PACRA Maintains Broker Management Rating of Arif Habib Limited
The Rating reflects the company’s very strong ownership profile and sponsor’s business acumen. The rating incorporates the company’s ability to retain its market share in lackluster equity market volumes. The leading position of the company in the country’s brokerage industry emanates from an established franchise, longstanding relationship with a diverse customer base and strong market share. This is underpinned by its well-developed transactions execution and monitoring system, acclaimed research, strong control environment and governance framework. The Company offers various value-added services to its clients including an online trading terminal, research portal, and mobile app. A strong IT infrastructure emplaced under the proper guidance of IT steering committee ensures uniform efficiency.
In addition to brokerage, AHL enjoys a distinct position in investment banking and advisory domain in Pakistan. This provides deeper penetration into client base. AHL has exposure to market risk due to its proprietary trading book. Related risks are managed through well-defined investment policy. Liquidity risk is supported by a firm commitment from the sponsor as well as the availability of banking lines of PKR ~4.7bln. In line with the capital market dynamics and lower trading volumes, AHL's profit margins have witnessed significant volatility.
The rating is dependent on upholding strong control and governance framework and continuous update of client servicing tools. Careful monitoring of risks, mainly market and liquidity risks and conflict of interest emanating from investment activities is crucial. The relatively constrained volumes in the market suppressed the profitability and managing any further contraction might be challenging.
Arif Habib Limited is a financial services company, subsidiary of Arif Habib Corporation, listed on Pakistan Stock Exchange. The company is engaged in equity trading, equity research, money market, forex, and commodities trading and has a very strong brand name. AHL also provides investment banking & advisory services to a large scale of clientele. AHL operates from three branches, including the Head office based in Karachi, Pakistan.
Arif Habib Corporation (AHC) owns 65.52% stake in AHL, while rest is owned by the general public (28.86%), banks and mutual funds (3.7%) and others. AHCL is the holding company of Arif Habib group. It has interest in fertilizer, power, cement, real estate, and financial segment. AHL has a well-composed board. It has seven members including the CEO Mr. Muhammad Shahid Ali. Two members are independent and four are non-executive. Board quarterly reviews overall performance of the company.