Press Release
VIS Assigns Positive Outlook to Entity Ratings of Intermarket Securities Limited
Karachi, November 17, 2021: VIS Credit Rating Company Ltd. (VIS) has maintained the entity ratings of Intermarket Securities (IMS) at ‘A-/A-2’ (A minus/A-Two). The long-term rating of ‘A-’ signifies good credit quality; protection factors are adequate meanwhile risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ signifies good certainty of timely payment with sound liquidity and company fundamentals. Access to capital markets is good along with low risk factors. Outlook on the assigned ratings has been revised from ‘Stable’ to ‘Positive’. Previous rating action was announced on December 04, 2020.
Revision in rating outlook is reflective of the turnaround in financial performance owing to uptick in industry trading volumes along with cost control measures. Moreover low leveraged capital structure and adequate liquidity buffers continue to provide support to overall financial risk profile. Ratings are constrained by the company’s significant dependence on equity brokerage operations and limited diversification of income streams. However, future sales strategy of further enhancing retail penetration along with materialization of available corporate advisory mandate would be important from rating perspective. The ratings would remain dependent upon maintenance of performance indicators at sound levels commensurate with the assigned ratings.
After two consecutive years of weak trading activity, volumes of PSX rebounded with a year-on-year growth of 24% in FY20 and a sizeable jump of 144% in FY21. This increase in economic activity locally and internationally post the initial shock of Covid -19 supported the rise in trading volumes in favourable interest rate regime. Benefitting the brokerage industry in their profits both in terms of trading volumes and one off capital gains. The ratings of the brokerage industry remain dependent on the continuity of economic gains and maintenance of sound financial profiles.
For further information on this rating announcement, please contact Ms. Asfia Aziz or the undersigned (Ext. 306) at 021-35311861-70 or email at info@vis.com.pk
Faryal Ahmad Faheem
Deputy CEO
VIS Entity Rating Criteria Methodology - Securities Firms Rating (July 2020)
https://docs.vis.com.pk/docs/SecuritiesFirm202007.pdf