Press Release

VIS Upgrades Management Quality Rating of HBL Asset Management Limited

Karachi, December 30, 2022: VIS Credit Rating Co. Ltd. (VIS) has upgraded the Management Quality Rating (MQR) of HBL Asset Management Limited (‘HBL AMC’ or ‘the AMC’) from ‘AM2++’ (AM-Two Plus Plus) to ‘AM1’ (AM-One). ‘AM1’ rating denotes excellent management characteristics exhibited by the asset manager. Outlook on the assigned rating has been revised from ‘Positive’ to ‘Stable’. Previous rating action was announced on December 31, 2021.

The rating revision takes into account notable growth in HBL AMC’s Assets under Management (AUMs), which increased by 90% YoY in FY22, while the industry grew by 19% during the same period translating in strong market share gains. During 4M’FY23, AUMs growth was relatively subpar as a result of which we noted some market share attrition. Nevertheless, market share of the AMC has notably improved since our last review. As of Oct’22, HBL AMC was the 3rd largest AMC in the industry, having improved its market positioning from 7th largest as of Jun’21.
During 9M’CY22, the sponsoring entity, HBL, injected Rs. 1.4b in HBL AMC, which was used to fully repay the financial obligations of the AMC. As a result of this development, financial risk profile of the AMC has improved, while business risk has also improved given higher profitability projections in the absence of financial charges and strong growth in AUMs. The management is working improving investor granularity by way of cross selling through branches. In-house sales team has also been growing and is planned to be increased further.
Fund performance posted mixed results during the period under review. We have noted the above average performance in conventional money market and income fund categories. However, on a 2-year basis (FY21-22), performance of Islamic money market and income funds is viewed as average. Stock fund returns were notably adverse, which also had a negative bearing on asset allocation fund returns. Cognizant of adverse equity asset class returns, the management is working on introducing alternative asset class based funds in the market to broaden the AMC’s product suite. The AMC also launched two new funds i.e. HBL Islamic Asset Allocation Fund Plan II and industry first debt ETF, HBL Total Treasury Exchange Trade Fund during 4M’FY23. The rating is underpinned by an element of sponsor support to provide operational self-sufficiency, maintenance of market positioning while reducing concentration in investor base and improvement in fund rankings.
For further information on this rating announcement, please contact Mr. Arsal Ayub, CFA (Ext: 204) or the undersigned (Ext. 306) at 021-35311861-70 or email at info@vis.com.pk




Sara Ahmed
Director

Applicable Rating Criteria: Asset Management Companies (June 2019)
https://s3-us-west-2.amazonaws.com/backupsqlvis/docs/AMC-Methodology-201906.pdf

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