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The Pakistan Credit Rating Agency Limited
Press Release

Date
04-Oct-24

Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com

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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

PACRA Maintains Asset Manager Rating of MCB Investment Management Limited

Rating Type Asset Manager
Current
(04-Oct-24 )
Previous
(06-Oct-23 )
Action Maintain Maintain
AM Rating AM1 AM1
Outlook Stable Stable
Rating Watch - -

MCB Investment Management Limited (or the 'Company') is amongst the largest leading players in the asset manager 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, and growth & diversity in assets under management. The firm also won three prestigious awards at the Pakistan Digital Awards 2024. With a portfolio of twenty-two open-end mutual funds, two voluntary pension and two KPK employees pension schemes, the Company offers its customers a wide range of products. The growth is expected to continue with management focusing on customer service enrichment. Since FY23, the AUMs base of the Company mounted significantly by ~46% to PKR 224bln as of FY24 (FY23: PKR 153bln), while the industry grew by ~65%, resulting in a market share of 8% in FY24 down from 9% in FY23. The Company has launched multiple plans across Islamic and conventional categories in fixed rate/return segment contributing to the overall AUMs growth of the Company. The funds have shown consistent and good long-term performance compared to peers. The Company has maintained a strong focus on enhancing retail penetration, contributing to enhanced stickiness and longevity in its AUM base. The current AUM composition reflects a retail-to-corporate ratio of 45:55, including HNWIs. The Company’s association with MCB Bank Limited – one of the largest commercial banks – and ensuing synergies have supplemented growth. The digital platform is also being strengthened for better retail penetration, enhanced customer services and to create synergies with the parent bank. The profitability of the Company has improved notably in FY24 due to increase in management fee and share of profit from associates standing at PKR ~861mln (FY23: PKR ~378mln). The equity base of the Company is well above the minimum regulatory requirement and stood at ~PKR 1.95bln as at end FY24 (FY23: PKR 1.74bln).
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 Investment Management Limited (MCB Funds) is a Public Listed Company regulated by SECP. MCB Funds holds licenses for Asset Management, Investment Advisory, and Pension Fund Management. Incorporated in 2000 as Arif Habib Investment, it merged with MCB Asset Management in 2011 to enhance synergies and expand distribution. In April 2023, MCB Bank increased its shareholding in MCB Funds to 81.42% by acquiring 30.09% from Arif Habib Corporation, which no longer holds any shares. It serves both conventional and Shariah-compliant clients, managing 22 open-end funds, two voluntary pension schemes, and two KPK pension schemes. Major shareholders include MCB Bank (81.42%) and Adamjee Insurance (7.6%). The general public holds the remaining ~11% of the shares. The CEO - Khawaja Khalil Shah has joined the Company in Nov'23 and has diversified experience in financial markets for over 30 years.

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.