S&P expects stable but challenging year in U.S. Commercial Finance

An improving U.S. economy, particularly a pickup in capital investment, growing demand for commercial equipment, and firming in selected real estate markets, bodes well for commercial finance companies in 2004, according to Standard & Poor’s. It believes that if the economic improvement that began in the second half of 2003 stays on track, it should boost finance companies’ asset quality, collateral values, profitability, and portfolio growth in the coming year.

Higher interest rates may limit capital spending and increase funding costs for finance companies but while S&P expects a rate rise in 2004, it does not foresee a large jump.