Press Release

JCR-VIS Reaffirms Entity Ratings of Intermarket Securities

Karachi, April 25, 2018: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed the entity ratings of Intermarket Securities (IMSL) at ‘BBB+/A-2’ (Triple B-Plus/A-Two). Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on August 31, 2017.

Intermarket Securities Limited (IMSL) is a public limited company incorporated in 2002. IMSL is the flagship company of Intermarket Group (IMG) and provides brokerage services for domestic and international retail and institutional clients and operates as the financial, equity research and corporate advisory arm of IMG.

The assigned ratings incorporate the sound corporate governance framework, sizeable equity observed in FY17 and manageable leverage indicators. Ratings are constrained by the overall downturn of the brokerage industry for HY18 and lower profitability levels vis-à-vis peers in FY17.

Market volumes for the industry increased during FY17 largely due to the reclassification of Pakistan Stock Exchange (PSX) from frontier market to emerging market in the MSCI Index. However, during FY18, erosion of market volumes has decreased revenue across the brokerage industry thereby leading to attrition of brokerage companies’ revenues.

During FY17, IMSL witnessed significant growth from last year in equity brokerage income due to increase in volume of shares trade, however, IMSL increased administrative expenses vis-à-vis peers which led to a net loss. Loss was also incurred in HYFY18 due to the decline in the market volumes as mentioned above.

IMSL’s equity base for FY17 increased on the back of a director’s loan injection, however, the same declined for FY18 due to the partial withdrawal of the director’s loan from equity. Resultantly, the decreased equity base was compensated by take up of debt which led to an increase, within manageable levels, in the leverage indicators for HY18.

For further information on this rating announcement, please contact Javed Callea (Ext: 201) at 021-35311861-71 or fax to 021-35311872-3.

Javed Callea

Applicable rating criteria: Methodology - Securities Firms Rating (May 2015)

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited JCR-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.JCR-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.JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.JCR-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 2018 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited