Press Release

JCR-VIS Upgrades MQ Rating of HBL Asset Management Limited
 

Karachi, April 1, 2010: JCR-VIS Credit Rating Company Ltd. has upgraded the Management Quality Rating of HBL Asset Management Limited (HBL AMC) from ‘AM3’ (AM - Three) to ‘AM3+’ (AM – Three Plus). The Outlook on the rating is ‘Stable’.

The upgrade takes into account strong governance practices in place at the management company. Key management positions are occupied by qualified personnel though the company may benefit from further depth in management. The sponsoring bank has also been forthcoming in its willingness to support the institution.

The management’s outlook has largely remained conservative. This approach provided downside protection to investors in both the equity and balanced funds in CY2008. Relative returns were still in the middle tier of the peer group, during the bull run of 2009. Asset allocation of stock fund has been revised to bring it in line with regulatory criterion during the on going year, while the risk profile of the balanced fund has also been revised on a more aggressive note. With respect to the income fund, a sizeable proportion of net assets is represented by TFCs. While so far returns are higher relative to FY09, they may come under pressure, if any further non-performing assets are reported.

Total investors in all three funds at the end of FY09 stood below 700. Growth in the retail investor base across all three funds under management remains to be seen, which will help ease concentration related risks. While the branch network of Habib Bank Limited is utilized for distribution of funds, more aggressive marketing tactics may need to be deployed for penetrating the retail investor base.

The asset management industry has undergone significant stress over the past one and a half years and recovery in terms of fresh inflow of funds may remain slow. Furthermore, issues with respect to pricing of corporate debt instruments and lack of liquidity in the market also remain a source of concern for industry participants.

For further information on this rating announcement, please contact Ms. Sabeen Saleem (Ext: 510) or Ms. Sobia Maqbool (Ext: 506) at 021-35311861-71 or fax to 021-35311872-3.



Faheem Ahmad
President & CEO

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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 2010 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