Rating Details	Rating Type	BFR
	Dissemination Date	Current (19-Jul-22 )	Previous (19-Jul-21)
	Action	Maintain	Initial
	Rating	BFR 2+	BFR 2+
	Outlook	Stable	Stable
	Rating Watch	-	-

Rating Rationale	Factor	Comment
	Ownership	The Company is a subsidiary of Bank AL Habib Limited with ~66.67% stake. The remaining stakes are held by Habib Family, friends and associates.
	Governance	The Company has six directors on the board including CEO and chairman. There are five non-executive directors and one executive director.
	Management and Client Services	The Company has well developed organizational structure to manage its operations and appropriate policies to protect the client's interest.
	Internal Controls and Regulatory Compliance	The Company has an in-house internal audit department, which monitors implementation of the policies and procedures of AHCML . Audit Committee further ensures an effective control environment.
	Business Sustainability	The topline of the Company is concentrated in the equity brokerage income which clocked in at ~PKR 125mln for CY21 (CY20: ~PKR 94mln).
	Financial Sustainability	The investment book is mostly comprised of GoP securities, hence exposed to some market risk. Short-term financing stood at ~PKR 464mln at end-Dec'21.

Key Rating Drivers

The broker fiduciary rating of AL Habib Capital Markets (Pvt.) Limited ("AHCML" or "The Company") reflects the Company's association with a well-established bank which is one of the dominant players in the banking sector. The assigned rating takes into account the well-experienced management team, and well-established compliance protocols. The Governance framework of the Company is in compliance with Securities Brokers Regulation 2016. The Company has established rigorous protocols regarding risk assessment by implementing KYC, CDD, AML and CFT which bodes well for the rating. Following the recent boom (1HCY21) in traded volumes of Pakistan Stock Exchange, the core revenue of the Company improved by ~33% in CY21 while the market share is also sustained. The Company maintains proprietary investments, mostly in GoP securities, hence exposed to some market risk. The Net Capital Balance of the Company clocked in at ~PKR 257mln with an equity base of ~PKR 373mln at end-Dec’21. The topline of the Company is concentrated in the equity brokerage income. The Company earned profit amounting to ~PKR 41mln during CY21 (CY20: ~PKR 30mln). The ratings are dependent on the management's ability to retain its market share and enhance the volumes and diversity of revenue to improve its competitive position in the brokerage industry. Retention of key personnel, adherence to regulatory requirements, and sustainability of profitability will remain imperative from ratings perspective.

About the Entity
	Legal Structure	Private Limited
	Year of Establishment	23-Aug-05
	Type of License	Trading and Self-clearing
	Majority Ownership	Bank AL Habib Limited

Regulatory Disclosures	Analyst	Applicable Criteria	Related Research
	Ayesha Qasim ayesha.qasim@pacra.com +92-42-35869504 www.pacra.com	Methodology | Broker Fiduciary Rating | Jan-22	Sector Study | Brokerage & Securities | Jan-22

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