The number of financial leasing companies licensed by the Palestine Capital Market Authority reached nine companies as of the end of 2024. During the year, a new independent company was licensed that applied to engage in financial leasing activities compliant with Islamic Sharia.
In the context of the PCMA’s strategic plan, which dedicates a specific focus to enhancing the regulatory and legal environment for leasing operations, and as part of the PCMA’s ongoing efforts to develop financial leasing products, the PCMA has worked on preparing specialized instructions necessary for companies engaged in financial leasing activities compliant with Sharia provisions (Ijara). These instructions are expected to be issued next year. The instructions emphasize the decisions and recommendations of the Higher Sharia Supervisory Board, including the necessity of separating traditional commercial activities from Sharia-compliant activities, the requirement to appoint a Sharia advisor under specified criteria, and the relationship between existing legislation and the standards of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Naturally, these instructions are expected to have a positive impact by expanding the client base of financial leasing companies and meeting the needs of financial service consumers who prefer Sharia-compliant financial leasing services, thereby contributing to the broader goal of increasing financial inclusion rates.
In line with the PCMA’s third strategic goal, focusing on the sustainability of financial sectors under its supervision and enhancing their contribution to economic development, and its sub-goal of expanding the scope of financial leasing services, the PCMA held several technical meetings and discussions with the Ministry of Transport to update the instructions for registering vehicles leased under financial leasing, which were originally issued in 2017. These meetings resulted in new instructions that address the issues found in the previous instructions, as well as detailed new provisions related to the leasing of public vehicles. This, in turn, organizes the relationship between the Ministry, leasing companies, and the PCMA, and expands the operational scope of financial leasing companies to include vehicles operating in the public sector. The instructions were signed by His Excellency, the Minister of Transport on 18/12/2024 and shall take effect upon their publication in the Official Gazette.
At the sectoral level, expanding financial leasing services will deepen the financial leasing sector and increase its penetration rates, diversify the portfolio of leased assets, and have positive effects on the housing sector in general by enhancing the interaction between supply and demand forces.
Regarding the PCMA’s first strategic goal, enhancing the use of technology, particularly in the area of electronic integration with companies, facilitating their operations, empowering them, and enabling direct and seamless access to necessary data and information, work has been carried out in cooperation with the Information Systems Department. As a result, companies can now generate detailed reports on their activities through the electronic contract registration system, thereby improving their operational efficiency and data accuracy.
Key Financial Indicators of the Sector:
In this section, the following table presents a comparison of the most important key financial items of the financial leasing sector for the years 2024 and 2023:
Key Comparative Financial Items for the Financial Leasing Sector for the Years 2024 and 2023
| 2024 | 2023 |
Item | USD | USD |
Total Assets | 191,316,318 | 192,412,983 |
Total Liabilities | 134,431,743 | 138,028,060 |
Total Equity | 56,884,575 | 54,384,921 |
Paid-in capital | 45,360,456 | 43,910,252 |
Net Investment in Financial Leasing Contracts | 142,015,273 | 146,517,900 |
Delinquency Rate | 15.85% | 5.75% |
Sector Statistics
The total value of investment in financial leasing contracts registered with the PCMA by the end of the year reached approximately USD 7.92 million, covering 1,730 contracts. The 2024 statistics represent a decrease of 24.1% in contract value compared to 2023, and a 28.8% decrease in the number of contracts.
This decline is temporary and transitory, reflecting the decrease in key economic indicators such as investment and consumption, as mentioned above. However, it is important to note that this sector continues to grow and remain competitive, as it targets various productive and consumer assets, and has demonstrated its ability to withstand and resume activity during previous financial and economic crises.
The charts illustrate the monthly growth/decline in the value and number of financial leasing contracts between the years 2023 and 2024:
As for the distribution of the financial leasing contract portfolio in the year 2024, by type of assets and purpose of use, we see that vehicles for personal use are the most financed assets, with the contract value accounting for 54.19% of the total value of contracts, and 74.97% of the total number of contracts.
Below, we present a chart illustrating the distribution of movable assets (such as machinery, equipment, production lines, etc.) by asset type, both in terms of value and number. These assets accounted for 1.32% and 0.64% of the total value and number of registered contracts, respectively. The reclassification of financial leasing contracts in the PCMA’s electronic system enabled us to categorize these assets by type and determine each type’s share within the movable assets portfolio, as follows:
As for the share of each economic sector in financial leasing, the chart illustrates the proportion of contracts by value and number for each sector. We observe that the consumer sector is the largest beneficiary, with contracts accounting for 53.65% of the total contract value and 74.34% of the total number. These contracts primarily finance vehicles for personal use, which aligns with the prevailing consumption-based economic pattern.
Regarding the geographic distribution of the contract portfolio, Ramallah and Al-Bireh Governorate holds the largest share of the portfolio, accounting for 51.74% in terms of value and 43.35% in terms of number, followed by Nablus Governorate, then Hebron Governorate. This distribution aligns with the economic structure and business concentration across the governorates.
As for the nature of the lessees, whether individuals or companies, individuals accounted for 59% of the contract value and 82% of the contract number, as illustrated in the following charts:
