Lahore, December 28, 2018 (PPI-OT): The rating reflects Ismail Iqbal Securities (Pvt.) Ltd’s (IIS) modest market share in the brokerage industry. The company’s focus remains on high net-worth individuals and ancillary business from big brokerage firms. The rating assigned to IIS takes into account its improving risk framework, adequate organizational structure, and IT infrastructure. IIS has a clearly designed organizational structure with all departmental heads reporting to the CEO. Governance framework needs to be strengthened, as the company has no independent director on its board. The company has high exposure to market risk due to investment book, dominated by investments in liquid securities.
This may lead to perception of conflict of interest but the management has put processes in place to manage it. The rating incorporates the company’s efforts to increase foot prints in corporate finance and advisory domain. Ongoing efforts have been put into establishing and implementing risk management and compliance policies, which mitigate the risks inherent to the brokerage industry to certain extent. Furthermore, the company has adequate capitalization levels with the net capital balance of ~PKR 204mln as at end June-18.
The rating is dependent upon the management’s ability to improve governance framework, careful monitoring of market risk and conflict of interest, emanating from investment activities. Retention of key personnel and continuous improvement in customer servicing tools will bode well for the company. Any significant drop in the volumes and resulting fee income will affect the rating negatively.
For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com