The Pakistan Credit Rating Agency Limited
Press Release


Usama Zubair

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PACRA Maintains Stability Rating of First Habib Income Fund

Rating Type Stability Rating
Action Maintain Maintain
Long Term AA-(f) AA-(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The rating reflects the funds strong credit risk profile. At end Jun’20, majority of the fund's assets were invested in A+ rated banks (~67.35%), and the rest of the funds are invested in T-Bills and PIBs (23.4%), TFCs (~4.36%) and Sukuks (~3.79%). The fund has high concentrated unit holding pattern, with top 10 investors representing ~81% of the fund size at end Jun’20.
Going forward, the management intends to shift funds allocation towards PIBs and T-Bills in 'AAA' rated Banks, while the remaining assets would be invested in government-guaranteed investments. This action will increase the interest rate sensitivity of the fund. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remain critical for the rating.

About the Entity
AL Habib Asset Management Limited (Formerly: Habib Asset Management Limited) incorporated in September 2005 as an unlisted public limited company. The Company is licensed by the Securities and Exchange Commission of Pakistan to carry out asset management and investment advisory services under the Non-Banking Finance Companies Regulations. During 4QFY20, Bank AL Habib has acquired 100% shareholding of the Company by acquiring the remaining 70% stake from the Habib family.

The Company is expecting changes in the board structure as a result of the 100% shareholding by Bank AL Habib. Currently, the Board of Directors comprises six members including the CEO. Mr. Saeed Allahwala replaced Mr. Liaquat Habib Merchant as an Independent Director in CY19. The ex CEO, Mr. Imran Azim, has Joined the Company's board as a non-executive director. Mr. Kashif Rafi has been appointed as the new CEO of the Company. He holds an MBA in Finance from IBA and has an established track record in AMC industry.

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.