The Pakistan Credit Rating Agency Limited
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Hassaan Ahmad

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PACRA Maintains Broker Management Rating of AL Habib Capital Markets (Pvt.) Limited

Rating Type Broker Management
(19-Jul-23 )
(19-Jul-22 )
Action Maintain Maintain
Long Term BMR2+ BMR2+
Short Term - -
Outlook Stable Stable
Rating Watch - -

Al Habib Capital Markets (Pvt.) Limited (“AHCML” or “the Company”) is primarily engaged in the provision of equity brokerage while income from MTS and MFS also aids the topline. The presence of a separate internal audit department contributes positively to the rating; however, the separation of risk and compliance functions would strengthen the control framework further. The Company has devised a comprehensive Disaster Recovery and business continuity plan to tackle any uncertain events. The rating takes note of AHCML’s well-developed organizational structure with a qualified and experienced management team. AHCML provides online trading, a complaint system, and research facilities to its clients. The addition of Online Sales and Marketing has enhanced the sound client services further. The assigned rating incorporates the business acumen of the primary sponsor “Bank Al Habib Limited”. Representation of the primary sponsor on the board is well noted. The addition of an independent director would improve governance oversight. The brokerage revenue of AHCML in CY22 clocked in at ~PKR 68mln while it stood at ~PKR 125mln in CY21 depicting a decline 46%. This decline aligns with the overall market volume decrease of ~51% observed during the same period. The Company maintains proprietary investments, mainly in GoP securities, hence market risk exposure is limited. The Liquid Capital Balance of the Company clocked in at ~PKR 179mln with an equity base of ~PKR 338mln at end-Dec’22. The management also intends to improve the technological infrastructure to facilitate the efficient onboarding of retail clientele. Moreover, geographical diversification is also under consideration to enhance client outreach.
Going forward, sustainability of market share, revenue, and profitability will remain imperative, while upholding strong internal controls and risk management framework and retention of key management is critical. Further, rational diversification of business activity may provide support to the company’s overall financial risk profile.

About the Entity
AL Habib Capital Markets (Pvt.) Limited, “AHCML or The Company” is a licensed TREC holder of Pakistan Stock Exchange and was incorporated under the Companies Ordinance 1984 in 2005 as private limited company. Bank AL Habib Limited (BAHL) is the major shareholder of AHCML, accounting for two‐third of the ownership. The remaining one‐third is held by Habib Family, friends and associates. The Company has six directors on the board including CEO and Chairman. The CEO, Mr. Aftab Q. Munshi possesses diversified experience in capital markets. He is serving on the Board of Directors of AHCML as Chief Executive since its incorporation. Mr. Munshi served with the Jahangir Siddiqui Group for almost 12 years in multiple roles.

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.