Lahore, May 20, 2019 (PPI-OT): The rating reflects the company’s continuous efforts to retain its market share in the brokerage industry despite vast volatility and lackluster trading volumes in Pakistan’s Stock Market. The rating incorporates the business strategy of the sponsors, emerging business dynamics, effective deployment of human resources, improved risk framework, adequate IT infrastructure, properly designed organizational structure with all the departmental heads reporting to the CEO.
The company is also in the process of indulging an independent director on its board to adopt the best practices of the industry which exhibits a positive gesture. The investment book dominated by investments in equity shares exposes the company to conflict of interest and market risk. Ongoing efforts have been made to reduce the size of proprietary book according to the company’s policy which mitigate risks inherent in the brokerage business. Furthermore, the company has adequate capitalization levels with the Net Capital Balance of ~PKR 205mln as at end Dec-18. The company’s revenue generation is mainly focused towards HNWI’s and the management needs to increase the retail penetration.
The rating is dependent upon the company’s ongoing efforts to improve its governance framework and careful monitoring of liquidity risks, strategic planning for improved returns, concerns regarding conflict of interest emanating from investment activities and continuous improvement in customer servicing tools will bode well for the company.
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