Karachi October 27, 2021: Topline Securities organized annual corporate briefing session for Orix Leasing Pakistan Limited (OLPL) today to discuss future outlook of the company. The company is planning to rebrand itself from Orix Leasing Pakistan Limited to OLP Financial Services Pakistan Limited. OLPL has upgraded its leasing license to an Investment Financial Services License.
The main idea is to introduce new products and capture available opportunities that are in place for the company. The products & services that company can offer may include insurance agency, term finance and working capital loans.
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The company has already implemented IFRS-9 so it should not have any major impact going forward in terms of provisioning expense. Further, 84% of the nonperforming loan overdue for 90 days or more are already covered.
Net Interest Margins (NIMs) of the company declined by 100bps to 10.9% in FY21 due to lower policy rates. However, this is expected to improve going forward with likely increase in policy rates. The company continued to maintain strong dividend payout of 77% during FY21. OLPL remains amongst top 5 dividend yielding stocks with dividend yield of 18%.
During the year, the Company aggressively pursued its non- performing portfolio. This approach together with improved business environment resulted in sharp reduction in the over 90 days overdue category. As on FY21, the Company’s delinquency rate stood at 6% compared to 9.6% last year.
The company main segments include Corporate lease, Commercial Vehicle Lease, Auto lease, & Operating lease on the asset side. On the liability side, the company offers Certificate of deposits and Microfinance products. The company has 38 branches in 35 cities of the country.
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Company’s total disbursements increased to Rs16.5bn in FY21, up 81% YoY while the contracts of the company increased by 73% to 2,813 contracts driven by macroeconomic recovery. Out of the total lease and loan portfolio, 27% is coming from individuals, 13% is from goods transport and 7% is from public transport.
Capital adequacy ratio (CAR) of the company stood at around 32% in FY21 vs. regulatory requirement of 10%. Future strategy of the company would include product diversification, increasing client base, alliances with vendors/manufacturers for co-marketing and staff training and development.
OLPL total borrowings reported at PKR 14.1Bn up 9%YoY due to increase in the asset portfolio. Moreover, the Company’s CAR was recorded at 31.78%, well above the regulatory requirement of 10%, reflecting the Company’s strong financial position.
