NAB’s Asset Finance and Leasing business has seen strong growth over the past year as companies commit to projects using efficient modern technologies to deliver a competitive advantage across a range of industries.

NAB Head of Asset Finance and Leasing Bevan White says it’s exciting to see customers investing in these next generation assets, plant and equipment while considering financing options which will help optimise value over the useful life of the investment.

“It’s not just about Australia’s construction and mining industries anymore,” White says. “We’re really seeing a big drive to acquire new assets to fulfil new contracts and generate revenue across a broad industry base, which means a big uplift in the marketplace.”

Today’s tech advances include opportunities to finance assets for advanced robotics and automation as well as improved energy efficiency, he says, which are adding to traditional categories like earthmoving equipment, rail rolling stock, aircraft and public transport.

Some recent assets financed and showing market breadth include the construction and operation of a fully automated building materials plant, TV production studio upgrades delivering HD and 4K sports feeds for major sporting events and new industrial plant for food manufacturing.

In each case the NAB team has been able to find asset finance optimised for the customer and their specific capital expenditure and asset requirements.

The business growth comes after some disruption in the market in recent years, with changes to accounting standards affecting the asset leasing market in 2019, as well as the supply chain shortages and asset inflation during Covid and beyond.

White says with these issues now resolving, the sector is back and thriving. Organisations see the time is right to use these facilities as a way of optimising cash flow to match repayments over the life cycle of an asset.

“We see our base of corporate and institutional clients is actively growing and using these asset finance facilities to fund their investment,” he says. “Customers have a lot of different choices of liquidity and they are coming back to this market, continuing to draw down and use those facilities, and to pay off those assets.”

Asset innovation

While many businesses may think of leasing for vehicles, there are also increasing opportunities across manufacturing, retail and more, largely driven by technology amid the need for greater productivity and energy efficiency.

White says NAB specialists are able to structure financing end-to-end across a diverse range of industries, providing pre- and post-delivery secured term facilities, operating leases and finance leases to suit customer needs.

“An example would be a customer who gets into a long-term lease of a building or warehouse for an industrial plant, and then finds all that fit-out of specialised equipment may be leasable too because it’s mobile, it’s tangible, and it can be taken away,” he says. “This could be up to $200 million for an automated distribution centre for instance.”

White says NAB specialists are particularly skilled in analysing asset value onsite and in secondary markets to allow customers the flexibility they need for secured financing end-to-end. Pricing takes into account the credit risk of the customer and also the collateral value of the asset.

The team, which is based in Sydney and runs a global business, includes a dedicated Equipment Management Group made up of experienced asset financiers which provides the bank with broad-based Residual Value underwriting capabilities.

Diversification

NAB Asset Finance and Leasing Director Edmund Loh says an additional benefit when using this product is to provide an alternative source of funding beyond pure corporate debt.

“Say in manufacturing or mining, if we separate the building and the assets, a customer can get more leverage out of it,” Loh says. “A lot of assets we fund, we can do 100 per cent LTV and it works for customers who are driven by yield who will want more debt versus equity contribution.”

Loh says the leasing allows better use of balance sheet that allows a focus on the core business rather than tying up capital in a supporting asset, like fridges used for storing retail product, for instance.

“This allows a customer to have the right, upgraded tools they need to generate the revenue without outlaying the money for them,” he says. “They can then use the debt from their general corporate lines to invest on what is more conducive to growing their business.”

White says with the pace of technological change today, having innovative financing solutions enables organisations to accelerate their business case to acquire new assets they need to stay competitive and satisfy their customers.

“Companies have to be innovative and be looking to the future,” he says. “NAB’s Asset Finance and Leasing business offers a flexible pathway to help take your business to the next level and remain future-fit.”