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. 

 

Analytical contact
Cheong Kah Weng
(603) 7628 1113
[email protected]

Media contact
Padthma Subbiah
(603) 7628 1162
[email protected]

 

The credit randation to purchase, sell or hold a security, inasmuch as it does not comment on the security's market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings' credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings' credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
? Copyright 2018 by RAM Rating Services Berhad

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