Press Release

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

Karachi, June 30, 2020: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Pak-Gulf Leasing Company Limited (PGLC) at ‘A-/A-2’ (Single A Minus/A-Two). The long term rating of ‘A’ signifies good credit quality. Protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ signifies good certainty of timely payment; liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on April 15, 2019.

Pak-Gulf Leasing Company Limited (PGLC) is a prominent leasing company that has been an active institution in the Pakistani leasing sector for almost quarter of a century. The assigned ratings take into account PGLC’s adequate profitability, asset quality indicators and capitalization indicators. Ratings also incorporate the challenging operational environment for privately-sponsored leasing companies in particular, where competition with banks and limited access to capital constrain the opportunities for accelerated growth.

PGLC has continued with its trajectory of steady growth in portfolio by following a prudent and selective disbursement strategy. With slowdown in economy, gross lease portfolio of PGLC (net of lease key money) stood around prior year’s level. Although portfolio size was maintained, infection ratios have slightly grown; though remaining at manageable level. Concentration in certain sectors remains unchanged as a result of a selective disbursement strategy. Overall monitoring and risk management controls have been strengthened with specific analyses being conducted to assess impact of COVID-19.

Operating earnings of the company has grown, however, higher provisioning has led to a marginally lower net profitability. Going forward, management expects to maintain profitability levels. Lease portfolio continues to be funded by short-term borrowing from commercial banks, along with redeployment of realized Lease Rentals on existing portfolio. Leverage indicators remained around prior year’s levels. Maintaining leverage indicators within prudent limits is considered an important rating driver. Going forward, the oncoming pandemic-induced headwinds are expected to test the portfolio asset quality. The operating environment, therefore, remains uncertain and VIS will continue to closely monitor the Company’s performance.

For further information on this rating announcement, please contact the undersigned at 021-35311861 (Ext-306) at 021-35311861 or fax to 021-35311872-3.

Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Non-Bank Financial Companies (March 2020)

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 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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