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The Pakistan Credit Rating Agency Limited

Date
30-Dec-2016
Analysts
Aisha Khalid
aisha@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • Rating Modifiers | Outlook and Rating Watch (Jun 16) [View]
  • Correlation between Long-term and Short-term rating (Jun 16) [View]
  • Methodology | Non-Banking Finance Companies (Jan 16) [View]

Related Research

  • Sector Study | Leasing (Jan 16) [View]
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PACRA Maintains Entity Ratings of ORIX Leasing Pakistan Limited
 Rating Type Entity
Current
(30-Dec-2016)
 Action Maintain
 Long Term AA+
 Short Term A1+
 Outlook Stable
 Rating Watch -

With recent completion of acquisition and subsequent merger of Standard Chartered Leasing with and into ORIX Leasing Pakistan Limited (OLP), the merged entity – OLP – has emerged as more strong market player given an increase in its market share in overall NBFC sector in general and Leasing sector in particular. OLP’s expanded portfolio of assets is well diversified, which is adequately supported by quality risk management framework, and superior technology infrastructure. The ratings draw comfort from the management’s efforts to strengthen its control mechanism, which aids in maintaining sound asset quality. The management, while exploring various options to strategic future growth, remains cautious emphasising on improving its spreads. While OLP maintains a fairly healthy funding structure, leveraging remains relatively high as compared to last year. As OLP has also acquired ORIX Services Pakistan (Private) Limited (Formerly Standard Chartered Services of Pakistan (Private) Limited and 20% stake in ORIX Modaraba (Formerly Standard Chartered Modaraba), an expected dividend stream from the Modaraba is likely to add to the bottom-line performance of OLP. OLP continues to benefit from historically demonstrated commitment from ORIX Corporation, Japan towards its operations in Pakistan.

The ratings are dependent on the Company's ability to maintain its strong market position while keeping its financial profile intact. Any significant change in its risk profile may adversely impact the ratings.
About the Entity
ORIX Leasing Pakistan Limited, the largest leasing company in Pakistan, commenced operations in 1986. OLP's major shareholder (~50%), ORIX Corporation-Japan, established in 1964, is one of Japan's leading integrated financial services group with operations in 36 countries. The group had a total asset base of ~ USD 102bln as at end Mar-2016 (Mar-15: USD 95bln). ORIX-Japan has an international credit rating of Baa1 from Moody's (March 31, 2016).

The Board of Directors (BoD) comprises eight members, including the Chief Executive Officer (CEO). It constitutes five nominees of ORIX, one nominee of State Life Insurance Corporation (SLIC) and two independent director. The BoD, with diversified background and expertise, is a key source of guidance to the management. Mr. Shaheen Amin assumed the role of CEO – ORIX in Feb16. Mr. Amin has been associated with the group since 1986. He has held various key positions in the group. The company has an experienced and qualified management team.
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.
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