Cyprus factoring volume at EUR 2.4 bln

International Factoring volume up 12%

 

Fresh statistics indicate that the total volume for factoring increased in 2006 by almost 12%.  The world total stands now at EUR1.13 trillion, while factoring volume in Cyprus among the three bank owned firms amounted to EUR 2.43 bln, of which EUR 2.38 bln were domestic factoring turnover and EUR 50 mln international, according to Factors Chain International figures.

Although the above figures indicate that the factoring industry continues to enjoy a double-digit yearly growth, even more impressive are the growth figures for international factoring, nearly 20% last year, a consistent pattern for the past years.  It illustrates that exporters and importers, around the world, are becoming more and more familiar with the advantages to be derived from a factoring arrangement: working capital, credit risk protection and collection service for the exporter, while the importer benefits from buying on open account terms without the need to open letters of credit or to accept other payment conditions with a similar restrictive character.

FCI itself grew to a membership of 216 members, located in 62 countries.  The members jointly experienced a better than average growth of nearly 14% for domestic factoring and a phenomenal growth of more than 34% for international factoring.  As a result of these dynamic developments, FCI members now have a world market share of 59%, and even 72% when looking specifically at cross-border factoring.  In the traditional area of two-factor cross-border factoring business, FCI members have increased their market share to more than 80% and are now the undisputed leaders in this field of trade finance.  It also explains why FCI is nowadays the only organisation which has the reach and depth to produce these world factoring statistics on a yearly basis.

In individual markets, Germany, France, Spain, U.K., China, Italy and Russia saw the biggest increases in absolute figures.

For regional growth, the Asian market has now surpassed the market of the America’s with Taiwan, China, Hong Kong and India the most important “growers”, more than offsetting a slight drop in the Japanese factoring volume.  If Turkey would be listed under Asia as well (rather than under Europe), the impact of Asia would be even greater.

It is satisfactory to see that also the relatively smaller African market has grown substantially in 2006 (+36%) with South Africa as the major force.

When Jeroen Kohnstamm, Secretary General of FCI, was asked to explain the reasons for these primarily positive figures, he listed three elements:

a)    a general improvement in world economic conditions, despite high energy prices and high prices for other raw materials.

b)    greater familiarisation in individual markets with the flexible and service oriented character of factoring, leading to a healthy increase in demand.

c)    introduction of factoring in more and more countries, whether it is Peru, Colombia, Egypt, the former Yugoslav republics, Ukraine, the United Arab Emirates or an especially promising market like Vietnam.