Habib Metropolitan Financial Services Limited | BMR

RATING REPORT | Oct-26

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Rating History
Dissemination Date Rating Outlook Action Rating Watch
23-Oct-26 BMR2 Stable Maintain -
23-Oct-25 BMR2 Stable Maintain -
25-Oct-24 BMR2 Stable Maintain -
27-Oct-23 BMR2 Stable Maintain -
28-Oct-22 BMR2 Stable Maintain -
About the Entity

Habib Metropolitan Financial Services Limited ('HMFSL' or the 'Company') was incorporated in 2007 as a public limited company under the Companies Act, 2017 and commenced its operations in 2008. Habib Metropolitan Bank Limited (HMBL) is the parent company of HMFSL. HMBL currently operates with an expanding nationwide network of more than 573 branches in more than 229 cities across Pakistan at end-June'26. The Company has three directors on the board. The CEO, Mr. Ather Hussain Medina is a qualified professional with extensive work experience of over 33 years in the financial sector and has worked with well-known companies.

Rating Rationale

Habib Metropolitan Financial Services Limited ('HMFSL' or the 'Company') primarily provides equity brokerage services to individuals and financial institutions. HMFSL is part of the Habib Metropolitan Bank Limited ('HMB') Group, which provides an important institutional and governance framework to the Company. The association with a well-established banking group supports oversight, financial flexibility, and access to institutional expertise. HMFSL continues to operate with a lean organizational structure, supported by experienced management and Board oversight, enabling focused execution while maintaining control over operations. The Board benefits from the banking and financial sector experience of Mr. Amanullah Shaikh, Syed Ather Ather Ahmad, and Syed Hasnain Haider Rizvi. The Board’s composition reflects a blend of banking and financial sector expertise, with members supporting effective governance, strategic oversight, and informed decision-making. The Company has experienced a change in its product function, with Mr. Iftikhar Hasan, Head of Online Product, having resigned. The position remains vacant, with the Company yet to appoint a replacement. While the existing structure continues to support operations, timely appointment of dedicated leadership for the online product function remains important to maintain continuity and support the Company's digital business development. The governance framework is further supported by an in-house internal audit function, while established KYC, CDD, AML, CFT and whistleblowing protocols provide a framework for compliance, risk management and internal controls. Pakistan's brokerage industry remained supported by favorable market conditions during 1HCY26, with HMFSL benefiting from increased market activity. Brokerage revenue increased by ~40% in 1HCY26, reflecting improved business volumes and revenue generation. However, earnings remained under pressure during the year, indicating that the increase in brokerage activity has yet to translate into sustainable profitability. Improving earnings conversion through greater operating efficiency remains an important area of focus. The Company's capitalization strengthened materially, with equity increasing to ~PKR 564mln as at Jun'26 from ~PKR 325mln in Jun'25. The liquid capital balance (LCB) also improved to ~PKR 413mln from ~PKR 200mln, providing enhanced financial flexibility and capacity to absorb market and operating stresses. HMFSL does not engage in proprietary investments, limiting direct exposure to market risk arising from proprietary positions.

Key Rating Drivers

Going forward, the strength of the HMB Group association, continued Board and management oversight, improvement in earnings generation, and timely strengthening of key functional leadership will remain important considerations in assessing HMFSL's management profile.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Habib Metropolitan Financial Services Limited | BMR

rating analysis

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Ownership
Ownership Structure

Habib Metropolitan Financial Services Limited (HMFSL) is a wholly owned subsidiary of Habib Metropolitan Bank Limited (HMBL). The company was incorporated in 2007 as a public limited company under the Companies Ordinance, 1984 (now Companies Act, 2017) and commenced operations in 2008.


Stability

HMFSL benefits from the financial and operational strength of its parent entity, Habib Metropolitan Bank Limited (HMBL), which has been in commercial banking since 1992. Following its merger with Habib Bank AG Zurich’s Pakistan operations in 2006, HMBL now operates through an extensive branch network of 573 branches across 229 cities in Pakistan (as of Jun '26), providing a stable foundation for HMFSL’s business.


Business Acumen

HMFSL maintains a close institutional relationship with Habib Metropolitan Bank Limited, which is owned and managed by the Habib family. With over 75 years of experience in banking, the group is recognized as one of the pioneers in Pakistan’s financial sector, bringing deep industry expertise and a strong reputation to HMFSL’s operations.


Financial Strength

HMFSL’s sponsors possess substantial financial strength, with Habib Metropolitan Bank Limited’s equity standing at PKR 125bln as at June 2026. HMBL holds a AA+ credit rating, assigned by PACRA, reflecting its strong financial position. Given its sizeable net worth and growing operations, HMBL is well-positioned to provide financial support to HMFSL as its business expands.


Governance
Board Structure

HMFSL's Board comprises three directors, all representing Habib Metropolitan Bank Limited (HMBL). The inclusion of independent directors can be seen as a step toward enhancing governance practices, strengthening oversight, and bringing diverse strategic insights, which will positively impact the ratings perspective.


