Published on 23 September 2013
RAM Ratings has reaffirmed the
A2/P1 issue ratings for Pac Lease Berhad’s (or the Company) CP/MTN Issuance
Programme of up to RM500 million (2011/2018). Concurrently, the outlook on the
long-term rating has been revised to positive.
The positive outlook reflects
the enhanced operational support from OCBC Bank (Malaysia) Berhad (OCBC),
following Oversea-Chinese Banking Corporation Limited’s increased stake in
PacLease (from an indirect 63.5% to 100%) via OCBC Capital (Malaysia) Sdn Bhd.
The Company’s business strategies and operations are under the purview of OCBC.
Being a bank-backed
equipment-financing company gives PacLease the added advantage of funding
support. The Company recently tied up with OCBC Al-Amin Bank Berhad, which is
envisaged to gradually increase PacLease’s non-interest income as it refers
equipment-financing customers to its new partner in return for a commission.
PacLease’s risk-management systems will also be reviewed periodically by OCBC.
Despite its rapid growth
PacLease’s asset-quality indicators have held up well. While its gross
impaired-loan (GIL) ratio had inched up from 1.0% to 1.3% y-o-y as at end-March
2013, it is still deemed healthy. At the same time, the Company’s GIL coverage
ratio came in at a strong 132% while its credit-cost ratio remained stable at
an annualised 0.4%.
PacLease’s robust profitability
is underpinned by its high-margin products. Its net interest margin and return
on assets remained healthy at a respective 5.4% and 3.2% in fiscal 2012.
Although the Company relies on wholesale borrowings as its main funding source,
refinancing risk is partly mitigated by its unutilised borrowing facilities and
the expected funding support from OCBC. As at end-March 2013, the Company’s
gearing ratio stood at 4.4 times, which is comparable to those of its similarly
rated non-bank financial institution peers in RAM’s portfolio.
Media contact
Kwan Ji-Ling
(603) 7628 1115
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