Press Release
Date: 06-Jun-22
PACRA Assigns Initial Broker Fiduciary Rating to Alfalah CLSA Securities (Pvt.) Limited

Rating Details Rating Type BFR
Dissemination Date Current (06-Jun-22 )
Action Initial
Rating BFR 2+
Outlook Stable
Rating Watch -

Rating Rationale Factor Comment
Ownership Bank Alfalah Limited is the primary shareholder with ~61% of the ownership followed by CLSA Limited with ~25% of the stakes.
Governance The board is comprised of six members including the CEO and Chairman. Three director represents Bank Alfalah while one of the directors represent CLSA.
Management and Client Services ACLSA has a well designed organizational structure. Experienced management team provides sound client services.
Internal Controls and Regulatory Compliance Comprehensive policies are in place; compliance department ensures implementation.
Business Sustainability A major part of revenue emanates from equity brokerage. Corporate finance has showed some growth in CY21 to supplement the topline.
Financial Sustainability At end Dec 21, the NCB and LCB stood at ~PKR 534mln and ~PKR 489mln respectively showing a significant growth compared to Dec 20.

Key Rating Drivers Alfalah CLSA Securities (Pvt.) Limited (ACLSA or The Company) mainly provides equity brokerage service while corporate finance also provides support. ACLSA enjoys one of the largest share of the foreign clientele in Pakistan. ACLSA has established rigorous protocols regarding risk assessment with the implementation of comprehensive and well-defined policies. ACLSA has outsourced its internal audit department which strengthens the internal control framework. Formation of an independent risk management department would be a positive factor. The Company has a well-defined organizational structure with seasoned management, reporting directly to CEO. Clients have been provided with online trading, research and all other basis facilities. In line with the improving market volumes in CY21 the brokerage revenue depicted an increase of ~30% to stand at ~PKR 287mln (CY20: ~PKR 120mln). The bottom-line also surged by ~PKR 32mln to stand at ~PKR 61mln. The market risk is negligible as the Company does not invest in equity securities. The rating accounts for the association of ACLSA with Bank Alfalah Limited and CLSA Limited. the governance framework may be enhanced further with the induction of independent directors for an increased oversight. As part of the long-term plan the Company intends to capture retail clientele with the use of digital platforms. Association with CLSA is an integral component of the rating decision. Maintaining a strong financial profile and retention of key human resources remains important.

About the Entity
Legal Structure Private Limited
Year of Establishment 23-Sep-03
Type of License Trading and Self-clearing
Majority Ownership Bank Alfalah Limited ~61%

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.