Karachi, September 29, 2021 (PPI-OT):VIS Credit Rating Company Ltd. VIS) has assigned initial Broker Management Rating of ‘BMR3’ to AKIK Capital (Private) Limited. Outlook on the assigned rating is ‘Stable’. The rating signifies adequate regulatory requirement and supervision and internal controls, along with adequate client relationship and fair play, HR and infrastructure and compliance and risk management. Financial management is also considered adequate while external control framework is sound.
AKIK Capital (Private) Limited, being a new company incorporated in 2020, the assessment is based on initial performance and those projected ahead. The assigned ratings take into account adequate regulatory requirement and supervisory framework which may be enhanced through inclusion of independent and qualified members on the Board. Increasing the board size may also support formation of independently represented board level committees. Acquisition of additional licenses and increasing the net capital balance would improve revenue generation and support larger trading activity.
Ratings also take into account adequate internal control framework and client relationships. The company is still in the process of establishing certain policies, however, ensuring comprehensive coverage and dissemination of the same to all stakeholders may contribute towards establishing a strong internal control framework. Company plans to roll out the online platform and research function this year which is expected to boost client relationships and revenues.
Execution of the same will be important for rating, going forward. Other client services such as trade execution alerts, customer complaint tracking system through SMS may be considered. Compliance and risk management are considered adequate and outsourcing of internal audit to third party noted. Inclusion of an independent risk management function would support strengthening the credit risk profile assessment of customers. Organizational structure of the company commensurate with the start-up stage.
For their first year of operations, financial performance of the company is considered reasonable. Overall, higher stock market activity yielded positive results for the company. The company maintains a sizeable propriety book relative to equity which exposes the company to market risk. Capitalization indicators are sound with zero gearing and leverage at 0.34x (FY20 0.02x). Cost to income ratio was reported higher at 70% (FY20 31%). Liquidity profile of the company remains sound. Going forward continuing the growth momentum along with addition of revenue streams, curtailment of operating expenses and maintenance of gearing and leverage at acceptable levels will be important for rating.
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
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/