Karachi, November 09, 2016: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Grays Leasing Limited (GLL) at ‘BB-/B’ (Double B Minus/Single B). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on December 01, 2015.
The ratings assigned to GLL take into account its weak financial risk profile. The company continues to face challenges of low business volume, limited funding opportunities and chronic non-performing leases, a large part of which remained un-provided. Capitalization indicators remained stressed and limit the institution’s risk absorption capacity. In order to fund its operations, the company has arranged a short term unsecured loan from an associated company. Under the changes in the NBFC regulations, the company has opted for non-deposit taking NBFC.
New leases booked were primarily extended to individuals under vehicle financing. Although new leases booked increased, income from leases declined due to lower benchmark rates. Given the aging profile of the overdue lease portfolio, likelihood of material recovery in the same is considered low.
Liquidity profile of GLL remained stressed due to weak portfolio quality and lack of funding avenues available. Equity base has eroded in the recent years owing to continued losses. In the absence of fresh equity, net NPLs as a proportion of Tier 1 Equity are sizeable.
For further information on this rating announcement, please contact the undersigned at 021-35311861-70 (Ext: 234) or Mr. Waqas Munir, FRM at 042-35723411-13 (Ext: 8010).
Applicable Rating Criteria:
Non-Bank Financial Companies (March, 2005) (http://www.jcrvis.com.pk/kc-meth.aspx)
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