Press Release
Date: 13-Jun-22
PACRA Assigns Initial Broker Fiduciary Rating to Habib Metropolitan Financial Services Limited

Rating Details Rating Type BFR
Dissemination Date Current (13-Jun-22 )
Action Initial
Rating BFR 3+
Outlook Stable
Rating Watch -

Rating Rationale Factor Comment
Ownership The Company is a wholly owned subsidiary of Habib Metropolitan Bank Limited, a prominent financial institution.
Governance The board of directors is comprised of three members all representing the parent company.
Management and Client Services The Company has a lean organisational structure which commensurate with the quantum of the business.
Internal Controls and Regulatory Compliance Well defined policies are in place pertaining to key risk areas compliance and internal audit department ensures implementation.
Business Sustainability Primary source of revenue emanates from equity brokerage which leaves room for product diversification.
Financial Sustainability At end-Dec21, the NCB and LCB stood at ~PKR 254mln and ~PKR 296mln respectively, while the equity stood at ~PKR 338mln.

Key Rating Drivers Habib Metropolitan Financial Services Limited ("HMFS" or the "Company") is a public unlisted company principally engaged in securities brokerage of both: ready and futures market. The assigned rating incorporates a qualified and experienced management team and a client services platform with the facility of online trading and quality research available to customers. The rating incorporates adequate internal control structure supported by an independent compliance department while the presence of internal auditor is well noted. The Company has established rigorous protocols regarding risk assessment by implementing KYC, CDD, AML, CFT, and whistle blowing policies. The IT infrastructure allows full integration of the front and back-office functions, allowing timely availability of MIS. The Company has no proprietary trading book hence, less exposed to market risk. The rating reflects the Company's association with a growing bank which has a dominant presence in trade finance. The governance framework is considered adequate. Formation of board level audit and risk management committee’s and the inclusion of independent director with relevant experience would strengthen corporate governance. The Company has sustained its revenue from equity brokerage for CY21 when compared with CY20. The profitability has reduced on the back of a decline in other income. The rating takes comfort from a low leveraged capital structure. The rating is dependent on the management's ability to sustain and increase its revenue and market share. Retention of key personnel and adherence to regulatory requirements is important.

About the Entity
Legal Structure Public Limited
Year of Establishment 28-Sep-07
Type of License Trading and Self-clearing
Majority Ownership Habib Metropolitan Bank Limited

Regulatory Disclosures Analyst Applicable Criteria Related Research
Ayesha Qasim

Methodology | Broker Fiduciary Rating | Jan-22

Sector Study | Brokerage & Securities | Jan-22

Disclaimer This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA. The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.