Press Release
VIS Maintains Broker Management Rating of Foundation Securities (Private) Limited
Karachi, July 07, 2022: VIS Credit Rating Company Ltd. (VIS) has maintains the Broker Management Rating of Foundation Securities (Private) Limited (FSL) at ‘BMR2’. Outlook on the assigned rating is being revised from Stable to ‘Rating Watch-Developing’. Previous rating action was announced on June 15, 2021.
The rating signifies strong compliance & risk management as well as external control framework. Regulatory framework, internal controls, client relationship and HR & IT infrastructure are sound with adequate financial management and supervisory levels.
The revision in outlook takes into account the amalgamation of Askari Securities Limited (ASL) with and into FSL. ASL, a securities brokerage company, is a wholly owned subsidiary of Askari Bank Limited (AKBL). The amalgamation will entail transfer of complete undertaking of ASL with FSL, together with all properties, assets, liabilities and obligations of every description.
Assigned rating takes note of FSL’s sound regulatory framework. Overall supervision framework is considered sound, the Company’s board comprises of three members, and increasing board size through addition of certified members may further strengthen the framework and facilitate the formation of independently represented board committees. Internal control framework is considered sound and external control framework is strong on the back of enhanced disclosure levels. Client relationship and fair-play remains sound with provision of all client facilitation tools for enhanced client experience. HR and infrastructure of the company is also considered sound with sound contingency measures and fully integrated ERP platform in place. Compliance and risk management framework is considered strong, outsourcing of internal audit is reviewed positively.
Assessment of financial profile indicates improvement in profitability on the back of higher brokerage income during FY21; however the same was impacted due to subdued market activity end-HFY22. Operational efficiency levels remained on the higher side during the year, curtailment of administrative expenses may improve the same. Liquidity profile is adequate while capitalization indicators remained under pressure. Going forward, improvement in capitalization indicators and liquidity profile along with augmentation in revenue streams and cost containment will remain important for rating.
For further information on this rating announcement, please contact Ms. Sara Ahmed (Ext: 207) at (021) 35311861-66 or email at info@vis.com.pk
Sara Ahmed
Director
Applicable Rating Criteria: Broker Management Ratings 2020:
https://docs.vis.com.pk/docs/BMR202007.pdf