MCB Bank weighs to boost its subsidiary business
The expansion plan of MCB Bank with its subsidiary Islamic Bank and acquisition of NIB Bank may bode well for the business of its subsidiary MCB-Arif Habib Savings and Investments Limited (MCBAH) having Rs 70 billion portfolio of fourteen mutual funds. MCB Bank holds majority stake of 51 percent in the company, followed by Arif Habib Corporation Limited with 30 percent shares. The company is managing fourteen open end mutual funds along with two pension schemes with AUMs of Rs 49 billion at end-Feb16. MCBAH also manages a SMA portfolio of Rs 19.15 billion.
MCB, the fourth largest bank in Pakistan in terms of asset size and branch network, has a very strong financial position but the possible merger of bank with NIB Bank will push its position to second largest after Habib Bank Limited in terms of branches and deposits.
According to analysts, a well-diversified fund slate along with a consistent growth in AUMs bodes well for the company's revenue stream. The increased contribution of retail investors benefitting through the company's iconic message 'Bachat Ka Doosra Naam' helps in providing sustainability to the core income. The company's experienced management and requi- site systems are well placed to tap the growth opportunities in the mutual fund industry. Well guided TORs and prudent investment framework provide comfort against the management's plan to supplement company's income through government securities investments. Sustained improvement in profitability lends more than adequate support to coverage's. The Pakistan Credit Rating Agency (PACRA) has maintained the long-term entity rating of MCB-Arif Habib Savings & Investments Limited (MCBAH) at "AA"(Double A Minus) and short-term rating at "A1+" (A One Plus). These ratings denote very strong capacity for timely payment of financial commitments. The ratings reflect MCBAH's well-maintained franchise augmenting its relative positioning in a competitive market.
The rating incorporates MCBAH's association with two prominent business conglomerates of Pakistan - particularly a leading bank, MCB Bank Limited. The ratings are dependent on the company's ability to sustain its market standing by capitalizing on the self and group operating platform.