Press Release

VIS Reaffirms Entity Ratings of Next Capital Limited

Karachi, August 3, 2022: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Next Capital Limited (NCL) at ‘A-/A-2’ (Single A-Minus/A-Two). The long-term rating of ‘A-‘signifies good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ signifies good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on March 10, 2021.

Post two years of improving trends in FY20 and FY21, PSX volumes have shown a dismal trend in FY22. Profitability of the brokerage industry remained constrained in FY22 on account of subdued market activity. Uncertainty on economic and political front is expected to keep trading volumes and profitability of the sector under pressure, going forward. Brokerage revenue for the Company remained low during 9MFY22 vis-à-vis 9MFY21 and together with unrealized loss on re measurement of investment has led to losses at the end of 9MFY22. However, we have been advised by the management that the full year FY22 results would contain the impact of substantial advisory income which would turn the Company into profits. The assigned ratings are dependent upon the definitive outcome of the management assertions.

Assessment of financial risk indicators exhibit manageable exposure to market risk as company’s participation in propriety trading has remained minimal. Capitalization indicators remain adequate. During the year, the Company paid off its commercial paper liability. Cost to income ratio of the Company has remained on the higher side relative to peers. With slowdown in business volumes, streamlining of the same becomes important for preservation of future profitability. Going forward, while corporate advisory income will continue to support overall profitability, we expect equity growth to remain subdued. Maintaining adequate profitability and capitalization indicators will remain important for ratings.

For further information on this rating announcement, please contact Ms. Sara Ahmed (Ext: 207) or the undersigned (Ext. 306) at 021-35311861-70 or email at

Sara Ahmed

Applicable rating criteria: Methodology - Securities Firms Rating (July 2020)

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