Karachi: OLP Financial Services Pakistan Limited has reported a 12% decline in profit before tax for the fiscal year ending June 30, 2025, amid a backdrop of economic recovery and easing monetary policies in Pakistan. The company, which plays a significant role in meeting the diverse financial needs of corporate and individual clients, recorded a profit before tax of Rs. 2.01 billion, down from Rs. 2.29 billion in the previous year. Profit after tax also decreased by 12% to Rs. 1.22 billion from Rs. 1.39 billion.
Despite the decline in profitability, OLP's total assets grew marginally by 0.1% to Rs. 35.41 billion, a reflection of strong recoveries and effective portfolio management. The company's new disbursements increased to Rs. 20.57 billion from Rs. 16.04 billion last year. According to information available from the Pakistan Stock Exchange (PSX), OLP's financial performance was impacted by a lower interest rate environment, which diminished returns from its equity-funded portfolio.
The company's revenue fell by 13% to Rs. 6,964 million, compared to Rs. 7,984 million the previous year. Income from the lease and loan portfolio decreased by 14.7%, attributed primarily to consistently lower interest rates and reduced yields. However, OLP's lease and loan portfolio saw a 14% growth, partly offsetting the decline in revenue.
Operating expenses, excluding provisions for potential lease and loan losses, were reduced by 11.8% to Rs. 4,868 million. OLP's finance costs decreased by 19.5% due to a decline in interest rates, even though total borrowings increased to Rs. 23.50 billion from Rs. 18.20 billion. Administrative and general expenses rose slightly by 3.7%, primarily due to increased staff costs.
OLP maintained its commitment to financial inclusion and empowering underserved communities. The company achieved a significant reduction in delinquency levels through prudent origination practices and effective portfolio management. Despite the challenges, OLP's fundamentals remained strong, as evidenced by credit ratings of 'AAA' (long term) and 'A1+' (short term) from VIS and PACRA.
The company declared a final cash dividend of 35%, bringing the total dividend for the year to 55%, up from 50% in the previous year. The economic outlook for Pakistan remains positive, with the State Bank of Pakistan projecting inflation to stabilize around 7.5% by June 2026, and GDP growth expected to rise to 3.25% - 3.6% in the coming year.
OLP's strategic focus on small and medium enterprises (SMEs) and its extensive branch network across Pakistan have enabled it to manage concentration risks effectively and maintain a diverse customer base. The company's vehicle leasing and financing segment continues to be a major contributor, accounting for 84% of total disbursements.
The company faced challenges in its subsidiary operations, leading to the suspension of its automobile service business due to a non-competitive market environment. Additionally, an impairment of Rs. 87 million was recorded against its investment in OPP (Private) Limited due to ongoing litigation.
Looking forward, OLP Financial Services remains focused on leveraging its robust governance, risk management, and growth strategies to capitalize on emerging opportunities in Pakistan's recovering economy.