The credit rating of Universal Leasing Company JSC (hereinafter, ULC, or Company) is based on the satisfactory assessment of business profile, adequate assessments of capital adequacy and risk profile, critical assessment of funding, and the satisfactory liquidity position.
Founded in 2002, ULC is a leader of the leasing market in the Far Eastern Federal District, which accounted for about a half of the Company’s portfolio on September 30, 2024. The Company offers a wide range of leased assets, with a focus on financial lease of commercial vehicles (trucks), special vehicles and equipment for enterprises of various business scale across various segments of the economy. ULC is actively expanding its presence outside the Far Eastern Federal District and significant shares of the portfolio fall on the Central and Siberian Federal Districts (22% and 16%, respectively, as of September 30, 2024). ULC’s head office is located in Khabarovsk, although the Company is registered in Moscow.
KEY ASSESSMENT FACTORS
Satisfactory assessment of business profile. ULC holds a relatively stable position in the group of medium-sized leasing companies (at the beginning of 2024, the portfolio volume was about RUB 80 bln). According to the Company’s RAS financial statements, its equity amounted to RUB 7.8 bln as of September 30, 2024. The Company’s portfolio increased by 30% in 2024. ULC is striving to improve efficiency through impressive investments in the development and deployment of IT solutions.
ACRA assesses the portfolio diversification as high: as of September 30, 2024, the largest shares of the portfolio were occupied by construction and special vehicles (31%) and motor transport (30%), while the share of railway transport amounted to 14%. The liquidity of leased assets is generally assessed as rather high. ULC continues to expand its branch network.
In the Agency’s view, the Company’s shareholding structure is transparent. ULC’s ultimate beneficiary is an individual. The quality of corporate governance and risk management is assessed as satisfactory. At the same time, ACRA notes a high dependence of the Company on the decisions of the managing shareholder who determines and approves the corporate strategy.
Adequate assessment of capital adequacy. ACRA notes the Company’s sustainable ability to generate profits: the average capital generation ratio (ACGR) is about 240 bps, taking into account dividends paid in 2023. The capital adequacy ratio (CAR) for 9M 2024 is 13.9%, and ACRA expects this indicator to remain above 12% on the 12–18-month horizon.
Adequate risk profile assessment. ACRA assesses the quality of the leasing portfolio as fairly high. The Company maintains a low share of non-performing assets: as of September 30, 2024, payments overdue for more than one day (including technical delays) amounted to about 1% of the leasing portfolio. ACRA’s analysis of the leasing portfolio shows that the share of potentially non-performing assets does not exceed 5% of the total amount of anticipated lease payments. As a year before, ACRA notes the presence of loans granted to related companies: their share has remained at about 6% of the Company’s equity after a significant proportion of these loans were repaid in Q4 2023. The market and operational risks are assessed as insignificant.
ACRA notes an increase in the concentration of the portfolio on the largest clients: on September 30, 2024, the share of the largest group of the Company’s clients accounted for 11% of the portfolio, and the share of the ten largest clients was about 36% (compared to 4% and 29%, respectively, on September 30, 2023).
The critical assessment of funding is explained by the very low diversification of the Company’s funding sources. The main sources of funding is bank loans and equity (78% and 14%, respectively, of the balance sheet as of September 30, 2024). The Company borrows loans from numerous banks but ACRA notes the concentration of the resource base on the largest ones: as of September 30, 2024, the share of the five largest banks was 60% of the Company’s liabilities, and the largest lender accounted for 32%. ULC is expected to enter the corporate bond market, which would improve the funding diversification in the future.
The liquidity position is satisfactory because the current liquidity ratio forecasted for the next 12–24 months in ACRA’s base case scenario is about 1.06 (taking into account the anticipated growth of new business and the existing contracts). On the horizon of 12–24 months, no significant one-time repayments is falling due from the Company. The Agency notes the Company’s limited capability to attract emergency liquidity in case of need. At the same time, ULC has accumulated a significant reserve of liquid funds on its balance sheet, which reduces the likelihood of such need in the stress scenario.
key assumptions
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Maintaining the current business model in the next 12–18 months.
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CAR at no lower than 12% in the next 12–18 months.
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The share of non-performing and potentially non-performing assets is less than 5% of the lease portfolio.
potential outlook or rating change factors
The Stable outlook assumes that the credit rating will highly likely remain unchanged within the 12 to 18-month horizon.
A positive rating action may be prompted by:
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Much stronger positions of the Company in the Russian leasing market;
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Much better diversification of funding sources.
A negative rating action may be prompted by:
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Worse quality of the lease portfolio;
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Much lower CAR and/or the Company’s capital generation capacity;
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Significant share of non-core assets on the balance sheet.
rating components
Standalone creditworthiness assessment (SCA): bbb.
Adjustments: none.
Support: no.
issue ratings
There are no outstanding issues.
regulatory disclosure
The credit rating has been assigned under the national scale for the Russian Federation based on the Methodology for Assigning Credit Ratings to Leasing Companies on the National Scale for the Russian Federation, and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.
The credit rating of Universal Leasing Company JSC was published by ACRA for the first time on February 19, 2024. The credit rating and its outlook are expected to be revised within one year following the publication date of this press release.
The credit rating was assigned based on data provided by Universal Leasing Company JSC, information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the IFRS and RAS financial statements of Universal Leasing Company JSC. The credit rating is solicited, and Universal Leasing Company JSC participated in its assignment.
In assigning the credit rating, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided no additional services to Universal Leasing Company JSC. No conflicts of interest were discovered in the course of credit rating assignment.
