Press Release

VIS Reaffirms Management Quality Rating of HBL Asset Management Limited
 

Karachi, December 31, 2019: VIS Credit Rating Co. Ltd. (VIS) has reaffirmed the Management Quality Rating (MQR) of HBL Asset Management Limited (HBL AMC) at ‘AM2+’ (AM-Two Plus). Outlook on the assigned rating is ‘Positive’. The previous rating action was announced on December 28, 2018.

The assigned ratings incorporate HBL AMC’s existing market position in the asset management industry with the company having a market share of 7.9% in total industry AUMs as at end-June 2019. Market Share declined in the outgoing fiscal year; however AUMs has witnessed an increasing trend in recent months. AUM profile has improved with increase in proportion of retail AUMs and reduction in investor concentration levels. Aggressive sales growth strategy for all channels has been put in place for enhancing market position and AUM profile. Sales strategy entails strengthening the sales team, implementation of a revised performance monitoring mechanism with target on net AUMs, focused alignment with HBL Bank to leverage its extensive branch network & HBL app and Konnect customers and roll-out of digital strategy. Successful execution of sales strategy is considered important.

HBL AMC’s investment decision making process is well-structured and formalized with strong focus on research based decision making. Relative performance ranking of equity funds was in the top quartile while performance of fixed income funds has room for improvement. Operating profitability was subdued in the ongoing calendar year due to lower management and investment advisory fee. Decline was attributable to lower AUMs and shift in AUMs towards lower management fee funds. Maintaining adequate cushion for debt servicing, as projected, while improving profitability profile is considered important. Comfort is drawn from strong profile and expected support of the Sponsor, if needed.

Ratings also incorporate Company’s adequate governance and control framework. During the review period, the compliance function has been strengthened with strong focus on actively resolving outstanding discrepancies related to KYC backlogs. Apart from change at the position of the CEO, senior management team has largely remained stable. Senior management team comprises experienced professionals with vacant positions expected to be filled by 1Q2020. Ratings remain dependent on improving market position and AUM profile, achieving superior fund performance vis-à-vis peers, maintaining sound debt servicing ability and resolving outstanding discrepancies related to KYC and AML within stipulated timelines. Successful execution of communicated business strategy is a key rating driver.

For further information on this rating announcement, please contact Mr. Talha Iqbal (Ext: 213) or the undersigned (Ext: 201) at (021) 35311861-66 or email at info@vis.com.pk.




Javed Callea
Advisor

Applicable Rating Criteria: Mutual Fund Rating (March 2016)
http://www.vis.com.pk/docs/AMC-Methodology-201603.pdf

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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 not an NRSRO and its credit ratings are not NRSRO credit ratings.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 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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