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

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. Since Oct’23, the KSE-100 Index has experienced a surge in investor interest, breaching the 81k mark during July 2024. The brokerage industry results for FY24 as a result are expected to be good. FY25 is expected to largely remain positive for the industry; however, political and macro-economic factors remain critical. 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 rating takes note of AHCML’s well-developed organizational structure with a qualified and experienced management team. 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. AHCML provides online trading, a grievance addressing portal, and research facilities to its clients. The Company has devised a comprehensive Disaster Recovery and Business Continuity Plan to tackle any uncertain events. The addition of Online Sales and Marketing has enhanced the sound client services further. The brokerage revenue of AHCML in 1QCY24 clocked in at ~PKR 46mln while it stood at ~PKR 17mln in SPLY depicting an incline of ~170%, while the topline grew by ~32% in CY23 as compared to CY22. This incline aligns with the overall market volume increase of more than ~100% 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 176mln with an equity base of ~PKR 378mln at end-Mar'24. Whereas, LCB of the company stood at 302mln with an equity base of 376mln as at end Dec'23. The management is on a move to improve the technological infrastructure to facilitate the 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 also 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.