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Lahore, July 20, 2023 (PPI-OT): Al Habib Capital Markets (Pvt.) Limited (“AHCML” or “the Company”) is primarily engaged in the provision of equity brokerage while income from MTS and MFS also aids the topline. The presence of a separate internal audit department contributes positively to the rating; however, the separation of risk and compliance functions would strengthen the control framework further. The Company has devised a comprehensive Disaster Recovery and business continuity plan to tackle any uncertain events. The rating takes note of AHCML’s well-developed organizational structure with a qualified and experienced management team.
AHCML provides online trading, a complaint system, and research facilities to its clients. The addition of Online Sales and Marketing has enhanced the sound client services further. The assigned rating incorporates the business acumen of the primary sponsor “Bank Al Habib Limited”. Representation of the primary sponsor on the board is well noted. The addition of an independent director would improve governance oversight. The brokerage revenue of AHCML in CY22 clocked in at ~PKR 68mln while it stood at ~PKR 125mln in CY21 depicting a decline 46%. This decline aligns with the overall market volume decrease of ~51% observed during the same period.
The Company maintains proprietary investments, mainly in GoP securities, hence market risk exposure is limited. The Liquid Capital Balance of the Company clocked in at ~PKR 179mln with an equity base of ~PKR 338mln at End-Dec’22. The management also intends to improve the technological infrastructure to facilitate the efficient onboarding of retail clientele. Moreover, geographical diversification is also under consideration to enhance client outreach.
Going forward, sustainability of market share, revenue, and profitability will remain imperative, while upholding strong internal controls and risk management framework and retention of key management is critical. Further, rational diversification of business activity may provide support to the company’s overall financial risk profile
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com
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