Press Release

VIS Maintains Entity Ratings of BIPL Securities Limited

Karachi, August 27, 2021: VIS Credit Rating Company Ltd. (VIS) has maintained the entity ratings of BIPL Securities Limited (BIPLS) at ‘A-/A-2’ (Single A Minus/A-Two). On June 28, 2021, BIPLS formally become a subsidiary of AKD Securities Ltd as the previous sponsor, BankIslami Pakistan (BIPL) sold its entire stake constituting 77.12% of the share capital to AKD Securities. The company is currently going through the process of merging of operations; regulatory approvals are underway. In view of this, outlook on the assigned ratings remains on ‘Rating Watch-Developing’. Previous rating action was announced on April 13, 2020.

Assigned ratings continue to factor in the sponsor support, strong retail client base and extensive branch network which is a major competitive strength. However, sustaining overall market share in highly competitive environment is a challenge. Reaffirmation of ratings takes into account the strong growth in brokerage revenue and overall profitability during the period under review. Conservative asset allocation strategy with small-sized proprietary book translates into low liquidity risk profile while capitalization level have depicted some improvement. Leverage indictors continue to be aligned with the ratings benchmarks. Given the public listed company, BIPLS is relatively better placed among its peers in terms of corporate governance framework, overall control environment and public disclosures.

During the past two years sizeable new online clients were taken onboard on account of management’s enhanced focus on growing retail network by leveraging digital platforms to attract online clientele along with the pandemic led shift in investors’ interest towards online trading. Almost 90% revenue is generated from equity brokerage activities and hence high reliance on the same remains a business risk. Retail clientele forms the major proportion of brokerage income which is viewed as strength; however, granularity in retail base and diversification in income stream is warranted from a rating perspective. Moreover, BIPLS did partake in ready market operations during the ongoing year, albeit the same remains limited in relation to equity.

For further information on this rating announcement, please contact Mr. Muhammad Tabish (Ext: 204) or the undersigned (Ext: 306) at 021-35311861-71 or fax to 021-35311872-3.






Faryal Ahmad Faheem
Deputy CEO

Applicable rating criteria: Securities Firms Rating (July 2020)
https://s3-us-west-2.amazonaws.com/backupsqlvis/docs/SecuritiesFirm202007.pdf

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