VIS Reaffirms Broker Fiduciary Rating of Next Capital Limited

Karachi, September 14, 2023 (PPI-OT): VIS Credit Rating Company Ltd. (VIS) has reaffirmed Broker Fiduciary Rating of Next Capital Limited (NCL) at ‘BFR2’. The assigned rating denotes strong fiduciary standards and signifies strong ownership and governance, internal control and regulatory compliance as well as sound business and financial sustainability and management and client services. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on May 18, 2022.

The rating takes into account the strong ownership and governance. NCL is a listed entity, with board of directors constituting seven members, inclusive of two independent representations. Moreover, the Company has also established two additional committees namely risk management committee and investment committee, providing impetus to the Company’s governance framework. Internal controls and regulatory compliances are also considered strong. However, enhancing the scope of the internal control policies, including conflict of interest policy, as well as reviewing order recording system on a periodic basis maybe considered. Rating also factors in Company’s sound management and client services, with extensive research coverage available on website along with mobile and web-based application in place to ensure client facilitation.

Financial profile of the Company depicts deterioration in the earning profile during 9MFY23 primarily driven by the decline in the brokerage income despite higher income from advisory and consultancy vis-à-vis same period last year, consequently leading to operating losses and worsening in cost to income ratio. While liquidity profile of the Company has shown a considerable improvement, capitalization profile is constrained by the low equity base relative to its peers. Going forward, augmenting revenue base and equity along with managing operational expenses will remain important for rating.

The Company holds a Trading Right Entitlement Certificate (TREC) issued by the Pakistan Stock Exchange Limited (PSX) for Trading and Self-Clearing Services. External auditors of the company are Baker Tilly Mehmood Idrees Qamar - Chartered Accountants and belong to category ‘A’ on the approved list of auditors published by the State Bank of Pakistan (SBP).

For more information, contact:

Director Compliance and Rating Analytics,

VIS Credit Rating Company Limited

VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,

Phase VII, DHA, Karachi, Pakistan

Tel: +92-21-35311861-72

Fax: +92-21-35311873



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