IBM Credit Corp, Stamford, Connecticut confounded the sceptics that believed that the IBM leasing arm would have to take more equipment writedowns against its figures for 1989 by announcing net profits up 5% at $137m – and the improvement is much better than it looks because last year’s figures included a one-time cumulative gain of $52.3m for adoption of Statement of Financial Accounting Standards No 96 covering the aggregate tax credits earned by the company due to the Tax Reform Act of 1986. When 1989 net profits are compared with the 1988 net profits before the cumulative effect of the accounting change, the increase comes out at 75%. During the year, IBM reports, the company originated financing for $9,300m of equipment, software and services for IBM’s direct customers and distribution channels, an increase of $3,000m or 47% over 1988. Equipment financed for end-users increased by 55% and short-term equipment financing for IBM industry remarketers increased by 40% over 1988. Primarily as a result of these volume increases, assets grew by 28% to $9,500m as of December 31, 1989, the company says. Finance and other income exceeded $1,000m for the first time in 1989, representing an increase of 47%. But the return on average equity fell to 18.1% from 18.5% in 1988.
