Published on 19 Dec 2018.
RAM Ratings has reaffirmed the respective AA2/Stable/P1 and AA2/Stable ratings of ORIX Leasing Malaysia Berhad’s (the Company) CP/MTN Programme of up to RM500 million (2013/2020) and MTN Programme of up to RM500 million (2016/2031). The reaffirmation reflects our expectation of ready parental support from ORIX Corporation (ORIX Corp or the Group), given our view that the Company is strategically important to ORIX Corp. ORIX Corp is one of Japan’s largest diversified financial services groups.
ORIX Leasing maintains its dominant position in the industrial hire purchase and leasing space in Malaysia. The Company’s asset quality has stayed strong; its gross impaired financing ratio trended lower over the last few years before inching up to a still-healthy 1.1% as at end-June 2018. That said, ORIX Leasing’s credit cost ratio has increased to an annualised 0.6% in 1Q FY Mar 2019 from a sizeable net writeback of impairments in FY Mar 2018. The Company’s loan-loss coverage ratio is lower than prior years but still stood at a comfortable 118.4%. ORIX Leasing is working towards the adoption of MFRS 9 in FY Mar 2019 which is anticipated to lead to a marginal rise in its provisions for unimpaired exposure, although unlikely to be significant in view of its prudent underwriting standards.
ORIX Leasing’s gross receivables grew 5.4% in FY Mar 2018 – after having contracted in the past two fiscal years – with growth momentum continued into 1Q FY Mar 2019. Meanwhile, ORIX Leasing’s gearing was kept at 1.4 times as at end-June 2018 as outstanding debts had reduced amid modest financing growth. Notably, ORIX Leasing’s profitability remains among the highest in RAM’s rated portfolio of non-bank financial institutions, with respective return on assets and net interest margin of 4.6% and 5.5% in FY Mar 2018.
Cheong Kah Weng
(603) 7628 1113
(603) 7628 1162
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Ratings on ORIX Leasing Malaysia Berhad