Press Release

JCR-VIS Reaffirms MQ Rating of HBL Asset Management Limited at AM2-

Karachi, March 13, 2015: JCR-VIS Credit Rating Company Ltd. has reaffirmed the Management Quality Rating of HBL Asset Management Limited (HBL AMC) at ‘AM2-’ (AM-Two Minus). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on October 21, 2013.

Risk profile of funds under management has broadly remained in line with pre-defined asset allocation parameters. In the income and money market categories, the company has been able to deliver largely competitive returns. However, performance of stock and multi-asset funds has weakened in relation to peers. Management attributes the same to a stringent stock selection criterion whereby major proportion of the funds remains allocated to top-tier stocks.

The company has undergone a few changes at senior management level; while some of the vacancies have been filled internally, external hiring for others has been undertaken or is underway. The company has a sound governance framework, emanating from the Board. Overall control environment in the company is also adequate. Scope of risk department is comprehensive with various fund related parameters actively tracked by the company in addition to operation risk factors. Information Technology (IT), Human Resource and Shariah Compliance functions are outsourced to HBL; meanwhile, Internal Audit is outsourced to M/s A.F. Ferguson & Company, Chartered Accountants.

HBL AMC’s market share reduced slightly in FY14 despite showcasing healthy growth in size of income and stock funds; this can be attributed to delay in launch of new funds in addition to regulatory changes, introduced under Finance Act 2014-15, that had a considerable impact on the money market funds, which is the largest asset class being managed by the AMC. Overall growth in Assets under Management (AUMs) was reported at 10%. Business strategy of the company depicts aggressive growth targets for coming years; the same is projected to be achieved by way of launch of several funds and a re-designed distribution arrangement with Habib Bank Limited (HBL). At end June 2014, about 10% of the company’s AUMs were contributed by retail investors.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext. 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 021-35311861-71 or fax to 021-35311872-3.

Jamal Abbas Zaidi
Deputy CEO

Applicable Rating Criteria: Mutual Funds Rating (December 2006)

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 2015 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited