The Pakistan Credit Rating Agency Limited
Press Release


Madiha Sohail

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PACRA Maintains the Broker Management Rating of Arif Habib Limited.

Rating Type Broker Management
(20-Dec-19 )
(20-Jun-19 )
Action Maintain Maintain
Long Term BMR1 BMR1
Short Term - -
Outlook Stable Stable
Rating Watch - -

The rating reflects the Company’s leading position in the brokerage industry emanating from strong ownership and governance framework, established franchise, robust operational control environment, IT infrastructure and customer services. Arif Habib Limited enjoys a strong brand name and has developed a diverse customer base over the years. The Company has achieved a distinct position in the corporate finance and advisory services, resulting in diversified revenue base and competitive advantage over peers. Recently, the profitability of the Company came under pressure due to lackluster performance of the equity market and low brokerage income. However, the recent up surge in equity market's performance is expected to bode well for the Company's profitability. The company is running a sizable proprietary book hence, largely exposed to market risk. The Company’s association with the leading business group is incorporated in the rating. The Net Capital Balance of the company at Jun'19 stood at PKR ~398mln (Jun'18: PKR ~920mln).
The rating is dependent on upholding and strengthening strong governance and control framework, while effectively managing risks, particularly associated with proprietary investment book. Meanwhile, improving profitability and maintaining market share is critical.

About the Entity
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 ~73% stake in AHL, ~2% is held by Mr. Arif Habib, ~2% is kept by banks, DFI's, mutual funds and others while rest of ~22% is owned by the general public. 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 and have female representation on board in compliance with Code of Corporate Governance. Board quarterly reviews overall performance of the company.

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.