Press Release

VIS Reaffirms Entity ratings of Arif Habib Limited

Karachi, October 9, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Arif Habib Limited (AHL) at ‘AA-/A-1’ (Double A Minus/A-One). Long term rating of ‘AA-’ signifies high credit quality, and strong protection factors. Risk is moderate but may vary slightly from time to time because of economic conditions. Short term rating of A-1 denotes high certainty of timely payment, excellent liquidity factors supported by good fundamental protection factors. Risk factors are minor. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on March 09, 2022.

Established in 2004, Arif Habib Limited (‘AHL’ or ‘the Company’) is a prominent brokerage and financial services company. The company is engaged in provision of equity and money market brokerage, interbank foreign exchange and corporate advisory services. AHL’s operations run through its head office in Karachi along with 6 branches, one each in Lahore, Islamabad, Rahim Yar Khan, Faisalabad, Multan and Peshawar. Going forward, the management envisages of opening sales centers in interior Sindh, Punjab, and KPK along with industrial areas in Punjab to increase retail penetration in these untapped regions.

The assigned ratings are underpinned by strong sponsors’ profile, with majority shareholding vested with Arif Habib Corporation Limited, the holding company. The sponsor strength emanates from owning interests in fertilizers, securities & commodities brokerage, corporate advisory, asset management, cement and steel sectors. During FY22, the brokerage sector faced significant challenges due to the poor overall economic situation, a global decline in commodity prices, and political uncertainty. As a result, investor’s confidence was greatly impacted. Trading volumes also witnessed significant deterioration, subsequently AHL’s earning profile also came under pressure during the year, the Company’s recurring revenues declined to Rs. 1.1b (FY21 1.5b). However, the strength of AHL's assigned rating is underpinned by its operational revenue diversification which continues to remain superior to other brokerage firms despite subdued market activity during the year. Profitability profile of the Company was also impacted owing to capital losses and higher finance costs. Despite challenging microeconomic environment, the Company was able to increase its market share and grow its client base through active participation in social events and increasing their number of sales centers across the country.

Assessment of financial profile of the Company indicates high market risk owing to the Company’s investment portfolio comprising largely of real estate holdings, exposure in TFCs and proprietary investments. Liquidity profile is considered adequate, with total liquid asset base of the Company amounting to Rs. 6.3b (FY21 5.5b) and providing 1.7x (FY21 1.6x) times coverage to total liabilities of Rs. 3.7b (FY21 3.5b). Capitalization indicators also depict an increase, gearing ratio witnessed increased on timeline basis, during FY22, gearing stood at 0.47x (FY21 0.28x) further increasing to 0.66x end-HFY23. Leverage ratio also increased to 0.73x (FY21 0.70x) during the year, while the same increased to 0.97x end-HFY23 on account of increase in total debt and total liabilities on timeline basis. Going forward, maintenance of market share and revenue augmentation, decrease in market risk along with improvement in liquidity and capitalization will remain important for the ratings.

For further information on this rating announcement, please contact Ms. Syeda Batool Zehra Zaidi (Ext: 210) or the undersigned (Ext: 106) at (021) 35311861-66 or email at

Muhammad Bilal Aftab

Applicable Rating Criteria: Securities Firms Rating (July 2020)

VIS Rating scale (2023)

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 2023 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .