources, non-financial conditions are also taken into account, such as efficiency, flexibility and customer focus of the creditor bank or leasing company.
table 5. Initial data for the purchase of equipment
Attached files
Available only to subscribers
- Excel file with payment schedules, expense calculations and effective interest rate.xlsx
08:03 18.03.2014
While the real sector continues to moan from interest on ruble loans, things are by no means better in leasing. It is understandable. To provide an item for financial lease for Belarusian rubles, you need to take these rubles somewhere.
Usually, Belarusian rubles are taken not in the Baltic, but in Belarusian banks. Leasing companies use the same credit funds as enterprises in the real sector. Of course, if the lessor - regular customer Belarusian bank, the latter "with pleasure" will make a discount of 1-2% for it.
But a couple of percent will not alleviate the fate of the lessee. In general, they can be hidden by the margin of a leasing company - everyone wants to live. And then at the output the rate on leasing will be equal to the rate on the loan plus 2 or 4% of the margin of the leasing company. Let it be conditional 42% per annum.
Such a rate can be found in some leasing companies in Belarus, which are called banking.
Let's assume that you are lucky and you have found some leasing company at the bank, which offered you 42% per annum. We take the scales and begin to weigh all the pros and all the cons.
Leasing for the bravest
Suppose we need to buy a server (such a big, big and very powerful computer) SunFire E2900В, which is offered by Belarusian companies for 1.182 billion rubles including VAT.
For example, we agreed with a leasing company a contract for 2 years and an advance payment of 20%, but here it must be remembered that the amount of this payment can be 25 or even 30%. How do you agree.
We pay the lessor 236.5 million rubles at a time, and then we make monthly differentiated payments. In the first month we will pay 78.6 million, the last lease payment, in two years - only 41 million. But that's not all.
Classically, there will be a redemption payment of 1% of the cost of equipment - 11.82 million Belarusian rubles.
As a result, after 24 months, the server will become your full property. What will we have as a result, except for outdated computer hardware? The equipment will cost 1.684 billion. The overpayment will amount to 502 million rubles with a tail, or 42.5%. Move on.
Pseudo-dollars will save the world?
If we translate the cost of our SunFire E2900B server into dollars, then it will be 121 thousand. The conditions remain the same as for leasing in rubles: 20% advance payment, 1% residual value, differentiated repayment system. But…
The overpayment will be 25 thousand pseudodollars, or 20.2%.
It doesn't take a financial genius to understand that comparing 42.5% and 20.2% increase in the cost of a server, a combine or a molecular meat grinder is pointless. Although there are leasing offers in Belarusian rubles.
If you call the leasing company and insist on leasing in Belarusian rubles, they will hardly argue with you. The desire of the client is the law. And the equipment will be leased to you.
Only devaluation will help us
What are the arguments in favor of ruble leasing?
Oddly enough, this is the possibility of the same notorious abrupt devaluation. Life's calculation is simple. You take a server worth 121 thousand dollars in February 2014. The price of equipment in Belarusian rubles is 1.182 billion and is fixed in the contract.
If at the beginning of July of this year the exchange rate of the Belarusian ruble suddenly depreciates by 250%, you will find yourself in the same financial conditions as the company that leased the same server for pseudodollars.
If the exchange rate of the Belarusian ruble behaves in the same way as in 2011, you will even win. But who said that you can enter the same water twice?
Two terrible nightmares of the lessee
True, there are several subtle points in this whole seemingly simple worldly scheme.
Read the text of the lease agreement carefully. If the lessor took a loan from a bank at a floating interest rate, this will certainly be reflected in your contract. The leasing rate, since you still decide to lease in Belarusian rubles, should be fixed.
Let's explain a little. The fixed rate will be if the text of the document says in black and white: “The rate is 42%. And it cannot change in the future.
When the agreement is decorated with the phrases: “The rate is equal to 1.79 refinancing rates” or “The leasing rate in the first month is 42%, and in subsequent months it is formed by agreement of the parties,” it is better not to waste ink in your pen on signing such a paper. Then you have to regret.
But the horror stories for the lessee do not end there. If, nevertheless, you signed a contract with a fixed rate, you should not relax. The bank that issued a loan to a leasing company may well ask it to move a little, by 5-10%.
“Listen, cousin is a lessor. As a financier - a financier. Times are hard now, it is forbidden to issue loans, the population does not bear deposits. Let's raise your loan rate by 7%, like the toy factory that went bankrupt the day before yesterday.
After such words, there is usually a game of nerves: who is who ... And if the leasing company raises its paws, then it puts them down and dials your phone number: “Hello. Times are tough right now…”
However, we recognize that this is quite an extreme case. Force Majeure.
Bisector that destroys hopes
Let's return to those lucky ones who, unlike us, signed a leasing agreement in pseudo-currency.
Recall that a deal in pseudodollars means that you will make all payments in Belarusian rubles at the rate of the National Bank on the day of payment. This is where the wormhole lies.
Many experts note that devaluation is already underway in Belarus. And it is called smooth devaluation. If you look closely at the growth of the dollar, then, obeying some kind of magic wand, none other than Harry Potter, it grows with enviable pedantry, by 10 rubles per day of the exchange. Let's see what will happen to the dollar with such an "exchange" acceleration in 24 months.
The resulting "bisector" indicates that if events continue to develop as they have developed over the past six months, in February 2016 the dollar will come close to the mark of 15 thousand or grow by 53%.
With this development of events legal entities, which leased the SunFire E2900B server for pseudodollars, will pay approximately 1.7 billion Belarusian rubles. Complex multi-page calculations will be omitted. But if we do not discard errors with exchange rate differences, then the amount of leasing payments is the same as in the case of leasing in Belarusian rubles.
And it turns out the same collection of horns on the wall. Only view - in profile.
Therefore, both supporters of transactions in Belarusian rubles and supporters of transactions in pseudo-currency should once again remember that leasing is beneficial not by the size of the rate (although it also matters), but by depreciation opportunities and tax benefits.
At the time of writing the article, approximate mathematical models were used that do not take into account certain nuances, such as the need for insurance, possible changes in legislation, the bankruptcy of the bank that issued the loan to the leasing company, and the presence of a leap year. However, all these factors are also not taken into account by leasing companies when drawing up payment schedules that they offer for consideration to their clients.
All economic forecasts made in the article are not full forecasts, as they are used to model situations that may occur with some probability or not at all.
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