Research Analyst
July 26 - Aug 1, 2010

Faysal Bank Limited (FBL) is a larger, stronger, and much more versatile institution offering banking facilities to its individual and corporate customers.

The bank offers value added deposit products and customised consumer financing solutions. The bank also offers a host of corporate, commercial and investment banking services, which include funding and trade finance facilities and corporate advisory services along with a wide array of tools to help customers achieve their business goals. Faysal bank widespread and growing network of branches in the four provinces of the country and Azad Kashmir together with corporate offices in major cities provides efficient services in an effective manner.

Faysal Bank also operates standalone Islamic banking branches under Barkat Islamic Banking brand. The strength and stability of Faysal Bank is evident from the credit rating of "AA" (Double A) for long to medium term and "A-1+" for short term assigned to it by both JCR-VIS and Pacra credit rating.


During the period ended at 31 March 2010, the bank's profit before tax was over Rs2 billion mainly on account of realisation of capital gain of Rs1.7 billion on settlement of NIT LOC Holders' Fund. Net markup income for the quarter was also higher by Rs130 million or 11.8 per cent due to growth in advances and investment portfolio.


INDICATORS MARCH 31, 2010 MARCH 31, 2009
Profit before tax 2,057 352
Profit after tax 1,686 255
Advances 94,341,474 91,346,001
Admin expense 1,213,732 893,356
EPS - Rs 2.77 0.42
Net assets 13,018,277 12,782,739 (Dec -09)

However, the administrative expenses were higher by 34.6 per cent mainly due to staff increments, premium on settlement of LOC Holders' Fund of 2.5 per cent, and opening of four new branches. The gross advances increased by Rs3.3 billion showing an annualised growth of 13.4 per cent over Dec 2009. Total assets at Rs168.7 billion were lower by Rs12.1 billion over Dec 2009 due to shedding of some expensive deposits which decreased by Rs12.8 billion to Rs110.8 billion.

The majority share holding of Faysal Bank is held by Ithmaar Bank BSC an investment bank listed in Bahrain with the balance shares in the hands of general public, NIT and other Pakistani institutions.


Faysal bank's saving plan is a multi-purpose saving utility that allows customers to plan and save proactively in the face of increasing inflationary pressures and growing expenses. This plan allows the customer to save on a regular basis with a lump sum payment on maturity to secure their long-term financial goals. All customers' savings are completely capital protected. The plan also provides attractive bonuses to further boost for savings to the customers.


Currently, Royal Bank of Scotland PLC has agreed to sell its Pakistan unit to Faysal Bank Ltd of Karachi for euro41 million ($50.6 mn).

RBS, now 84 percent-controlled by the British government, is selling its 99.37 per cent holding in RBS Pakistan. The deal, subject to regulatory approval, is expected to be completed in the third quarter of the year. The Pakistan operation serves more than 300,000 customers through 75 branches in 24 cities. This acquisition will significantly contribute to FBL's development and will be a major catalyst in achieving Faysal Bank's growth.


During the FY2010, the country's trade balance reflects healthy improvement mainly on account of reduced cost of imports. With the IMF support programme and a commitment expressed by the global community to extend monetary aid to democratic Pakistan, the country's foreign exchange reserves have increased significantly although rupee continues to depreciate against the dollar.

Moreover, the current account has also displayed significant improvement on the back of stellar growth in remittances and a fall in aggregate demand. Home remittances for the first nine months of FY'10 were recorded at $6.549 billion up from $5.657 billion during the same period last year.

Though the Feb "10 numbers were a little disconcerting at $589 million, they may be considered as a one-off as they were followed by an inflow of $763 million in March 10. In order to sustain this trend over the medium term the economy needs to generate a diversified, vibrant and higher value-added export base and reduce dependency on remittances. The reserve position has remained relatively flat during this quarter and as of 27th March 10 they were recorded at $14.93 bn versus $15.069 billion as of 31st Dec 09.

The market rates depicted a downward curve, which was translated into a 250 bps gradual reduction by the SBP in the discount rates during the year. Market conditions resulted in an industry-wide halt in consumer financing while credit off-take by the private sector continued to remain under pressure. However, the rate reductions during the year are expected to have positive impact on the country's gross domestic product and going forward some improvement in private sector credit demand can be expected in the future.


The global financial crisis has its effects trickling down to Pakistan's banking systems. The financial sector is facing its lows but still on a comparative basis it is better than other neighboring countries owing to regulations and the role of SBP to take timely corrective measures. Measures include relaxation of CRR, SLR and banking spread in phases. Faysal Bank is a progressive financial institution, and striving and committed to offer innovative products and quality services in easily accessible ways for greater customer convenience.