Press Release

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

Karachi, April 15, 2019: 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 January 30, 2018

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 increase in disbursements, gross lease portfolio of PGLC (net of lease key money) stood at Rs. 1.52b (FY18: Rs. 1.48b; FY17: Rs. 1.20b) at end-HY19. Majority of the disbursement were undertaken in the last quarter, this trend has been maintained on a timeline basis. With increase in portfolio size, infection ratios have grown; though remaining at manageable level. Despite decreasing on an annual basis, concentration in portfolio remains noticeable as a result of a selective disbursement strategy.

Profitability of the Company has grown at a steady pace on account of growth in lease portfolio. Going forward, the management expects this trend to continue. Growth in the lease portfolio was primarily funded by short-term borrowing from commercial banks. Leverage indicators modestly increased on account of utilization of additional borrowings and decrease in equity due to payment of dividend. Maintaining leverage indicators within prudent limits is considered an important rating driver.

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 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited