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Pakistan Credit Rating Agency Revises Ratings of KASB Securities Limited

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by January 18, 2012 General

Lahore: The Pakistan Credit Rating Agency (PACRA) has revised the long-term and short-term entity ratings of KASB Securities Limited (KSL) to “A-” (A Minus) and “A2″ (A Two) respectively [Previous: A/A1]. The rating of the secured and privately placed TFC issue of PKR 500mln has also been revised to “A” (Single A) [Previous: A+]. These ratings denote a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.

The ratings reflect KSL’s strong position in the equity broking business emanating from its healthy market share and established brand. This is supplemented by a strong research function and advanced technology infrastructure that draws support from the company’s association with Bank of America Merrill Lynch (BAML). However, the overall depressed broking volumes have squeezed the respective business available to KSL, in turn, negative operating margins.

The proprietary trading activities, though actively monitored, expose the company to market risk. Furthermore, non-earning assets (significant compared to the company’s equity), besides putting pressure on the earning capability, have constrained the liquidity profile of the company.

The management, cognizant of the situation, is exerting efforts to convert these non-earning assets, via divestment, into earning resources. The negative outlook highlights the continuous pressure on core profitability of the company which could result in further weakening of its business profile. The difficult business environment magnifies the challenge.

For more information, contact:
Hammad Rashid
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town, Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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