JCR-VIS Revises Management Quality Rating of Faysal Asset Management Limited

Karachi, March 19, 2018 (PPI-OT):JCR-VIS Credit Rating Company Ltd. has revised the Management Quality (MQ) Rating of Faysal Asset Management Limited (FAML) from ‘AM3+’ (AM-Three Single Plus) to ‘AM3’ (AM-Three). The outstanding rating has been placed on ‘Rating Watch – Developing’ status. The previous rating action was announced on October 12, 2017.

Rating change incorporates stagnation in Assets Under Management (AUMs) at a level where they are unable to support corresponding operational costs. Over the period, this has eroded equity of the company to a level below the regulatory requirement. JCR-VIS has continued to monitor company’s developments and will update the rating upon finalization of the planned equity injection / sponsor subordinated loan which has been pursued for some time.

In case of capitalization through subordinated loan, this would increase the liquidity and capitalization levels; nonetheless, its effective utilization to generate sustainable AUMs and control operational losses would be seen over time. Current rating takes into account Faysal Bank Limited becoming a major shareholder of the company subsequent to planned takeover of 50% equity holding from Islamic Investment Company of the Gulf (Bahamas) Ltd.

Total AUMs amounted to Rs. 8.2b (1Q18: Rs. 8.7b; FY17: Rs. 7.9b) at end-February 2018. As per management projections, achieving a targeted AUM level of Rs. 30b is expected to aid in achieving breakeven by end-FY20. With majority of funds’ performance belonging in the lower quartiles, returns from these funds depict significant room for improvement relative to peers.

For more information, contact:
CFA
JCR-VIS Credit Rating Company Limited
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Email: sobia@jcrvis.com.pk