Lahore, December 28, 2020 (PPI-OT): The ratings reflect EFG Hermes Pakistan Limited’s (“EFG Hermes” or “The Company”) association with an international financial services group “EFG Hermes” having access to emerging and frontier markets. The Company has carved its footprints in thirteen countries across four continents, spanning 35 years of growth. The assigned ratings incorporate company’s adequate market share, well built governance structure and satisfactory operating profitability. The Company maintains a high leveraged capital structure whereby, the parent company has provided unconditional and irrevocable financial guarantee to the bank.
Following the recent boom in traded volumes of stock exchange, the core revenue of the Company remained buoyant and the Company maintained its market share to ~3%. The Company does not maintain proprietary investments hence less exposed to market risk. Sizable liquid assets and support from parent provide comfort to the ratings. Further, appointment of ‘A’ category auditors and establishment of two board level committees augurs well for insightful monitoring.
The Net Capital Balance of the company clocked in at ~PKR 370mln with an equity base of ~PKR 138mln as at end Sep’20 whereas, the net profit after tax and net equity of parent Company stood at ~EGP 426mln and ~EGP 13.6bln. The topline of the EFG Hermes Pakistan lacks diversification in revenue stream and concentrated to the equity brokerage income which clocked in at ~PKR 128mln at end Sep’20 (SPLY: ~PKR 70mln). The Company earned profit amounting to ~PKR 0.49mln during 3QCY20 (3QFY19: ~PKR 56.6mln loss).
The ratings are dependent on the management’s ability to retain its market share and enhance the volumes and diversity of revenue to improve its competitive position in the brokerage industry. Retention of key personnel and sustainability of profitability will remain imperative from ratings perspective.
For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
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