Press Release
Date: 28-Apr-23
PACRA Maintains Broker Fiduciary Rating of Alfalah CLSA Securities (Pvt.) Limited

Rating Details Rating Type BFR
Dissemination Date Current (28-Apr-23 ) Previous (06-Jun-22)
Action Maintain Initial
Rating BFR 2+ BFR 2+
Outlook Stable Stable
Rating Watch - -

Rating Rationale Factor Comment
Ownership Bank Alfalah Limited is the primary shareholder with ~62% of the ownership followed by CLSA Limited with ~25% of the stakes.
Governance The board is comprised of six members, out of which four members represent BAFL. Recently, Mr. Aliuddin Ansari resigned from the board. Additionally, the Company has appointed two new members.
Management and Client Services ACLSA has a well-developed organizational structure. The experienced management team provides sound client services.
Internal Controls and Regulatory Compliance Comprehensive policies are in place; the compliance department ensures implementation.
Business Sustainability A major part of revenue emanates from equity brokerage. A product and geographic concentration are present in the company's top line.
Financial Sustainability At end-Dec'22, the LCB stood at ~PKR 340mln depicting a significant growth compared to Dec'21.

Key Rating Drivers Alfalah CLSA Securities (Pvt.) Limited ( ACLSA or the Company ) is primarily engaged in the provision of equity brokerage while the income from investment banking and research also aids the topline. The assigned rating incorporates the business acumen of the primary sponsors' Bank Alfalah Limited and CLSA. ACLSA enjoys a market share of ~4.8%. ACLSA has implemented stringent protocols for risk assessment along with comprehensive policies. The governance framework could be further improved by appointing independent directors to enhance oversight. ACLSA has outsourced its internal audit department which strengthens the internal control framework. The Company has a well-developed organizational structure with experienced management. ACLSA offers its customers online trading, research and all other basic facilities. The brokerage revenue of ACLSA increased by 31% in CY22 compared with CY21 despite market volumes declining by 51% during the same period. The market risk is negligible as the Company does not invest in equity securities. As a part of long-term strategic plans, ACLSA has already established a money market and forex department in CY22, which will aid the Company’s topline going forward, and the establishment of facilitation desks in multiple cities. The improvement of the technological platform by integrating with the Bank Alfalah app and geographical diversification is also under consideration. Association with CLSA is an integral component of the rating decision. Maintaining sound internal controls, retention of key management personnel and diligent monitoring of risks is important.

About the Entity
Legal Structure Private Limited
Year of Establishment 23-Sep-03
Type of License Trading and Self-clearing
Majority Ownership Bank Alfalah Limited ~61%

Regulatory Disclosures Analyst Applicable Criteria Related Research
Afnan Iqbal

Methodology | Broker Fiduciary Rating | Jan-23

Sector Study | Brokerage & Securities | Jan-23

Disclaimer 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. 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 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.