Members’ Profile

The board possess the necessary skills and experience required for capital markets. The board members, on-average, possess more than ~30 years of experience in the field of finance and capital markets.


Board Effectiveness

During 1HCY26, two (2) board meetings were conducted and attended by all of the board members. The board is always provided with MIS pack prior to the meeting and the meeting discussions are properly documented in the form of minutes. However, due to the size of the board, board-level committees have not been formed as per the industry best practice.


Financial Transparency

The financial statements of the Company have been audited by KPMG Taseer Hadi and Company; 'A' category and a satisfactory QCR rated firm. The auditors have issued an unqualified opinion on the financial statements.


Management
Management Team

The management of HMFSL possess necessary experience and qualifications to manage the Company's operations efficiently. Mr. Ather Husain Medina, the CEO, is a qualified professional with extensive work experience of over 33 years in the financial sector among reputed Financial Institutions.


Organizational Structure

The Company has a lean organizational structure to manage its operations and appropriate policies to protect the clients interest. The Company operates through the Head Office located in Karachi. All of the Departmental Heads reports to the CEO . However, the internal auditor reports directly to the Board.


Client Servicing

HMFSL regularly publishes reports on market strategy, economy, daily news and market updates. HMFSL has provided direct links to relevant institutions and departments on their website. Moreover, various channels, including a mobile app and online trading platforms, are available to execute and monitor the transactions.


Complaint Management

HMFSL has established Customer Complaint Policy to provide guidance to both customers and staff on the manner in which HMFSL receives and manages complaint. Customers can lodge complaint via call, email or by speaking directly to Manager Operations.


Extent Of Automation / Integration

HMFSL has comprehensive and effective IT arrangement to deal with dynamic technological environment prevailing in the capital markets arena. HMFSL has a dedicated online platform for its customers.


Continuity Of Operations

HMFSL has established a recovery plan for all essential infrastructure elements, systems, networks, and key business activities. The business continuity plan provides a framework for business departments if a major incident occurs, causing disruption to pre-defined critical services.


Risk Management Framework

The Company has an in-house internal audit department, which monitors implementation of the policies and procedures of HMFSL. Presence of an Audit Committee would have been helpful for an effective control environment and compliance with reporting standards.


Regulatory Compliance

Compliance Department ensures regular monitoring of controls and systems, which ensures all functions are in-line with the applicable policies and procedures. Research analyst policy has also been formulated. The Head of Compliance, Mr. Usman Shakeel has over 12 years of experience in the financial industry.


Business Sustainability
Business Risk

The KSE-100 Index continued its strong upward trajectory in 1HCY26, reaching successive record highs and reflecting sustained investor confidence. The market remained supported by improving macroeconomic conditions, easing interest rates, stronger foreign exchange reserves, and continued progress under the IMF program. The policy rate trajectory in 1HCY26 further encouraged a gradual reallocation from fixed-income instruments toward equities, supporting trading activity and market liquidity. Consequently, the brokerage industry benefited from higher trading volumes, increased investor participation, and stronger transaction-based revenues. Going forward, the sector’s growth will remain dependent on the sustainability of macroeconomic stability, political developments, interest-rate direction, and the continuation of supportive economic and market policies.


Business Profile

Habib Metropolitan Financial Services Limited (HMFS or the Company) was incorporated on September 28, 2007, as a public limited company and commenced operations on March 6, 2008. HMFS is a wholly owned subsidiary of Habib Metropolitan Bank Limited (HMBL), with its ultimate holding entity, Habib Bank AG Zurich, headquartered in Switzerland. The Company holds a Trading Rights Entitlement (TRE) Certificate from the Pakistan Stock Exchange Limited (PSX), authorizing it to operate in the capital markets.


Revenue and Profitability Analysis

The top line concentration of HMFS mainly consist of brokerage revenue. During 1HCY26, HMFSL earned a brokerage revenue of ~PKR 63mln as compared to SPLY: ~PKR 45mln. However, a loss after taxation of ~PKR 17mln was reported as at Jun '26.


Financial Sustainability
Credit Risk

For the assessment of client's creditworthiness, the Company has formulated detailed KYC/CDD policies. Limits have been defined, which are strictly monitored. The exposure limits as a whole and on individual basis are monitored and any shortfalls are immediately reported to senior management for prompt action.


Market Risk

HMFSL does not operate any proprietary book hence, it has protected itself from the risk arising from volatility in the equity markets. The Company does not plan to trade proprietary book in the near future.


Liquidity Profile

The liquidity profile of HMFS is adequate. The Company has reported current assets of ~PKR 620mln in 1HCY26 (Dec '25: ~PKR 785mln) as compared to current liabilities of ~PKR 166mln in 1HCY26 (Dec '25: ~PKR 503mln).


