Business outlook for 2015 remains volatile

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This is according to Toni Fritz, Standard Bank's head of Vehicle and Asset Finance, Business, who says that the business environment remains volatile and investment into operations and working assets remains a key area of concern for most business entities.

"In perspective, any business reliant on the import of assets, for sale or production use, would have experienced a rand depreciated against the US Dollar, Euro and British Pound by 43%, 35% and 46% respectively, between January 2012 and December 2014," says Fritz.

Vehicle production

Factory output contracted by 1.3% y/y in November from a slightly upwardly revised 2.3% y/y in October. "The biggest swing factor has been motor vehicle production determining monthly manufacturing growth rates, despite only carrying an 8.6% weight within the index. However, the PMI indicates that activity and sentiment in the sector picked up dramatically in January 2015. We hope this recovery will not be short lived due to power outages," she says.

"Taking all of the factors into account, we foresee that the business growth within the asset finance space is set to remain sluggish but with positive year on year growth. Specific focus on certain sectors and industries will be key in driving this growth and will help aid risk management.

"While the 'new' versus 'used' asset trade-off influences many banks' appetite to some degree, we are expecting that, as a result of delayed re-investment by some businesses over the last three years, replacement cycles will start to take place during the course of the next two years and this will aid growth in the financing of new assets; and subsequently the asset finance industry as a whole," Fritz concludes.