Press Release

VIS Assigns Initial Broker Fiduciary Rating to First National Equities Limited

Karachi, March 6, 2024: VIS Credit Rating Company Ltd. (VIS) has assigned initial Broker Fiduciary Rating of ‘BFR3+’ to First National Equities Limited (FNEL). Rating of BFR3+ denotes good fiduciary standards. Outlook on the assigned rating is ‘Stable’.

The rating signifies sound ownership and governance and management and client services. Business and financial sustainability and internal control and regulatory compliance are considered adequate.

Assigned rating takes note of sound ownership and governance framework. The Company is a listed entity, with 42% shareholding vested with the general public. Remaining is held with Mr. Ali Aslam Malik (CEO) and related companies. The board is represented by seven members with one-third independent representation. Management and client services are also considered sound with availability of market reports, briefings and disclosure of commission rates and other relevant information, enhancing client facilitation.

Internal controls and regulatory compliance are considered adequate. While internal control policies are in place, their scope may be further enhanced for strengthening of control environment. Risk management framework may also be enhanced by establishing an independently functioning risk management. Assessment of business and financial sustainability of the Company reflects deterioration in earning profile impacted by subdued trading activity in FY22. Cost to income ratio was also impacted due to the same. While the Company has a relatively higher equity base of Rs. 1.2bn, it is largely invested in a strategic investment which has yet to contribute to income. Gearing and leverage ratios remain manageable, although on adjusted equity basis they stand higher. Liquidity profile of FNEL provides adequate coverage to total liabilities. Overall, business and financial sustainability is considered adequate. Going forward, increasing revenue base along with market share and improving operational efficiency will be important for rating.

The Company holds a Trading Right Entitlement Certificate (TREC) issued by the Pakistan Stock Exchange Limited (PSX) for Trading and Self-Clearing Services. External auditors of the Company are Tariq Ahmed Abdul Ghani Maqbool & Co. Chartered Accountants. Auditors belong to category ‘B’ on the approved list of auditors published by the State Bank of Pakistan (SBP).

For further information on this rating announcement, please contact at (021) 35311861-66 or email at info@vis.com.pk



Applicable Rating Criteria: Broker Fiduciary Ratings:
https://docs.vis.com.pk/docs/BrokerFiduciary012021.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .