Press Release
VIS Reaffirms Broker Management Rating of Investment Managers Securities Private Limited
Karachi, May 30, 2023: VIS Credit Rating Company Ltd. (VIS) has reaffirmed Broker Management Rating of ‘BMR3’ assigned to Investment Managers Securities Private Limited (IMSPL). Assigned rating denotes sound management quality. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on 11th February, 2022.
The rating signifies sound external control framework. Compliance and risk management, client relationship, HR and infrastructure, financial management, internal controls and regulatory requirements are considered adequate.
The board consists of four members representing three board committees, inclusion of independent directors on board may be considered to avoid repetition of board members in board committees, moreover increasing frequency of board meeting may also enhance overall governance framework.
Rating also takes note of sound external control framework while internal control framework is also considered adequate. Disclosure levels may be improved by adding the director's report and CEO's statement to the financial statements while internal control framework can be further strengthened through enhancing the scope of all internal policies. The assigned rating also takes into account the IMSPL’s adequate HR & infrastructure, compliance & risk management. Segregation of internal audit and compliance department may be considered.
Assessment of financial profile indicates deterioration of the Company’s operational profile on account of subdued market activity along with decline in trading volumes. During FY22, decline in market volumes impacted the earning profile however; non-core income generated on account of profit on deposits has supported the bottom line. The efficiency ratio of the company remains high, therefore, reducing administrative expenses while increasing revenue through means other than brokerage income may be considered. Liquidity profile is considered to be adequate, with liquid assets providing 1.1x coverage to total liabilities. Capitalization indicators are also considered adequate with zero gearing and manageable leverage levels, however equity base remains small. Going forward, augmentation in revenue streams in order to mitigate operational risk, improvement in cost to income ratio maintenance of capitalization indicators and liquidity profile will remain important for the rating.
IMSPL is a private limited company holding Trading Rights Entitlement Certificate (TREC) granted by Pakistan Stock Exchange Limited (PSX), and is registered with SECP to provide Trading & Self-Clearing Services.
For further information on this rating announcement, please contact Ms. Syeda Batool Zehra Zaidi (Ext: 210) or the undersigned (Ext: 106) at (021) 35311861-66 or email at info@vis.com.pk.
Muhammad Bilal Aftab
Director
Applicable Rating Criteria: Broker Management Ratings July 2020
https://docs.vis.com.pk/docs/BMR202007.pdf
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