AL Habib Capital Markets (Pvt.) Limited | BMR

RATING REPORT | Jul-26

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Rating History
Dissemination Date Rating Outlook Action Rating Watch
17-Jul-26 BMR2+ Stable Maintain -
18-Jul-25 BMR2+ Stable Maintain -
19-Jul-24 BMR2+ Stable Maintain -
19-Jul-23 BMR2+ Stable Maintain -
19-Jul-22 BMR2+ Stable Maintain -
About the Entity

AL Habib Capital Markets (Pvt.) Limited, “AHCML or The Company” is a licensed TREC holder of Pakistan Stock Exchange and was incorporated under the Companies Ordinance 1984 in 2005 as private limited company. Bank AL Habib Limited (BAHL) is the major shareholder of AHCML, accounting for two‐third of the ownership. The remaining one‐third is held by Habib Family, friends and associates. The Company has 5 directors on the board including CEO and Chairman. The CEO, Mr. Aftab Q. Munshi possesses diversified experience in capital markets. He is also on the Board of Directors of AHCML as Chief Executive since its incorporation. Mr. Munshi served with the Jahangir Siddiqui Group for almost 12 years in multiple roles.

Rating Rationale

AL Habib Capital Markets (Pvt.) Limited ("AHCML" or "the Company") is primarily engaged in equity brokerage, with income from MTS and MFS providing additional support to the topline. The KSE-100 Index maintained positive momentum during 1QCY26, enabling the brokerage industry to benefit from healthy trading activity and improved investor participation. While the outlook for CY26 remains favorable, external debt repayments, political uncertainty, regional geopolitical developments, and evolving global trade conditions continue to require prudent management oversight. The assigned rating reflects the business acumen of the primary sponsor, Bank Al Habib Limited, whose Board representation remains a key governance strength. The inclusion of an independent director would further strengthen governance oversight. The rating also incorporates AHCML's experienced management team, well-defined organizational structure, and commitment to internal controls through a dedicated internal audit function, while further segregation of risk and compliance functions would enhance the control framework. Management continues to strengthen the Company's service offering through online trading, a grievance redressal portal, research services, and a comprehensive Disaster Recovery and Business Continuity Plan. The addition of an Online Sales and Marketing function further demonstrates management's focus on enhancing client engagement and operational effectiveness. Management's execution of its business strategy translated into improved financial performance during 1QCY26. The Company benefitted from profit on income from MTS of ~PKR 10mln, income from client fund management of ~PKR 7mln, and profit on PSX/NCCPL exposures of ~PKR 6mln, alongside improved brokerage income, supporting overall profitability. Revenue, while remaining concentrated in equity brokerage, increased to ~PKR 74mln in 1QCY26 (SPLY: ~PKR 43mln), contributing to total revenue of ~PKR 105mln. The sustained improvement in brokerage income reflects management's ability to capitalize on favorable market conditions and effectively execute client acquisition and business development initiatives. Management has maintained an adequate capitalization profile through internal accruals, supporting the Company's financial resilience and capacity to absorb business risks. Equity stood at ~PKR 567mln (Dec'25: ~PKR 579mln), while the regulatory Liquid Capital Balance (LCB) improved to ~PKR 387mln (Dec'25: ~PKR 378mln) by end-Mar'26, reflecting prudent capital management. The proprietary investment book constituted approximately 10% of equity and stood at ~PKR 157mln at end-Mar'26, with Pakistan Investment Bonds (PIBs) accounting for ~63% of the portfolio, indicating management's relatively conservative investment approach aimed at balancing returns with risk considerations.

Key Rating Drivers

Going forward, sustainability of market share, revenue, and profitability will remain imperative, while upholding strong internal controls and risk management framework and retention of key management is critical. Further, rational diversification of business activity may provide support to the company’s overall financial risk profile.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

AL Habib Capital Markets (Pvt.) Limited | BMR

rating analysis

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Ownership
Ownership Structure

Bank AL Habib (BAHL) is a major shareholder of AHCML, accounting for two-third of the ownership. The remaining one-third is held by Habib Family, friends and associates.


Stability

Habib Group has been historically involved in the banking sector for about 80 years. BAHL operates through a fast growing network of 1323 branches/ sub-branches, including 276 Islamic banking branches at end March '26.


Business Acumen

The CEO Mr. Aftab Q. Munshi possesses diversied experience in capital markets. He is serving on the Board of Directors of AHCML as Chief Executive since its incorporation. Mr. Munshi served with the Jahangir Siddiqui Group for almost 12 years in multiple roles. He headed their Equity Operations for 5 years.


Financial Strength

The sponsors have sizeable net worth and may provide support the Company with increasing quantum of operations. Bank AL Habib enjoys a rating of AAA, assigned by PACRA. The assets of BAHL stood at ~PKR 3.3Tr at end March '26.


Governance
Board Structure

The company has 5 directors on the board including CEO and Chairman. There are 4 non-executive directors and 1 executive director.


