Lahore, February 27, 2019 (PPI-OT): The ratings reflect the company’s compliance against its investment policy and other agreed parameters by shareholders. Ismail Iqbal Securities has a clearly designed organizational structure with all departmental heads reporting to the CEO. The management intends to strengthen the board structure by increasing the size of the board and inducting independent director/s along with improving its risk management framework. Ismail Iqbal Securities (Pvt.) Ltd has a 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 assigned ratings take into account the company’s high exposure to market risk due to its investment book, dominated by investments in quoted securities. This may lead to perception of conflict of interest but the management has put processes in place to manage it. The ratings incorporate the company’s efforts to increase its foot print in the corporate finance and advisory domain. The performance of the company is under pressure due to operating losses, on the back of low volumes in equity market, eventually impacting its equity. Furthermore, the company has adequate capitalization levels with net capital balance of ~PKR 205mln at end Dec-18.
The ratings are dependent upon the management’s ability to improve its operating revenues to stem the losses. Meanwhile, better governance framework, careful monitoring of market risk and conflict of interest remain critical. Retention of key personnel and continuous improvement in customer servicing tools will bode well for the company. Any significant drop in revenues leading or persistent losses will affect the ratings 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