Lahore, June 27, 2022 (PPI-OT):Faysal Bank has registered a remarkable journey towards becoming and achieving a full-fledged Islamic bank. This is important as it is first of its kind globally. Given a pertinent focus towards and demand for transition towards Islamic Banking in the country, Faysal Bank stands at a distinct advantage. The conversion process is expected to be completed over the short horizon. FABL opened 30 new Islamic branches and converted 65 branches to Islamic during CY21, increasing the Islamic branch network to 595 branches, making it the biggest network of dedicated Islamic Branches amongst all conventional banks in Pakistan. Moreover, the Bank has launched the first ever Tawaruq based Islamic Credit Card to target a large unserved customer base.
The ratings take comfort from the Faysal Bank Limited’s (FABL) association with a foreign business group – (Dar Al-Maal Al Islami Trust). The presence of sponsor’s nominees on the Board stands to provide it with the industry-specific working knowledge and strategic thinking capability. The Bank has also benefited from management stability over the past several years. FABL continued its focus on growth while maintaining its relative positioning among medium sized banks. The Bank has prudent deployment of assets for better yields and carefully planned loan book growth. The Bank has a continued focus on operational efficiency and despite an increase in its branch network, related costs remained in check. These initiatives have supported the Bank’s profitability and provided a cushion against risk absorption capacity. The bank recorded improved total income and growth in profitability.
Going forward, positive trajectory should sustain. The management is cognizant of dynamic competition in the industry and is taking steps to strengthen FABL’s positioning amongst medium-sized banks operating in Pakistan. FABL remains a highly capitalized commercial bank with a common equity tier 1 (CET-1) ratio of 15.7% as at Dec-21. Pakistan’s economy has gone through several varied phases in last two years due to the COVID19 pandemic. Banking sector continued to flourish with high profitability. Going forward, the macro-economic environment is beset with myriad challenges due to heightened interest rate, tightening of demand, rupee depreciation and higher inflation. This has repercussions for all segments of the economy.
The ratings are dependent on the Bank’s ability to sustain improvement in its financial profile. This is important since most peer banks have gained in terms of their size and profitability matrix in recent years. Any material weakening in asset quality, in turn, putting pressure on the Bank’s profitability and risk absorption capacity may have negative implications for the ratings.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com