Press Release

VIS Assigns Initial Broker Fiduciary Rating to Next Capital Limited

Karachi, May 18, 2022: VIS Credit Rating Company Ltd. (VIS) has assigned initial Broker Fiduciary Rating of ‘BFR2’ to Next Capital Limited (NCL). The assigned rating denotes strong fiduciary standards and signifies strong management and client services as well as internal control and regulatory compliance. Ownership & governance is sound, while business and financial sustainability is considered adequate.

The rating takes note of sound ownership and governance framework. NCL is a listed entity, with board of directors comprising of seven members including independent representation of two. Two board level committees supervise the HR and Audit functions. Management and client services is considered strong. The company ensures availability of ample research material on the website as well as mobile and web-friendly trading platforms for client facilitation.

Internal controls and regulatory compliance are considered strong. In addition to well-developed internal control policies, an independent functioning risk management function has been noted; however, formulating a defined credit policy may further strengthen the control framework.

Assessment of business and financial sustainability depicts improvement in revenues and profitability in FY21 due to higher brokerage commission led by higher market activity. However, during first half of ongoing fiscal year, market activity has remained subdued, impacting profitability of the Company. As per the management, the company is expected to recoup the profitability to a certain extent by the year-end on account of higher advisory income. While exposure to market risk is low, liquidity profile has room for improvement. Gearing and leverage ratios have increased year-on-year, albeit remaining within manageable levels. Equity growth led by augmentation of revenue streams along with improvement in operational efficiency will remain important for rating, going forward.

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 KPMG Taseer Hadi & Co. - Chartered Accountants which belong to category ‘A’ on the approved list of auditors published by the State Bank of Pakistan (SBP).

For further information on this rating announcement, please contact Ms. Sara Ahmed (Ext: 207) at (021) 35311861-66 or email at info@vis.com.pk


Sara Ahmed
Director

Applicable Rating Criteria: Broker Fiduciary Ratings 2021:
https://docs.vis.com.pk/docs/BrokerFiduciary012021.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 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .