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The Pakistan Credit Rating Agency Limited
Press Release

Date
24-Dec-21

Analyst
Afnan Iqbal
afnan.iqbal@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Broker Management Rating of EFG Hermes Pakistan Limited

Rating Type Broker Management
Current
(24-Dec-21 )
Previous
(24-Dec-20 )
Action Maintain Maintain
Long Term BMR2+ BMR2+
Short Term - -
Outlook Stable Stable
Rating Watch - -

The rating reflect EFG Hermes Pakistan Limited's ("EFG Hermes" or "The Company") association with an international financial services group “EFG Hermes” having access to emerging and frontier markets. The Company has carved its footprint in thirteen countries across four continents. The assigned rating incorporate company’s adequate market share, well built governance structure and satisfactory operating profitability. The rating also reflect presence of experienced management at helm, satisfactory risk management and internal control framework and compliance with regulatory affairs. Following the recent boom in traded volumes of stock exchange, the core revenue of the Company remained buoyant and the Company maintained its market share at ~3%. The Company does not maintain proprietary investments hence, less exposed to market risk. The mechanism of risk assessment, complaint management procedures, fortnightly MIS reports and adequate customer services provide comfort to the rating. Further, establishment of two board level committees augurs well for insightful monitoring. The equity base of EFG Hermes Pakistan stood at ~PKR 172mln at end-Sep'21 whereas, the net profit after tax and net equity of parent Company stood at ~EGP 1.1bln and ~EGP 14.8bln. The topline of the EFG Hermes Pakistan lacks diversification in revenue stream and concentrated to the equity brokerage income which clocked in at ~PKR 181mln at end-Sep’21 (SPLY: ~PKR 128mln). The Company earned profit amounting to ~PKR 36mln during 9MCY21 (SPLY: ~PKR 6.9mln).
The rating are dependent on maintenance of rating benchmarks. Retention of key personnel, improvement in customer servicing tools and maintaining strong controls will remain vital. Meanwhile, growth in brokerage business, strengthening of internal controls and diligent monitoring of risks will remain critical.

About the Entity
EFG Hermes Pakistan Limited, a public listed company, is licensed under Securities Brokers (Licensing and Operations) Regulations, 2016, as a securities broker and provides securities research and brokerage services to institutional and individual clients. It is also engaged in investment banking activities. The Company is 51% owned by EFG Hermes Frontier Holdings LLC, which is a wholly owned subsidiary of EFG Hermes Holding S.A.E. EFG Hermes has presence in the Middle East and North Africa (MENA) region and specializes in asset management, securities brokering, investment banking, private equity and research. EFG Hermes is the first foreign investment bank and securities broker to have physical presence in Pakistan. The Company operates from its head office based in Karachi, Pakistan.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.