The Pakistan Credit Rating Agency Limited
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Wajeeha Asghar

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PACRA Maintains Asset Manager Rating of MCB-Arif Habib Savings and Investments Limited

Rating Type Asset Manager
(06-Oct-22 )
(06-Oct-21 )
Action Maintain Maintain
AM Rating AM1 AM1
Outlook Stable Stable
Rating Watch - -

MCB-Arif Habib Saving and Investment Limited (or the 'company') is amongst the largest leading players in the AMC industry, supported by a strong control environment, structured Investment processes, good governance framework, and qualified management team. The assigned rating takes into account improvement across key performance areas including investment management, fund performance, control framework, and growth & diversity in assets under management. The rating reflects the sizable growth in the AUMs of the Company, which have increased by ~25% at the end Jun'22 on a YoY basis. While the market share showed an increase of ~2.5% and is currently standing at ~9.8% in Jun'22. The growth momentum is expected to continue with management focusing on customer service enrichment. The AMC has won best digital customer service award at Pakistan Digital Awards 2022. The Company is also managing one of the largest AUMs portfolios under the SMA segment and holds a significant share of the investment advisory domain. MCBAH is operating separate risk management and compliance departments and both departments are headed by different individuals. The Company has a large retail customer base with improving granularity resulting in sticky AUMs. With a comprehensive portfolio of eighteen open-end mutual funds and two voluntary pension schemes, the Company offers a wide range of products for its customers. The Company’s association with MCB Bank Limited – one of the largest commercial banks – and ensuing synergies have supplemented growth. The funds under management have shown consistent and good long term performance compared to peers.. The profitability of the Company has improved notably in FY22 on the back of improving revenue generation ability from the collective investment schemes and the SMA portfolio. The company enjoys sound liquidity and has sufficient lines available if the need arises. The equity base of the company is well above the minimum regulatory requirement and stood at ~PKR 1.4bln as at end-Jun'22.
The rating is dependent upon the Company’s ability to sustain its market share and upholding strong investment processes and control environment. Meanwhile, consistent performance of funds compared to benchmark and peers is critical. Any sustained downturn in fund performance and/or significant loss in market share will impact the rating

About the Entity
MCB-Arif Habib Limited Savings and Investments Limited (MCB-AH or the "Company") is a Public Listed Company, regulated by the SECP. MCB-AH holds licenses for Asset Management, Investment Advisory, and Pension Fund Management. MCB-AH was incorporated in 2000 as Arif Habib Investments Limited and subsequently merged with MCB Asset Management Company in 2011, to achieve synergies in asset management business and access to a wider distribution network. Pursuant to the merger, the name of the Company was changed to MCB-Arif Habib Savings and Investments Limited. MCB-AH caters to both conventional and Shariah-compliant clientele and is currently managing a diverse product slate of eighteen open-end funds and two voluntary pension schemes. MCB-AH is also managing one of the largest AUMs under the SMA segment and holds a significant position in the investment advisory domain.
The major shareholders of MCB-AH are MCB Bank Limited ~51%, Arif Habib Corporation Limited ~30%, and Adamjee Insurance Company Limited ~8%. The general public holds the remaining ~11% of the shares. MCB-AH's control vests in the eight-member board, comprises the CEO, two representatives from MCB Bank Limited, two representatives from Arif Habib Group.

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.