Karachi, May 2, 2016: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of NBP Leasing Limited (NBPL) 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 National Bank of Pakistan (NBP). The previous rating action was announced on November 25, 2015.
Ratings derive strength from the ownership structure of NBPL, with its sponsor being National Bank of Pakistan (NBP), one of the largest banks in the country.
Core leasing operations of the company remained subdued, with lease portfolio witnessing decline of around 13% in 2015. Lease portfolio of NBPL features client-wise concentration; the same is considered to be within manageable levels.
Portfolio quality has depicted some improvement on account of recoveries. Major portion of non-performing leases (NPLs) carried on books relates to prior years; fresh accretion of NPLs in recent years has remained limited. Consequently, gross and net infection ratios witnessed slight decrease. Though lease income exhibited decrease, earnings almost doubled in 2015 largely on account of reversal in provision against investments and sizeable recoveries from defaulting parties.
Capitalization levels of the company have grown over time on account of profit retention. Net equity of NBPL stood higher than minimum capital requirement for leasing companies. Given sizeable debt repayment in 2015 and the ongoing year, debt leverage and gearing continued their downward trend and remain on the lower side. Funding sources of the company are currently limited to the parent bank, in line with merger plans.
For further information on this rating announcement, please contact the undersigned (Ext: 508) or Mr. Javed Callea (Ext: 501) at 021-35311861-71 or fax to 021-35311872-3.
Mohammed Khalid Ali
Applicable Rating Criteria: Non-Bank Financial Companies http://jcrvis.com.pk/Images/NBFC.pdf
Information herein was obtained from sources believed to be accurate and reliable; however,
JCR-VIS Credit Rating Company Limited (JCR-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. JCR-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. JCR-VIS is not an NRSRO and its
credit ratings are not NRSRO credit ratings. JCR-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.
JCR-VIS Credit Rating Company Limited. All rights reserved.
Contents may be used by news media with credit to JCR-VIS.