Press Release

JCR-VIS Reviews and Upgrades Entity Ratings of Adam Securities Limited

Karachi, October 31, 2017: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has performed the mid-year review and upgraded the entity ratings of Adam Securities Limited (ASL) from ‘BB/A-3’ (Double B/A-Three) to ‘BB+/A-3’ (Double B Plus/A-Three). Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on April 3, 2017.

Ratings take into account the considerable improvement in financial performance of the company while having adequate capitalization and liquidity indicators. However, there remains room for improvement with regards to governance and control infrastructure of ASL.

Profitability of the institution has improved on the back of improved commission income which has more than doubled year on year. The increased commission income was on account of increase in commission rates charged to clients. The same has resulted in improvement of efficiency of the company inasmuch that operating revenues are higher than recurring expenses. Sustainability of operating income and in turn, efficiency would be a key rating driver going forward.

Capitalization of the company is considered adequate. Net worth of the company has increased on the back of retained profit as well subordinated interest free loan from directors. Although leverage has increased year on year, there is sufficient liquidity on the balance sheet to meet liabilities.

For further information on this rating announcement, please contact the undersigned (Ext: 207) or Mr. Javed Callea (Ext: 201) at (021)35311861-70 or fax to (021)35311872-3.

Jamal Abbas Zaidi

Applicable Rating Criteria: Methodology - Securities Firms Rating (May 2015)

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