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JCR-VIS reaffirms entity ratings of SLL

August 16, 2014

JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of SME Leasing Limited (SLL) at BB+/B’ (Double B Plus/B).

Outlook on the assigned ratings is ‘stable’, said a press release here on Friday.

After a considerable gap, operating activities of SLL resumed in the last quarter of FY13, following the appointment of a full time CEO.

In addition to this, management has enhanced focus on recovery of non- performing financings. As leasing activities remained subdued for most of FY13, there has been a decline in administration costs and financial charges.

Resultantly, quantum of losses reduced in FY13.

The risk absorption capacity of the company stands considerably weakened.

Meanwhile, net non-performing financings represent a sizeable proportion of the company’s equity base.

Fresh capital injection is required to reinstate the risk profile of the company.

Liquidity profile of the institution also remains stressed.

Funding sources of the company are primarily limited to parent bank; availability of which is considered critical for SLL to support its growth needs.

Meanwhile, the Securities and Exchange Commission of Pakistan (SECP) has restricted the company from raising deposits from general public till such time compliance with minimum capital requirement is achieved and also renewal or leasing license.

Management is projecting positive bottom line results on the back of growth in operations. Enhancing core revenues of the company is primarily dependent on management’s ability to scale up its leasing portfolio while ensuring strict underwriting controls.

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Source: Balochistan Times (Pakistan)

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