Press Release

VIS Reaffirms Management Quality Rating of HBL Asset Management Limited

Karachi, December 29, 2023: VIS Credit Rating Company Ltd. (VIS) has reaffirmed the Management Quality Rating of HBL Asset Management Limited (HBL AMC) at ‘AM1’ (AM-One). ‘AM1’ rating denotes excellent management characteristics exhibited by the asset manager. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on December 30, 2022.

HBL Asset Management Limited (‘HBL AMC’ or ‘the AMC’), established in 2006, is among the prominent players in the asset management and investment advisory services sector. The AMC is a wholly-owned subsidiary of Habib Bank Limited (HBL) with experience of managing a diverse AUM portfolio including Mutual Funds, ETFs, and Pension Funds. The overall Asset Management Company (AMC) industry has experienced growth of 28.6% during FY23 while a shift toward money market funds was noted during period across the industry capitalizing on high interest rates prevailing in the market.

The assigned rating incorporates the AMC’s maintaining its position as the third-largest Asset Management Company (AMC) despite a slower growth in Assets under Management (AUMs) compared to the industry average during the review period. The AMC witnessed a growth of 33% against an industry growth of 47% during 15 months period (Jul’22-Sep’23). Resultantly, the market share of the AMC inched down to 9.9% as at Sep’23 (Jun’22: 11.0%) though growth in its AUMs is aligned with the industry growth rate. The growth in AUMs has been primarily driven by money market funds, while the share of equity funds has declined. Though fund concentration risk remains elevated, rating takes into account improvement in concentration of top 3 funds to 74% (Jun’23: 77%) of the total AUMs during the period.

Fund performance posted mixed results in FY23 as the proportion of AUMs in the first quartile decreased, with significant increase in the second quartile as of Jun’23. However, majority of the AMC's funds remained in the top two quartiles, which is considered satisfactory from the rating perspective.

The AMC's risk profile improved following equity injection of Rs. 1.4 b by Habib Bank Limited, which allowed the AMC to repay its financial obligations. An increase in total income is also noted, attributable to higher management fees and increased dividend income. The AMC is also focusing on to introduce funds in alternate asset classes in order to enhance the product portfolio. This includes Pakistan’s first ever Livestock Fund which is under sand box testing with SECP. Going forward, the AMC is planning to expand its sales force and enhancing digital onboarding to increase its corporate and retail client base. The assigned rating remains dependent on maintenance of market position and AUM profile, as well as consistency in fund performance.

For further information on this rating announcement, please contact Mr. Amin Hamdani (Ext: 217) or the undersigned (Ext. 208) at 021-35311861-70 or email at info@vis.com.pk.



Syed Asif Ali
Executive Director

Applicable Rating Criteria: Asset Management Companies
https://docs.vis.com.pk/docs/AMC-Methodology-201906.pdf

VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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