Press Release

JCR-VIS Reaffirms Ratings of Pak-Gulf Leasing Company Limited at A-/A-2

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Karachi, December 30, 2016: JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Pak Gulf Leasing Company Limited (PGLC) at ‘A-/A-2’ (Single A Minus/A-Two). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on November 27, 2015.

The assigned ratings incorporate sound asset quality indicators, adequate profitability levels and liquidity profile of the company. Capitalization levels of the company have grown on the back of profit retention, while leverage indicators, despite increasing on a yearly basis, have also been maintained at prudent levels. Ratings also reflect the challenging operational environment for NBFCs in general and for privately-sponsored leasing companies in particular, where thinning margins, competition with banks and limited access to capital constrain the opportunities for growth.

Net lease portfolio of PGLC grew by 11% with majority increase witnessed in the last quarter; this trend has been observed on a timeline basis. Modest growth in the portfolio can be attributed to lower industrial growth and prudent disbursement strategy by management. Despite decreasing on an annual basis, concentration in portfolio remains sizeable as a result of selective disbursement strategy. Infection levels of the company have remained negligible. Going forward, management has restricted fresh disbursements in Ijarah leases till an ongoing litigation is resolved.

Cash recoveries of PGLC are sufficient to meet operating expenses and finance costs, while excess cash along with additional borrowings is being utilized to fund disbursements. While management expects debt to finance further growth in its portfolio, leverage indicators are expected to remain within manageable levels given current capitalization levels and assuming prudent retention of future profits.

For further information on this rating announcement, please contact the undersigned at 021-35311861 (Ext-207) or Mr. Javed Callea (Ext-201) at 021-35311861 or fax to 021-35311872-3.

Jamal Abbas Zaidi

Applicable Rating Criteria: Non-Bank Financial Companies (March, 2005)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited VIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2016 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited