NBP Leasing Limited Rating at A+/A-1

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). Outlook on the assigned ratings remains ‘Positive’.

Ratings derive strength from the ownership structure of NBPL, with its sponsor being National Bank of Pakistan (NBP); the second largest bank of Pakistan in terms of deposit base and rated ‘AAA’ (Triple A) by JCR-VIS. Given the resources available with NBP, the company’s access to funds is expected to remain strong.

Net equity of NBPL stood higher than the minimum capital requirement for leasing companies. While there has been increase in borrowings utilized by the company on a timeline basis, debt leverage remains low. Moreover, the management is projecting decrease in borrowings level by year-end as liquidity released from maturing PIBs will be channeled into lending activities.

Growth has been witnessed in the core leasing activities of the institution, with disbursements until Jun’13 exceeding the target for half year. With fresh accretion in NPLs, portfolio quality indicators depicted some weakening in 2012. Management remained active in recoveries against delinquencies and no new NPLs were reported in 1Q’13.

Revenues from core operations depicted an increase in 2012. Nevertheless profit for the year declined on account of higher finance cost, revised provisioning criteria and lower income from other operating activities. Effective utilization of funds in income generating avenues is necessary to generate the desired return, going forward.