Press Release

VIS Reaffirms Entity Ratings of MRA Securities Limited

Karachi, October 18, 2021: VIS Credit Rating Company Ltd. (VIS) has reaffirmed entity ratings of MRA Securities Limited (MRA) at ‘A-/A-2’ (Single A Minus/A-Two). Long-term rating of ‘A-’ signifies good credit quality with adequate protection factors. Risk may vary slightly from time to time because of economic conditions. Short-term rating of ‘A-2’ depicts good certainty of timely payment where liquidity factors are sound and good access to capital markets. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on December 21, 2020.

Assigned ratings continue to factor in the distinctive branch network model (9 branches in Karachi), strong and sustained market share (above 15% in volumetric terms and excluding in-house investment trading) and growing retail client base. Reaffirmation of ratings takes into account the strong growth in core brokerage revenue and higher one-off capital gains, translating into improved overall profitability during the period under review. Leverage indicators have posted a rising trend over the years and the market risk also remains high on account of sizeable short-term investments. Going forward, managing market risk and capitalization indicators at levels commensurate with the ratings is considered important. Ratings also take note of improvement in governance profile with the appointment of external auditors of ‘Category A’ of SBP’s Panel of Auditors.

MRA’s trading volumes outpaced the industry growth and led to a three-fold increase in equity brokerage commission in the outgoing fiscal year. The same, however, constitute almost entire proportion of recurring revenue base which remains a business concentration risk. Despite higher recurring income, the company’s cost-income ratio has depicted slight weakening. Given recently acquired underwriting license, contribution of underwriting income to revenues remains small. Going forward, increase in underwriting volumes and diversification in income stream may improve the company’s competitive position.

Since last review, sizeable new clients were taken onboard and the retail client base registered a growth of ~33% vis-à-vis previous year. Going forward, focus would remain on the growth of retail penetration. In this regards, the management has planned to open one branch in Islamabad in the ongoing year. Furthermore, the management is in process of acquiring a third party research service in order to enhance customer facilitation.

For further information on this rating announcement, please contact Mr. Muhammad Tabish (Ext: 203) or the undersigned (Ext: 306) at 021-35311861-71 or fax to 021-35311872-3.

Faryal Ahmad Faheem
Deputy CEO

Applicable rating criteria: Securities Firms Rating (July 2020)

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 2021 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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