Published on 28 Jul 2017.
Analytical contact
Chew Wei Li
(603) 7628 1025
weili@ram.com.my
Media contact
Padthma Subbiah
(603) 7628 1162
padthma@ram.com.my
RAM Ratings has
assigned AA3/Stable/P1 ratings to Pac Lease Berhad’s (PacLease or the Company)
Proposed CP/MTN Programme of up to RM1.0 billion. We have also reaffirmed the
AA3/Stable/P1 ratings of Pac Lease Berhad’s (PacLease or the Company) CP/MTN
Issuance Programme of up to RM500 million (2011/2018). A sister company of OCBC
Bank (Malaysia) Berhad, the Company enhances the suite of financial services
provided by the former. Support from OCBC Malaysia (rated AAA/Stable/P1 by RAM)
is expected to continue, if needed.
PacLease’s
asset-quality indicators improved in FY Dec 2016, with its gross impaired-loan
(GIL) ratio easing from 1.4% to 1.0% owing to higher recoveries of impaired
loans and reductions in newly impaired loans. The Company’s credit-cost ratio
declined from 75 bps in 2015 to 7 bps in 2016 while its GIL coverage improved
from 137% to 172%. Nonetheless, PacLease’s asset quality may come under
pressure amid the more challenging economic environment, especially given its
SME-centric client base.
As a
non-deposit-taking entity, PacLease relies on wholesale borrowings to fund its
lending business, thereby exposing the Company to refinancing risk.
Nonetheless, we derive comfort from its ability to turn to OCBC Malaysia for funding
and liquidity support. The Company’s gearing ratio eased to a comfortable 4.0
times as at end-December 2016 in view of relatively subdued loan growth.
Meanwhile,
PacLease’s profitability remains sound, supported by its wide-margin products.
In FY Dec 2016, the Company’s net interest margin and ROA came in at 4.8% and
3.0%, respectively. Its ROA had increased from 2.5% the previous year,
primarily attributable to lower net impairment charges.
Analytical contact
Chew Wei Li
(603) 7628 1025
weili@ram.com.my
Media contact
Padthma Subbiah
(603) 7628 1162
padthma@ram.com.my
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