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The Pakistan Credit Rating Agency Limited

Date
28-Dec-2017
Analysts
Rai Umar Zafar
rai.umar@pacra.com

Ahmed Sheikh
ahmed.sheikh@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • Methodology | Asset Manager Rating (May 17)
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Related Research

  • Sector Study | Asset Management (Apr 17)
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PACRA Maintains Entity Ratings of MCB-Arif Habib Savings and Investments Limited
 Rating Type Entity Asset Manager
Current
(28-Dec-2017)
Previous
(23-Jun-2017)
Current
(28-Dec-2017)
Previous
(30-Jun-2017)
 Action Maintain Maintain Maintain Maintain
 Long Term AM2++ AM2++ AA- AA-
 Short Term  - A1+ A1+
 Outlook Stable Stable Stable Stable
 Rating Watch - - - -

The rating reflects MCBAH’s strong position in the domestic AMC industry augmented by its robust retail base, strong sponsor support, improved organizational structure, innovative technology and sound franchise value. MCBAH's well-structured decision making process supported by continuous improvement in the overall operating platform along with a diversified fund slate. This has helped the company in maintaining the AUM base despite the dip in the industry due to lack luster stock market performance, hence sustaining its system share. The management has effectively integrated separately developed risk management function with investment decision making process. The company has successfully branded its Islamic products under Islamic division - Alhamra. The company has inducted professional and experienced higher management staff. The rating incorporates MCBAH's association with two prominent business conglomerates of Pakistan -Nishat & Arif Habib Groups.

The rating is dependent on the company's ability to sustain its market standing by capitalizing on the self and group distribution platform. At the same time, stability of the quality human resource and consistent fund performance – at par or better than peers will bode well for the company.
About the Entity
MCBAH is a subsidiary of MCB Bank Limited (MCB). MCB holds majority stake (51%) in the company, followed by Arif Habib Corporation Limited (30%). The company is managing fifteen open end mutual funds and two pension schemes with AUMs of ~ PKR 48bln at end-Sep17. MCBAH also manages an SMA portfolio of ~ PKR 27bln. MCB, the fourth largest bank in Pakistan in terms of asset size and branch network, has a very strong financial position, evidenced by a long-term entity rating of AAA by PACRA. Arif Habib Corporation is the holding company for Arif Habib Group with interests in the financial and industrial sectors.

MCBAH’s eight members BoD comprise the company’s CEO, two representatives from MCB, two representatives from AHG and three independent members. Mian Muhammad Mansha – Chairman MCB – serves as the Chairman on the board. Mr. Nasim Beg – a representative of AHG – acts as the Vice Chairman. Mr. Saqib Saleem, is leading the AMC as Chief Executive Officer.
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.