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The Pakistan Credit Rating Agency Limited
Press Release

Date
30-Jun-18

Analyst
Masooma Zahid
masooma.zahid@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 Entity Rating of Alfalah Securities (Pvt) Limited

Rating Type Entity
Current
(30-Jun-18)
Previous
(23-Jun-17)
Action Maintain Upgrade
Long Term A- A-
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

The Entity Rating of Alfalah Securities (Private) Limited captures its emerging position in the country’s brokerage industry. The company is a subsidiary of Bank Alfalah Limited and four senior management personnel of the bank are on the board of the company. This is underpinned by its adequate governance, good risk management framework, hierarchical organizational structure and strong control environment. The rating further draws comfort from the company’s policy for not taking market exposure for proprietary trades.

The Company has zero leveraged capital structure and adequate capitalization levels. The management team, experienced in respective functions has prepared a comprehensive business plan approved by the board. The company successfully improved its brokerage revenue in CY17. In addition to its brokerage business, the company enjoys distinct position in investment banking and advisory domain. The management has effectively integrated the investment banking function with an independent advisory board to provide competitive advantage. Enhancement in investment banking income would further add diversity and support to the brokerage business. The foreign market share has been enhancing due to the emplacement of foreign brokers on its board.

The rating is dependent on the ability of the company to sustain profits and strengthen its emerging position in the brokerage industry. Stability of the key human resource and consistent profits will bode well for the company.

About the Entity
Alfalah Securities (Private) Limited is a financial services company, licensed as securities broker under Securities Brokers (Licensing and Operations) Regulations, 2016. The company is engaged in equity trading. Company also provides investment banking & advisory services. Alfalah Securities operates from Head office based in Karachi, Pakistan.

It is a subsidiary of Bank Alfalah Limited. Bank Alfalah owns ~98% stake in Alfalah Securities and the bank is ultimately majority owned by Abu Dhabi group. Bank is divesting its 30% stake in the company that is expected to be acquired by seasoned professionals, including CEO Mr. Atif Mohammad Khan.

Company’s board constitute of five members including CEO Mr. Atif Mohammad Khan. All directors, other than CEO, are non-executive. Board meets every quarter to review the overall performance. Board has comprehensive discussion on strategy and business plan.

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.