Press Release

JCR-VIS Reaffirms Entity Ratings of Intermarket Securities Limited

Karachi, February 21, 2017: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed entity rating of Intermarket Securities Limited (IMSL) at ‘BBB+/A-2’ (Triple B Plus/A-Two). Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on November 20th, 2015.

The rating takes into account sustained efforts by the senior management team to increase revenue generated through provision of brokerage services, improving proportion of core revenue through institutional clients and delving further into the international brokerage market.

During FY16, the brokerage department of IMSL has focused on developing a source for core brokerage commission income by creating and improving institutional client relationships. Total income generated from these clients has increased five-fold. Retail clients however continue to generate primary portion of total brokerage commission income. The company’s market share has increased to 4.49% (FY15: 2.06%) on total Share Volume traded.

IMSL has signed multiple broking agreements with international brokers based in the United States of America (USA) and in United Kingdom to develop strong international relationships to provide brokerage services to prospective clients. These are expected to develop into brokerage commission income where commission rates are on the higher side. Additionally, improvement in quality and efficiency of research reports has resulted in international brokers providing due compensation and entering formal contracts for sharing reports on the Pakistani market.

The company has maintained an experienced senior management team to achieve company targets in both domestic and foreign brokerage. Resultantly, growth in operating expenses has outpaced revenue generation, impacting operating profit levels. Going forward, the expenses would need to be rationalized in-line with revenue growth. Furthermore, the company has added an Internal Audit department that will support compliances with regulations and create operational efficiencies.

Given the expansion of operational activities, which would require greater levels of debt and equity, the company should consider addressing capital strength, going forward.

For further information on this rating announcement, please contact the undersigned (Ext: 208) or Mr. Javed Callea (Ext: 201) at 021-35311861-71 or fax to 021-35311872-3.

Mohammed Khalid Ali

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 2017 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