The Pakistan Credit Rating Agency Limited
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Muhammad Noor Ul Haq

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PACRA Maintains Entity Ratings of OLP Financial Services Pakistan Limited with "Stable" Outlook

Rating Type Entity
(03-Mar-23 )
(03-Mar-22 )
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 Company maintained its position backed by its wealth of experience in the industry. The Company utilizes its expertise to gauge the prevailing conditions and take decisions in the evolving environment. The ratings also reflect OLP’s association with ORIX Corporation (ORIX), its parent company. The company derives synergies with the Group in strengthening its governance structure, internal policy framework and prudent risk management approach. The presence of three independent directors, including chairman of the Board, two executive directors and four non-executive directors having vast experience of local as well as global financial market, provides comfort on the risk profile of the Company and also lends support to rating. In current environment, when the economy is facing severe challenges, coupled with political uncertainties, the Company has shown sustained results. Significant decrease in sales and production of OEMs during 7MFY23 and increasing policy rates cause high business risk for the Company. However, OLP successfully maintains its business risk in the reported period due to its focus on cautious approach in writing new business, customer diversification, maintaining quality portfolio and expanding market reach through launch of new products as per the market need. Going forward, the increasing trend in the policy rate, inflationary pressure on price of assets and contracting economy may pose challenge to the Company’s profitability. Nevertheless, the Company is committed to expanding its portfolio with due caution, adopting prudent portfolio management by maintaining its respective risk and profitability. The Company maintains a fairly healthy funding structure; main source of funding remains bank borrowing besides CoDs and privately placed term finance certificates. Diversified source of funding strengthens the funding structure of OLP. The Company maintains a strong CAR of 27.6% as at end-sep22 comfortably fulfilling the minimum requirement of 10%.
The Company’s rating depends upon keeping its financial and sponsor profile intact. Any significant change in its risk profile may adversely impact the ratings.

About the Entity
OLP Financial Services Pakistan Limited (OLP) commenced commercial operations in 1986. OLP is listed on Pakistan Stock Exchange (PSX) and is majorly owned by ORIX Corporation (49.58%), Arif Habib Group (6.78%) and State Life Insurance Corporation (SLIC) (5.25%). The remaining shareholding is distributed among other corporates and the general public. OLP has Investment Financial Services license and is expanding its operational scope. The Board of Directors (BoD) comprises nine members. It is composed of four Non-Executive Directors representing ORIX Corporation, three independent directors and the Chief Executive Officer (CEO) and Deputy CEO as Executive Directors. Mr. Shaheen Amin, the CEO, is a seasoned professional and has been associated with the ORIX group since 1986. OLP has a well-defined organizational structure along-with 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.