Press Release
VIS Reaffirms Broker Management Rating of Next Capital Limited
Karachi, June 21, 2022: VIS Credit Rating Company Ltd. (VIS) has reaffirmed the Broker Management Rating of Next Capital Limited (NCL) at ‘BMR2++’. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on March 24, 2021.
The rating signifies strong external controls as well as compliance & risk management. Regulatory requirements, supervisory framework, internal controls, client relationship, HR & infrastructure are considered sound while financial management is considered adequate.
The rating action incorporates the company’s sound regulatory and supervisory framework. The board of directors consists of seven members, including independent representation of two. Board level committees to supervise audit and HR functions are present. Increasing the number of board committees may further enhance the supervisory framework. The company’s revenue stream is supported by corporate advisory and underwriting functions, which is accounted for in the assigned rating.
The rating also takes note of strong compliance and risk management of the company. Segregation of internal audit and compliance departments is noted. The company does not extend any credit limits except for a selected high net-worth clientele. External control of the company is also strong. Further improvement may be brought by including CEO’s statement for fraudulent and illegal transactions to the annual financial statements. Internal controls are sound, with well-documented policies in place to ensure the confidentiality of information as well as to avoid any conflict of interest. However, the scope of the same may be increased for further enhancement of internal controls. Client relationship is sound; availability of all modern facilitation tools to the clients, and research materials on the website has been ensured. HR and infrastructure remains sound, with a well-defined organizational structure and a fully integrated ERP platform in place.
The company’s profitability has remained in line with market activity recording significant profitability in FY21. However, 1HFY22 bottom line remained negative as a result of suppressed market activity. Liquidity profile remains adequate; cost-to-income ratio also offers room for improvement. Gearing ratio remains in a manageable range, while leverage is on the higher side. Going forward, improvement in capitalization indicators, profitability and cost to income ratio will be important for the ratings.
For further information on this rating announcement, please contact the undersigned at (021) 35311861-66 or email at info@vis.com.pk
Javed Callea
Advisor
Applicable Rating Criteria: Broker Management Ratings 2020