Members’ Profile

The board possess the necessary skills and experience required for capital markets. The board members on average possess ~20 years of experience in the field of finance and capital markets and are Bank nominated.


Board Effectiveness

During the period under review, three board meetings were conducted and attended by the majority of the board members. The board is always provided with MIS pack prior to the meeting and the meeting discussions are properly documented in the form of minutes.


Financial Transparency

The external auditors of the company are KPMG Taseer Hadi & Co., Chartered Accountants. The auditor is QCR rated by ICAP and is in the A Category of SBP’s panel of auditors.


Management
Management Team

The management of AHCML is well qualified and experienced to manage the Company's operations efficiently. The CFO Mr. Rizwan Hashmi is a fellow member of Association of Chartered Certied Accountant. He has been serving as CFO & Company Secretary of AL Habib Capital Markets (Pvt.) Limited since March 2017.


Organizational Structure

The Company has well developed organizational structure to manage its operations and appropriate policies to protect the client's interest and to preserve their good faith and trust. The Company operates through one branch office and the Head Office is located in Karachi. The COO and CFO report to the Company's CEO.


Client Servicing

AHCML regularly publishes reports on market strategy, economy, daily news, and market updates. AHCML has provided links to relevant institutions and departments on their website. Moreover, various channels, including a mobile app and online trading platforms, are available to execute and monitor the transactions.


Complaint Management

A designated officer has been assigned the responsibility for handling and rectification of complaints. Complaints can also reach the Company through telephone, email, and website. Direct links for PSX and SECP are also available on website to lodge complaints.


Extent Of Automation / Integration

AHCML has comprehensive and effective IT arrangement to deal with dynamic technological environment prevailing in the capital markets arena. The "Catalyst System" is deployed for online trading transactions with PSX and online monitoring of the margin exposure.


Continuity Of Operations

AHCML has established a recovery plan for all essential infrastructure elements, systems, networks, and key business activities. The business continuity plan provides a framework for business departments if a major incident occurs, causing disruption to pre-defined critical services.


Risk Management Framework

The Company has in-house internal audit department, which monitors implementation of the policies and procedures of AHCML. Audit Committee further ensures an effective control environment. For an effective control environment and compliance with reporting standards, AHCML has constituted an Audit Committee and Investment Committee at the board level. Management Committee of AHCML reviews/monitors risk management of the Company amongst other matters.


Regulatory Compliance

Compliance Department ensures regular monitoring of controls and systems, which ensures that all functions are in-line with the applicable policies, procedures and regulations. Research analyst policy has also been formulated.


Business Sustainability
Business Risk

Pakistan's brokerage sector is expanding, supported by digital adoption, regulatory reforms, and growing investor participation. The PSX hosts over 400 licensed brokers, serving around 300,000 active retail clients and nearly 1,900 foreign institutional investors. While retail participation averages just 5-10% weekly, significant growth potential remains, reinforced by the rise of online platforms and digital-only brokers. In CY25, the PSX delivered returns above 30%, ranking among the best-performing frontier markets, driven by improving macroeconomic conditions, falling interest rates, and a shift from fixed income to equities. Nonetheless, the market remains vulnerable to external shocks, with both risks and positive triggers capable of sparking rapid swings.


Business Profile

AHCML's service offering includes Equity Brokerage and Economic and Investment Research. The clientele of the company is segmented into three categories 1) HNWI's 2) Financial Institutions 3) Retail.


Revenue and Profitability Analysis

The Company's operating revenue is mainly concentrated in equity brokerage. During 1QCY26 equity brokerage revenue increased to ~PKR 74mln from ~PKR 43mln in SPLY which is ~72% increase. Profit after Tax stood at ~PKR 22mln (SPLY: ~PKR 10mln).


Financial Sustainability
Credit Risk

For the assessment of client's creditworthiness, the Company has formulated detailed KYC/CDD policies. Limits have been defined, which are strictly monitored. The exposure limits as a whole and on individual basis are monitored and any shortfalls are immediately reported to senior management for prompt action.


Market Risk

AHCML is maintaining the prop book that increases its exposure to the market risk. However, to mitigate the risk, the Company has invested majorly in the government securities and placed strategic equity investments. The prop book of the Company constitutes 10% of the equity and stood at ~PKR 157mln at end Mar '26. Pakistan Investment Bonds (PIBs) contribute ~63% to the prop book at end Mar '26.


Liquidity Profile

At the end March '26, the current assets of the Company were ~PKR 1,250mln (Dec '25: ~PKR 2,599mln) against the current liability of ~PKR 702mln (SPLY: ~PKR 2,041mln).


Financial Risk

The Company has an adequate capitalization level with regulatory Liquid Capital Balance (LCB) standing at ~PKR 387mln as at March '26.
 
