Muhammad Jhangeer Hanif
PACRA Maintains Entity Ratings of ORIX Leasing Pakistan Limited
OLP is a strong market player, given an increase in its market share in leasing industry as well as in overall NBFC sector. OLP’s expanded portfolio of assets is well diversified, which is adequately supported by quality risk management framework and advanced technology infrastructure. The ratings draw comfort from the management’s efforts to strengthen its control mechanism, which helps in maintaining sound asset quality. The management, while exploring various options to garner future growth, continues to emphasize on improved spreads, increased geographical outreach and diversification into non-spread based businesses especially in the wake of low interest rate environment in the country. While OLP maintains a fairly healthy funding structure, leveraging remains relatively high (Borrowing / (Borrowing +Deposits ratio is ~67 % at end-Mar17). With new right issue completing in July 17, this is likely to come down. 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.
The ratings are dependent on the Company's ability to maintain its market position. The ratings also depend upon keeping its financial profile intact. Any significant change in its risk profile may adversely impact the ratings.
ORIX Leasing Pakistan Limited (OLP) commenced commercial operations in 1986. OLP has a network of 34 branches spread across 32 cities. OLP is listed on Pakistan Stock Exchange. OLP is majority owned by ORIX Corporation-Japan (49.6%), State Life Insurance Corporation (SLIC) (5.25%) while rest is distributed among other corporates and general public. In FY16, OLP acquired Standard Chartered Leasing Limited; consequently market share in leasing industry in terms of total assets has increased to 84%.
ORIX Corporation, established in 1964, is a major conglomerate with presence all over the world. Starting with leasing, now ORIX Corporation has interests in many sectors including Asset management, Automobile, Insurance and Energy. BoD of OLP comprises of eight experienced members including the CEO. Apart from the CEO, five nominees of ORIX Corporation, one nominee of SLIC and two independent directors are on the Board. Mr. Khalid Aziz Mirza has recently joined the Board and is the chairman. Mr. Shaheen Amin assumed the role of CEO of OLP in Feb16. Mr. Amin has been associated with the group since 1986. He is assisted by an able management team.