PACRA Maintains Broker Management Rating of Habib Metropolitan Financial Services Limited

Habib Metropolitan Financial Services Limited ('HMFSL' or 'the Company') is a public limited company primarily providing equity brokerage services to individuals and leading financial institutions. The equity market has witnessed a significant surge in investor interest during FY25, repeatedly touching historic highs. Despite this rally, valuations remain relatively attractive, indicating room for further upside. A notable catalyst has been the reduction in the policy rate at the start of FY25, which prompted a shift in investor preference from fixed-income instruments to equities, fueling fresh buying momentum. This environment has created a favorable backdrop for the brokerage industry, with higher trading volumes, increased retail participation, and enhanced transaction-based revenues. While FY25 has been a strong year for the sector, sustaining investor confidence beyond FY25 will hinge on political stability, macroeconomic resilience, and the continuation of market-friendly policies. The rating incorporates the business acumen of the primary sponsors, Habib Metropolitan Bank Limited, the experienced management team, and the availability of a client services platform with research reports available to customers. The governance framework is considered satisfactory; however, the inclusion of independent directors with relevant experience would strengthen corporate governance. The organizational structure is lean and commensurate with the scale of operations. The Company operates through its office located in Karachi. HMFSL has an in-house internal audit department, which strengthens the Company's control framework. The Company has established rigorous protocols regarding risk assessment by implementing KYC, CDD, AML, CFT, and whistleblowing policies. The market risk is limited, as HMFSL does not maintain any proprietary trading books. The brokerage revenue increased by ~72% to ~PKR 45mln as at Jun'25, as compared to ~PKR 26mln in SPLY. However, operating costs pressured a net loss of PKR ~7.7mln in 1HCY25 compared to a net loss of ~PKR 14.5mln in SPLY. There has been an increase of ~8% in administrative expenses. The Company has an adequate equity base of ~PKR 326mln at the end of Jun’25 as compared to the equity of ~PKR 298mln in Jun’24.
Going forward, the rating is dependent on the management's ability to increase and retain its market share and diversification in revenue base to improve its competitive position in the brokerage industry. Simultaneously, it is imperative to uphold strong internal controls, retention of key management personnel, and diligently monitor risks.

About the Entity
Habib Metropolitan Financial Services Limited ('HMFSL' or the 'Company') was incorporated in 2007 as a public limited company under the Companies Act, 2017 and commenced its operations in 2008. Habib Metropolitan Bank Limited (HMBL) is the parent company of HMFSL. HMBL currently operates with an expanding nationwide network of more than 521 branches in more than 207 cities across Pakistan at end-June'25. The Company has three directors on the board. The CEO, Mr. Ather Husain Medina is a qualified professional with extensive work experience of over 32 years in the financial sector and has worked with well-known companies.