Karachi, April 20, 2017: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of NBP Leasing Limited (NBPLL) at ‘A+/A-1’ (Single A Plus/A-One). Ratings continue to be placed under ‘Rating Watch Developing’ status in view of the impending merger with NBPLL’s parent company, National Bank of Pakistan (NBP), subject to regulatory approvals. The previous rating action was announced on May 2nd, 2016.
The ratings of NBPLL derive strength from the strong financial profile of the sponsor (NBP) which is one of the largest commercial banks in Pakistan, with major shareholding vested with the Government of Pakistan and an asset base of Rs. 1.9tr at year end-2016.
For the past 2 years NBPLL has witnessed a declining trend in the lease portfolio, given its merger plans. However, given the delay in prospective merger, the company’s board has directed management to focus on revival of business. The company expects new lease arrangements to commence in the ongoing year.
Net Equity of the company has improved on account of retained profits. Assets of the company are largely financed by equity. This has resulted in a near zero debt leverage. In the near future, we understand that funding sources will be limited to the parent bank.
Quality of portfolio has depicted improvement on account of recoveries. Consequently, gross and net infection ratios witnessed improvement despite a reducing size of its lease portfolio. Given the decline in lease portfolio, income from leasing operations fell; culminating in a lower profit before tax. However, effect on the same was mitigated on account of sizeable recoveries.
For further information on this rating announcement, please contact the undersigned (Ext: 201) or Mr. Mohammed Khalid Ali (Ext: 208) at 021-35311861-71 or fax to 021-35311872-3.
Applicable Rating Criteria: Non-Bank Financial Companies http://jcrvis.com.pk/Images/NBFC.pdf
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