The Pakistan Credit Rating Agency Limited
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Muhammad Azmat Shaheen

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PACRA Upgrades Asset Manager Rating of AL Habib Asset Management Limited

Rating Type Asset Manager
(12-Aug-22 )
(15-Sep-21 )
Action Upgrade Maintain
AM Rating AM2+ AM2
Outlook Stable Stable
Rating Watch - -

The rating reflects AL Habib Asset Management Limited's ("AHAML" or the "Company") elevating market position in the domestic AMC industry, supported by i) structural investment process, ii) sound governance structure and iii) experienced and qualified management. The rating incorporates the Company's association with a well-established bank which is one of the dominant players in banking sector. Since Jun'21, the overall industry has shown a significant growth by 19%, while AHAML leaped ahead the industry and has shown growth by ~51% while the market share of the company has increased to 4.0% as at end Jun'22. The company is following a risk averse approach to generate revenues. Hence, the AUMs concentration tilted towards money market funds with fund size of PKR ~33bln contributing 66% of total AUMs. The Company is benefiting from access to large branch network of Bank AL Habib with its strong brand name and is penetrating its footprints on the retail side. The current retail and institution mix is 25:75 which is in line with the peers universe. Furthermore, the company also synergizes its research function with the bank. The overall fund performance remained above the benchmarks and industry averages. The Equity funds of AHAML have beaten entire market by performing better than industry average. On technological side, to improve investor's reporting the company is in process to launch it's mobile app soon.

On financial profile, the core-income has shown an increase of 40.8% and stood at PKR 116mln at end 1HCY22 (1HCY21: PKR 82.6mln). The increase in-core income is due to management fees from money market categories. The Company reported net profit of PKR 48.7mln during 1HCY22 (1HCY21 : PKR 39.5mln). The Company's equity stood at PKR 812mln at end Jun'22 (Jun'21: PKR 763.5mln), comfortably meeting the minimum regulatory capital requirement of PKR capital 230mln.
Going forward, growing AUMs, sustainable market share and augmenting equity through internally generated funds would remain imperative to the assigned rating. Diversification of the fund slate and maintaining strong fund performance will be critical. Strengthening systems and adhering to robust investment process is important.

About the Entity
AL Habib Asset Management Limited incorporated in September 2005 as an unlisted public company, is one of the growing Asset Management and Investment Advisory Company in Pakistan. The company is licensed by the Securities and Exchange Commission of Pakistan (SECP) to carry out these services under the Non-Banking Finance Companies Regulations. The Company is a wholly owned subsidiary of Bank AL Habib Limited.
The Board of Directors comprises six members. The CEO, Mr. Kashif Rafi, has vast experience expanding over 20 years in the field of Investments and Fund Management. The Company’s diverse product slate includes five conventional and four shariah compliant funds in open end schemes along with three voluntary pension schemes.

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's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. 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.