Karachi, May 18, 2022 (PPI-OT):VIS Credit Rating Company Ltd. (VIS) has assigned initial Broker Fiduciary Rating of ‘BFR2’ to Next Capital Limited (NCL). The assigned rating denotes strong fiduciary standards and signifies strong management and client services as well as internal control and regulatory compliance. Ownership and governance is sound, while business and financial sustainability is considered adequate.

The rating takes note of sound ownership and governance framework. NCL is a listed entity, with board of directors comprising of seven members including independent representation of two. Two board level committees supervise the HR and Audit functions. Management and client services is considered strong. The company ensures availability of ample research material on the website as well as mobile and web-friendly trading platforms for client facilitation.

Internal controls and regulatory compliance are considered strong. In addition to well-developed internal control policies, an independent functioning risk management function has been noted; however, formulating a defined credit policy may further strengthen the control framework.

Assessment of business and financial sustainability depicts improvement in revenues and profitability in FY21 due to higher brokerage commission led by higher market activity. However, during first half of ongoing fiscal year, market activity has remained subdued, impacting profitability of the Company. As per the management, the company is expected to recoup the profitability to a certain extent by the year-end on account of higher advisory income. While exposure to market risk is low, liquidity profile has room for improvement. Gearing and leverage ratios have increased year-on-year, albeit remaining within manageable levels. Equity growth led by augmentation of revenue streams along with improvement in operational efficiency will remain important for rating, going forward.

The Company holds a Trading Right Entitlement Certificate (TREC) issued by the Pakistan Stock Exchange Limited (PSX) for Trading and Self-Clearing Services. External auditors of the company are KPMG Taseer Hadi and Co. – Chartered Accountants which belong to category ‘A’ on the approved list of auditors published by the State Bank of Pakistan (SBP).

For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/