Press Release

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

Karachi, January 30, 2018: 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 December 30, 2016.

Ratings incorporate the Company’s ability to maintain its risk profile in a challenging environment. PGLC has continued its strategy of cautious underwriting with focus on controls over the financing activity while there has also been added emphasis on obtaining additional security against exposures. With increase in disbursements, lease portfolio of PGLC (net of lease key money) reached Rs. 1.2b during the period ending June 30, 2017. To further diversify its product portfolio, the Company has also launched diminishing mushrakah mode of financing.

In line with PGLC’s conservative stance, infections levels continue to remain at a negligible level. With growth in assets during the outgoing year, infection has declined. Nonetheless, concentration in the portfolio remains noticeable although depicting a declining trend. Given concentration in the portfolio, credit risk emanating from the same is considered significant.

Profitability of the Company has grown at a steady pace on account of growth in lease portfolio during FY17. While the entire lease portfolio of the Company comprises variable rate leases, impact of interest rates on future profitability of the Company will continue to be monitored. A major source of funds for the Company emanates from its Certificate of Investments (CoIs) base; almost 93% of CoIs are held by related parties which are rolled over at maturity each year. In order to fund its growth strategy in the coming years, PGLC also mobilized short-term running finance facilities from commercial banks. Leverage indicators are commensurate with the current ratings, despite additional borrowings. With the recent amendment to minimum equity level for deposit-taking leasing companies, equity of PGLC is now compliant with this regulatory requirement.

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 (October, 2017)

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 2018 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