Press Release
VIS Assigns Initial Broker Fiduciary Rating to DJM Securities Limited
Karachi, September 24, 2021: VIS Credit Rating Company Ltd. (VIS) has assigned initial Broker Fiduciary Rating of ‘BFR3’ to DJM Securities Limited (DJMSL). Rating of BFR3 denotes good fiduciary standards. Outlook on the assigned rating is ‘Stable’.
The rating signifies sound business and financial sustainability. Ownership and governance, management and client services and internal controls and regulatory compliance are considered adequate.
Assigned rating takes into account DJMSL’s adequate ownership and governance framework, which may be strengthened by increasing the board size which may assist in formation of independently represented Board level committees, including formation of Audit committee. Increased disclosure levels in financial statements may also improve governance levels.
Ratings also take into account adequate client management services which may be enhanced through market research, increased periodic reporting to clients, disclosure of commission rates on website and geographical diversification. The company’s organizational structure is well-defined, however, having a separate risk management function may be considered while increasing the frequency of disaster recovery exercises may strengthen business continuity plan. Regular review of internal controls conducted by independent internal audit department may strengthen internal control and regulatory compliance framework. Restriction on employee trading and no credit limit allocation for clients is viewed favorably.
Assessment of company’s financial profile reflects significant improvement in FY20, largely supported by gain on revaluation of investments. The momentum has increased in 1H’FY21 in line with market trend, with the company posting a sizeable capital gain together with higher brokerage income and revaluation gains. Equity base of the company as a result increased at the end of 1H’FY21. Liquidity profile remains consistently strong. Gearing and leverage were also recorded at manageable levels on account of improved profitability. Going forward, given the small revenue base, containment of operating expenses will be important for maintaining operational efficiency. In addition, increasing market share and revenue streams while keeping gearing at acceptable levels will be important for ratings, going forward.
DJMSL is a public unlisted company holding Trading Rights Entitlement Certificate (TREC) granted by Pakistan Stock Exchange Limited (PSX), and is registered with SECP to provide Trading & Self Clearing Services.
For further information on this rating announcement, please contact Ms. Sara Ahmed (Ext: 207) or the undersigned (Ext: 306) at (021) 35311861-66 or email at info@vis.com.pk
Faryal Ahmad Faheem
Deputy CEO
Applicable Rating Criteria: Broker Fiduciary Ratings 2021: https://docs.vis.com.pk/docs/BrokerFiduciary012021.pdf