Global factoring volumes reached a record €2.3tn in 2014, up 6.3% from 2013 and led by cross-border transaction growth, according to Factors Chain International (FCI).
This is the highest figure on record, yet the growth rate is below the annual rate recorded in the past 20 years (11%). FCI attributes that slowdown to slower sector growth in Asia – the second-biggest factoring market in the world – at just 3%.
Of the €2.3tn, 79% (€1.8tn) was domestic factoring, while international transactions formed 21% of the total (€490bn; a 22% increase from 2013), leading FCI to believe that cross-border factoring is “the driver of future factoring growth”.
Factoring growth was particularly strong in Europe (8% to €1.3bn), driven by the commercial banking sector, which controls about 90% of Europe’s factoring volume. The UK, France, Germany and Italy remain the largest markets in Europe, but Lithuania (up 101%), Malta (up 66%), Turkey (up 29%) and Switzerland (up 24%) showed the strongest growth in the region.
In the Americas, growth was on par with Europe at 8%, with a particular increase in the US (17% to €97.67bn). Brazil remained the second-largest market in the Americas at €31.78bn (up 1%). Mexico and Chile both saw a decline, down 9 and 3% respectively.
Despite its slowdown, Asia accounted for over half of the total cross-border factoring volumes in 2014, with China taking 66% of the overall Asian factoring market at €406.1bn (up 7%). Japan however saw volumes drop 34% to €51bn, and Taiwan also experienced a reduction in volumes, down 22%.
In Africa, despite increased support from Afreximbank to factoring firms, the sector’s volume declined by 9% to €21bn. The decrease was strongest in South Africa at 19%, from €19.4bn in 2013 to €15.9bn last year. South Africa’s factoring market share also dropped, from 90% five years ago to 75% last year, indicating both the country’s drop in volumes and the rise of factoring in other African countries – Morocco for example grew by 52% to €4.2bn last year.
Peter Mulroy, FCI secretary general, says: “Overall, the factoring industry experienced another solid year of growth despite a volatile economic environment […] even as international trade softened due to the uneven economic recovery and as we witnessed the plummeting of commodity prices, along with quite a volatile foreign exchange environment.”
The FCI Global Factoring Statistics gather data collected from over 271 members in over 70 countries on a yearly basis.