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The Pakistan Credit Rating Agency Limited
Press Release

Date
28-Aug-19

Analyst
Muhammad Obaid
muhammad.obaid@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of ORIX Leasing Pakistan Limited

Rating Type Entity
Current
(28-Aug-19)
Previous
(26-Feb-19)
Action Maintain Maintain
Long Term AA+ AA+
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings reflect OLP's leading market position in the industry. The risk management framework and strong internal controls are the mainstay of OLP's operations. The management, while exploring various options to garner future growth, continues to emphasize on sustainability of operations. The strategy is supplemented by OLP's extended outreach. OLP believes in timely re-positioning as is evident from the sale of its overseas strategic investments over the last few years, investment in Islamic arm through acquisition of a modaraba and addition of value-added services to standard leasing products. OLP has a diverse product base with financial leasing representing the larger proportion of the earning assets pie. The Company has also built up a sizeable finances portfolio comprising of vehicles, microfinance and Islamic finance. OLP is aiming to develop non-spread based income streams to maximize its return without taking extended risk. Its strength of business model lies in its ability to accurately gauge the pulse of the borrowers and their credit appetite in the context of the fundamentals of their businesses. In the current subdued economic environment, OLP is closely monitoring the risk profile of its portfolio and risk management. An overall cautious approach is being taken, as also reflected from the reduced rate of new business. The Company maintains a fairly healthy funding structure; main source of funding remains bank borrowing and CoDs. OLP’s capital structure is strong. Association of OLP with ORIX (Japan) and emphasis on strong governance structure as reflected by nearly 45% independent members on OLP’s Board, provide extra strength to the Company’s standing.
The ratings are dependent on the Company's ability to maintain its market position while generating sound profitability. The ratings also depend upon keeping its financial profile intact. Any significant change in its risk profile may adversely impact the ratings.

About the Entity
ORIX Leasing Pakistan Limited (OLP) commenced commercial operations in 1986. OLP is listed on Pakistan Stock Exchange (PSX). OLP is majority owned by ORIX Corporation (49.58%), Arif Habib Group (12.18%) and State Life Insurance Corporation (SLIC) (5.25%). The remaining shareholding is distributed among other corporates and the general public.
ORIX Corporation (ORIX), established in 1964, is a major conglomerate with a vast global presence. ORIX presently has interests in many sectors including Asset management, Automobile, Insurance and Energy to name a few.
The Board of Directors (BoD) comprises of nine members, including the Chief Executive Officer (CEO). It constitutes four nominees of ORIX and four independent directors and the CEO. Apart from CEO all are non-executive directors. Mr. Shaheen Amin, CEO, is a seasoned professional and has been associated with the ORIX group since 1986. OLP has a well-defined organizational structure with clear job responsibilities and experienced professionals heading key functions.

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.