US commercial and consumer lending company CIT Group Inc, hit by the crisis in the US mortgage market, said on Thursday it would accelerate expansion into international markets such as China. The crisis "will enhance our strategy to grow outside of the United States", CIT Vice Chairman Thomas Hallman told Reuters in a interview in Shanghai.
Currently, CIT has a quarter of its assets outside the United States, he said. CIT's $1 billion of leasing assets in China account for less than 5 percent of the company's total such assets, but the country is CIT's biggest potential market in Asia and its Chinese leasing assets are growing 30 percent a year, he added.
"We're here on the ground floor of growth and we're building here for the future," said Hallman, who on Thursday announced the opening of an Asia-Pacific service centre in Shanghai.
Leasing is not widely used as a financing tool in China and accounts for only 1 percent of the country's $250 billion equipment market compared with 30 percent in the United States, said Li Siming, Asia managing director of CIT's leasing unit.
But this leaves huge potential and China's leasing market is attracting new entrants. China Construction Bank, Industrial & Commercial Bank of China and Bank of Communications all plan to enter the business.
"Some of that competition creates more opportunities, because that creates more awareness," Hallman said. Leasing activity will also be boosted by increasing demand for airplanes, technology, software, telecommunications and industrial equipment among Chinese companies, he said.
CIT has helped Chinese carriers such as Air China, China Eastern Airlines and China Southern Airlines buy 25 planes so far from Boeing Co and Airbus through leasing arrangements, the company said. Boeing has forecast China will require 3,400 new airplanes worth about $340 billion over the next 20 years.
Hallman said that apart from home lending in the United States, CIT's businesses remained strong and the company "still has access to substantial liquidity". CIT, which recently closed down its mortgage lending operations, on Wednesday said it planned to sell between $3.5 billion and $4.2 billion of mortgage-backed securities to home loan funder Freddie Mac as it seeks financing in jittery credit markets.
CIT shares, which changed hands around $60 in June, fell by as much as half in the past few months, last trading at $41.89.
"I think the company is worth a lot more than our stock price has been," Hallman said. The stock price "is not really an indicator of the strength of the company over the long run". Home lending accounted for about 13 percent of CIT's $80 billion of assets, and "all of our other businesses are performing really well."