The flipside of the Land of the Midnight Sun is the Arctic Night – the long winter period when the sun barely gets above the horizon. Recently, Finland’s asset finance sector has also been benighted, depressed by the tough economic conditions that are also afflicting many of its Eurozone partners.

Despite its triple-A sovereign rating and the fact that its banks largely avoided the worst of the financial crisis, Finland is facing diminishing exports, lacklustre consumer demand and government-mandated tightening of state spending. The tougher market conditions have resulted in lower demand for capital as companies rein – in spending, with the consequent adverse impact on asset finance that implies, particularly in large-ticket areas like plant and machinery and fleet.

But the story is far from being all Nordic doom and gloom ­– leasing members of the Federation of Finnish Financial Services have seen growth of around 5% in terms of overall loan portfolios over the past 12 months, and the resilient Finns are upbeat about growth opportunities in several sectors, even if that growth is likely to be modest in the near term.

Although Finland’s economy is certainly strong in heavy industries such as pulp, paper and metal, it’s also a market leader in high-tech electronics, and IT leasing is one growth area. IT leasing specialists continue to see net growth in the take-up of the latest technology in computing, mobile devices and print. This has boosted the books of small-ticket lessors, even as the leasing of large-ticket items awaits an economic upturn.

Allied to this is the increase in interest from SMEs in using leasing, particularly for technology investment – almost a third of employment in the SME sector is in high-tech industries. Typically, the more active SMEs are in raising funding levels for equipment, the greater the level of interaction with the asset finance sector, and many leasing companies see huge potential here.

At the other end of the spectrum, the public sector and local government are also potential sources of market growth. This might seem counter-intuitive in a climate with the government looking to reduce its fiscal deficit, but on the other hand, austerity increases the imperative for competitively-priced funding for essential assets such as hospital equipment, where the demand for high-quality equipment remains strong. Infrastructure such as energy and electricity also offer leasing potential.

The prospect of ‘super-trucks’ on Finland’s roads is also set to drive leasing volumes, as the maximum weight restrictions for trucks was recently lifted from 60 tonnes to a potential 76 tonnes. This will benefit the forestry and paper markets that typically use large truck/trailer combinations, and will spur demand for super-truck leasing. It’s certainly a window of opportunity not to be missed.

Fleet has been rather hard-hit, as company restructurings and cost-cutting programmes reduce fleet sizes. But here again, there is an upside, as fleet management is increasingly outsourced to leasing companies and companies that own their fleet opt for leasing as a way to decrease costs and release capital tied up in cars. On the consumer auto side, growth has been restricted by the Finnish cultural tradition of ownership, but increasing awareness of the benefits of leasing leaves significant room for growth. And lease financing of more environmentally-friendly vehicles could be a new market for lessors to approach in the near future. In fact, ‘green leasing’ overall is a likely growth market for a country that is very aware of the value of its nature and environment.

It’s fair to say that asset finance starts from a low base in Finland, and growth is likely to remain modest overall in the medium term as Finnish companies’ sentiment remains cautious. But there are plenty of shafts of light penetrating the gloom, and many opportunities for leasing companies to support the necessary investment that will surely come.

The White Clarke Group Finland Asset and Auto Finance Country Survey is available to download here

http://www.whiteclarkegroup.com/knowledge-centre/category/country_reports/finland_asset_and_auto_finance_country_survey