Financial Analysis of Askari Leasing

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ASKARI LEASING LIMITED
“ANALYSIS OF FINANCIAL STATEMENTS FINANCIAL YEAR 2009”
OVERVIEW OF THE COMPANY:
Askari Leasing Limited (ALL) was incorporated in Pakistan as a public limited company on August 1, 1993 and was granted certificate of commencement of business on November 3, 1993 with a capital base of Rs 100 million. As of June 30, 2009, its total equity was over Rs 1.4 billion while its balance sheet was nearly Rs 11.8 billion. The company is controlled by the Army Welfare Trust (AWT) which owns 57.66% of the company s stock.

Its 1,192 individual shareholders own 5.886% shares. Remaining shares are with other institutional investors and employees. It has a presence in the consumer, transport, communications, textiles, power and healthcare sectors. The company also offers Certificates of Investments for various durations, both short-term and long-term. Some of its products are as follows: Askar, ALL s flagship products which has been synonymous with the concept of auto leasing in the country, Ask Life, Industrial Lease, Certificates of Investments, Ask Overseas and Ask Power.

Its other sister concerns are Askari Commercial Bank Ltd, Askari General Insurance Company Limited, Askari Cement Company Limited, Askari Aviation (Pvt) Ltd, Askari Associates (Pvt) Limited, Askari Information Systems Limited, Askari Guard Limited. Askari Leasing Ltd is operating from 5th Floor, AWT Plaza, The Mall, and Rawalpindi Cantt where it’s registered and head offices are situated.

It has strong presence in the important commercial centers across the country through its elaborate branch network. It has a total of 10 branches in various cities across Pakistan such as Karachi, Lahore, Rawalpindi, Islamabad, Peshawar, Faisalabad, Multan, Sialkot and Gujranwala. PACRA has maintained Askari Leasing s entity rating of A Plus for long-term and A1 for short-term obligations based on results of June 30, 2007. It has strong presence in the important commercial centers across the country through its elaborate branch network. It has a total of 10 branches in various cities across Pakistan such as Karachi, Lahore, Rawalpindi, Islamabad, Peshawar, Faisalabad, Multan, Sialkot and Gujranwala.

INDUSTRY BACKGROUND:
There are a total of 27 companies, which comprise the leasing sector of Pakistan. These include 16 leasing companies, 4 investment banks, 2 investment companies and 5 Modarabas. In 1997, 32 leasing companies were operational in the country. This number has been decreasing since then, especially after 2000 when the minimum paid-up capital requirement for leasing companies was raised to Rs 200 million which led to mergers and acquisitions. The recent performance of the leasing sector was affected by strong competition from commercial banks, which are increasingly offering products and services similar to that of NBFCs, including leasing companies. This, along with the slowdown in private sector credit off-take, decreased new business volume of members by 14% to Rs 36 billion in 2007, compared to Rs 41 billion in 2006. The total assets of the leasing sector increased to Rs 128 billion in 2007, a 4% rise from Rs 123 billion in the year before that. During the same period, investments in lease finance decreased to Rs 73.6 billion in FY07 from Rs 75 billion in FY06, while the revenues increased marginally by 2% to Rs 15 billion from Rs 14.7 billion. Increasing interest rate environment resulted in sharp upsurge in borrowing costs which were higher by 14% at Rs 8.5 billion from Rs 7.4 billion. The average spread, which is described as the difference between the average rate of cost of funds and lending rates, decreased to below 2% jeopardizing the profitability of the sector which reached to Rs 635 million in 2007 from Rs 2.06 billion in 2006. CREDIT RATING:

The Pakistan credit rating agency limited (PACRA) has maintained Askari Leasing s entity rating of A Plus for long-term and A1 for short-term obligations based on results of June 30,...
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