Lahore, October 31, 2022 (PPI-OT):Habib Metropolitan Financial Services Limited (“HMFSL” or the “Company”) is a public unlisted company primarily providing the services of equity brokerage to HNWIs and corporate/institutional clients. The Broker Management Rating reflects the Company’s association with a well-established bank, one of the banking sector’s dominant players. The rating incorporates the Company’s sponsor support, experienced management team, and the availability of a client services platform with quality research available to customers. The governance framework is considered satisfactory; however, the formation of board-level audit and risk management committees and the inclusion of independent directors with relevant experience would strengthen corporate governance.
The Company has a lean organizational structure to manage its operations. The assigned rating also takes into account sound internal controls with adequately documented and disseminated internal policies. The Company has an in-house internal audit department, which ensures the implementation of the policies and procedures. The Company has established rigorous protocols regarding risk assessment by implementing KYC, CDD, AML, CFT, and whistle-blowing policies. The appointment of auditors from SBP’s approved ‘A’ category list has strengthened the transparency.
The IT infrastructure allows full integration of the front and back-office functions, allowing the generation of real-time reports. The Company has no proprietary trading book hence, less exposed to market risk. The average market share of HMFSL during 1HCY22 stands at ~1.6%.; however, the brokerage income which clocked in at ~PKR 19mln for 1HCY22, lacks diversification. The Company reported a net loss of ~PKR 2.6mln during 1HCY22 compared to a profit of ~PKR 3.2mln in 1HCY21. The reduced profits are on account of condensed traded volume. The Company has an equity base of ~PKR330mln at end-June’22.
The ratings are dependent on the management’s ability to increase and retain its market share and diversification of revenue base to improve its competitive position in the brokerage industry. Retention of key personnel, adherence to regulatory requirements, and sustainability of profits will remain imperative from the rating’s perspective.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com