Press Release

VIS Assigns Initial Broker Fiduciary Rating to BIPL Securities Limited

Karachi, April 8, 2022: VIS Credit Rating Company Ltd. (VIS) has assigned initial Broker Fiduciary Rating of ‘BFR3++’ to BIPL Securities Limited (BIPLS). The assigned rating denotes good fiduciary standards and signifies sound ownership and governance, management and client services as well as internal control and regulatory compliance. Business and financial sustainability are adequate. Outlook on the rating is “Rating Watch - Developing”.

Assigned rating takes note of sound ownership and governance framework, being a listed company with majority ownership stake held by AKD Securities Limited (AKDSL). Assigned outlook on the rating is on account of proposed merger of AKDSL into BIPLS on the basis of a swap ratio of 2.59. Respective boards of BIPLS and AKD have approved this scheme of arrangement, while regulatory approvals are still under progress. The surviving entity will be named as “AKD Securities Ltd.” upon sanctioning of this scheme. Till the time merger is completed, SECP has granted relaxation against holding two TRE Certificates and licenses by an entity or sponsor under the regulatory framework. The rating will be reviewed once the proposed merger is finalized.

Governance framework of the company is reflective of a public listed entity with the board of directors adequately represented by seven members including independent member representation including two independent directors. Management and client services is also considered sound with strong geographical presence of the company in Pakistan and availability of customer facilitation tools including web and mobile based trading platforms as well as customer grievance tracking systems.

Internal controls and regulatory compliance are considered sound. Implementation of a well-defined credit policy may enhance internal control framework. Independent functioning of internal audit and compliance departments has been noted. Outcome of the ongoing KYC related issues with the regulator will be important for the rating going forward.

Assessment of the financial profile indicates enhanced profitability on the back of higher brokerage revenue, in line with the industry trend. Higher operating revenue also provided support to cost to income ratio; however, the same may further be enhanced through improved cost control. Liquidity profile is considered sound, with liquid assets providing considerable cushion against total liabilities. Market risk has increased during FY21, owing to a growing proprietary book. Gearing level is adequate while leverage is also trending towards a more manageable range, albeit remaining on the higher side.

Further, the company holds a Trading Right Entitlement Certificate (TREC) of PSX and is a Member of Pakistan Mercantile Exchange Limited (PMEX). External auditors of the company are RSM Avais Hyder Liaquat Nauman Chartered Accountants. Auditors 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 .