 

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AL Habib Capital Markets (Pvt.) Limited | BMR

financial summary

(PKR mln)

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Mar-26
3M		 Dec-25
12M		 Dec-24
12M		 Dec-23
12M
A. BALANCE SHEET
1. Finances 1.97 1.84 37.85 2.76
2. Investments 157.33 190.68 147.81 100.91
3. Other Earning Assets 479.48 694.87 569.46 361.05
4. Non-Earning Assets 640.35 1,742.68 994.09 907.21
5. Non-Performing Finances-net 0.00 0.00 0.00 0.00
Total Assets 1,279.13 2,630.08 1,749.20 1,371.93
6. Funding 204.09 607.35 601.67 590.47
7. Other Liabilities (Non-Interest Bearing) 507.64 1,443.40 691.49 405.15
Total Liabilities 711.73 2,050.74 1,293.16 995.62
Equity 567.41 579.34 466.04 376.38
B. INCOME STATEMENT
1. Fee Based Income 74.39 231.63 317.47 117.70
2. Operating Expenses (60.37) (211.63) (161.97) (132.45)
3. Non Fee Based Income 18.34 68.01 2.45 80.27
Total Opearting Income/(Loss) 32.37 88.01 157.95 65.52
4. Financial Charges 0.20 18.99 (79.54) (58.56)
Pre-Tax Profit 32.56 107.00 78.41 6.96
5. Taxes (10.14) (32.57) (23.93) (3.78)
Profit After Tax 22.42 74.44 54.48 3.18
C. RATIO ANALYSIS
1. Cost Structure
Financial Charges / Total Opearting Income/(Loss) -0.6% -21.6% 50.4% 89.4%
Return on Equity (ROE) 12.9% 20.0% 13.2% 1.8%
2. Capital Adequacy
Equity / Total Assets (D+E+F) 44.4% 22.0% 26.6% 27.4%
Free Cash Flows from Operations (FCFO) / (Financial Charges + Current Maturity of Long Term Debt + Uncovered Short Term Borrowings) 40.3% -563.4% 131.2% 50.0%
3. Liquidity
Liquid Assets / Total Assets (D+E+F) 37.6% 53.0% 22.6% 67.5%
Liquid Assets / Trade Related Liabilities 102.5% 101.1% 59.7% 250.9%
4. Credit & Market Risk
Accounts Receivable / Short-term Borrowings + Advances from Customers + Payables to Customers 58.1% 60.5% 19.7% 54.2%
Equity Instruments / Investments 36.2% 46.9% 35.7% 19.0%

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AL Habib Capital Markets (Pvt.) Limited | BMR

rating scale

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AL Habib Capital Markets (Pvt.) Limited | BMR

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
    5. PACRA maintains the principle of integrity in seeking rating business. (Chapter III; 11-A-(u))
    6. PACRA promptly investigates in the event of misconduct or a breach of the policies, procedures, and controls, and takes appropriate steps to rectify any weaknesses to prevent any recurrence, along with suitable punitive action against the responsible employee(s). (Chapter III; 11-B-(m))
  4. Independence & Conflict of Interest
    1. PACRA receives compensation from the entity being rated or any third party for the rating services it offers. The receipt of this compensation has no influence on PACRA’s opinions or other analytical processes. In all instances, PACRA is committed to preserving the objectivity, integrity, and independence of its ratings. Our relationship is governed by two distinct mandates: i) rating mandate - signed with the entity being rated or issuer of the debt instrument, and ii) fee mandate - signed with the payer, which can be different from the entity.
    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
    5. PACRA ensures that the analysts or any of their family members shall not buy, sell, or engage in any transaction in any security which falls in the analyst’s area of primary analytical responsibility. This clause, however, does not apply to investments in securities through collective investment schemes. (Chapter III; 12-2-(l))
    6. PACRA has established policies and procedures governing investments and trading in securities by its employees and for monitoring the same to prevent insider trading, market manipulation, or any other market abuse. (Chapter III; 11-B-(g))
  5. Monitoring and Review
    1. PACRA monitors all the outstanding ratings continuously, and any potential change therein due to any event associated with the issuer, the security arrangement, the industry, etc., is disseminated to the market immediately and in an effective manner after appropriate consultation with the entity/issuer. (Chapter III; 17-(a))
    2. PACRA reviews all the outstanding ratings periodically on an annual basis. Provided that public dissemination of annual review and in an instance of change in rating will be made. (Chapter III; 17-(b))
    3. PACRA initiates an immediate review of the outstanding rating upon becoming aware of any information that may reasonably be expected to result in downgrading of the rating. (Chapter III; 17-(c))
    4. PACRA engages with the issuer and the debt securities trustee to remain updated on all information pertaining to the rating of the entity/instrument. (Chapter III; 17-(d))
  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
  7. Proprietary Information
    1. All information contained herein is considered proprietary by PACRA. Hence, none of the information in this document can be copied or otherwise reproduced, stored, or disseminated in whole or in part in any form or by any means whatsoever by any person without PACRA’s prior written consent.

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