The Pakistan Credit Rating Agency Limited
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Muhammad Obaid

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PACRA Maintains Entity Ratings of ORIX Leasing Pakistan Limited

Rating Type Entity
(26-Feb-19 )
(16-Aug-18 )
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 improved profitability. The strategy is supplemented by OLP's extended outreach, augmented recently as well. 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, development of product for transportation segment and addition of value-added services to standard leasing products. OLP has a diverse product slate, with the Leases representing the larger proportion of the earning assets pie. The larger chunk of revenues is derived from this segment as well. OLP has also built a good book of Finances, catering vehicle, microfinance and Islamic finance. OLP balances the risk and profitability and may not expand business for size only. In lieu of this, OLP eyes non-spread based income streams to maximize its return without taking extended risk. OLP's strength of the 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. The Company maintains a fairly healthy funding structure; main source of funding remains bank borrowing and CoDs. OLP’s capital structure is strong. The paradigm change is evolving as OLP expands its operational horizon with a new license as Investment Finance Company. 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 OLP'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 (11.96%) 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 and with clear job responsibilities experienced professionals are 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.