Financial Risk

At end-Jun '26, the Liquid Capital Balance (LCB) of the Company stood at ~PKR 413.463mln.The Company has an equity base of ~PKR 564mln at end Jun '26 as compared to the equity standing of ~PKR 370mln in Dec '25.
 
 

Oct-26

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Habib Metropolitan Financial Services Limited | BMR

financial summary

(PKR mln)

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Jun-26
6M		 Dec-25
12M		 Dec-24
12M		 Dec-23
12M
Management Audited Audited Audited
A. BALANCE SHEET
1. Finances 0 0 0 0
2. Investments 381 174 142 112
3. Other Earning Assets 129 111 134 80
4. Non-Earning Assets 221 589 326 315
5. Non-Performing Finances-net 0 0 0 0
Total Assets 731 874 603 506
6. Funding 141 487 253 137
7. Other Liabilities (Non-Interest Bearing) 25 16 17 60
Total Liabilities 166 504 269 197
Equity 564 371 334 308
B. INCOME STATEMENT
1. Fee Based Income 63 122 79 34
2. Operating Expenses (86) (130) (116) (97)
3. Non Fee Based Income 11 28 41 47
Total Opearting Income/(Loss) (12) 20 4 (16)
4. Financial Charges (1) (3) (1) (1)
Pre-Tax Profit (13) 17 3 (17)
5. Taxes (4) (10) (8) (3)
Profit After Tax (17) 7 (4) (20)
C. RATIO ANALYSIS
1. Cost Structure
Financial Charges / Total Opearting Income/(Loss) -7.7% 17.0% 18.5% -4.6%
Return on Equity (ROE) -3.7% 1.9% -1.3% -6.3%
2. Capital Adequacy
Equity / Total Assets (D+E+F) 77.2% 42.4% 55.4% 77.0%
Free Cash Flows from Operations (FCFO) / (Financial Charges + Current Maturity of Long Term Debt + Uncovered Short Term Borrowings) -39.62 -4.87 -11.73 -32.55
3. Liquidity
Liquid Assets / Total Assets (D+E+F) 75.3% 82.5% 66.4% 88.1%
Liquid Assets / Trade Related Liabilities 389.8% 148.4% 208.5% 267.3%
4. Credit & Market Risk
Accounts Receivable / Short-term Borrowings + Advances from Customers + Payables to Customers 31.7% 79.3% 65.4% 77.4%
Equity Instruments / Investments 22.6% 43.2% 31.2% 14.5%

Oct-26

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Habib Metropolitan Financial Services Limited | BMR

rating scale

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Oct-26

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Habib Metropolitan Financial Services Limited | BMR

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
    5. PACRA maintains the principle of integrity in seeking rating business. (Chapter III; 11-A-(u))
    6. PACRA promptly investigates in the event of misconduct or a breach of the policies, procedures, and controls, and takes appropriate steps to rectify any weaknesses to prevent any recurrence, along with suitable punitive action against the responsible employee(s). (Chapter III; 11-B-(m))
  4. Independence & Conflict of Interest
    1. PACRA receives compensation from the entity being rated or any third party for the rating services it offers. The receipt of this compensation has no influence on PACRA’s opinions or other analytical processes. In all instances, PACRA is committed to preserving the objectivity, integrity, and independence of its ratings. Our relationship is governed by two distinct mandates: i) rating mandate - signed with the entity being rated or issuer of the debt instrument, and ii) fee mandate - signed with the payer, which can be different from the entity.
    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
    5. PACRA ensures that the analysts or any of their family members shall not buy, sell, or engage in any transaction in any security which falls in the analyst’s area of primary analytical responsibility. This clause, however, does not apply to investments in securities through collective investment schemes. (Chapter III; 12-2-(l))
    6. PACRA has established policies and procedures governing investments and trading in securities by its employees and for monitoring the same to prevent insider trading, market manipulation, or any other market abuse. (Chapter III; 11-B-(g))
  5. Monitoring and Review
    1. PACRA monitors all the outstanding ratings continuously, and any potential change therein due to any event associated with the issuer, the security arrangement, the industry, etc., is disseminated to the market immediately and in an effective manner after appropriate consultation with the entity/issuer. (Chapter III; 17-(a))
    2. PACRA reviews all the outstanding ratings periodically on an annual basis. Provided that public dissemination of annual review and in an instance of change in rating will be made. (Chapter III; 17-(b))
    3. PACRA initiates an immediate review of the outstanding rating upon becoming aware of any information that may reasonably be expected to result in downgrading of the rating. (Chapter III; 17-(c))
    4. PACRA engages with the issuer and the debt securities trustee to remain updated on all information pertaining to the rating of the entity/instrument. (Chapter III; 17-(d))
  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
  7. Proprietary Information
    1. All information contained herein is considered proprietary by PACRA. Hence, none of the information in this document can be copied or otherwise reproduced, stored, or disseminated in whole or in part in any form or by any means whatsoever by any person without PACRA’s prior written consent.

Oct-26

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