Profile
Structure
Faysal Bank Limited ("FABL" or the "Bank") was incorporated on October 3, 1994, as a public limited company under the provisions of the Companies Ordinance 1984 (now the Companies Act, 2017).
Background
FABL started operations in Pakistan in 1987, first as a branch set up of Shamil Bank of Bahrain and since 1994, as a locally incorporated Bank under the
present name. In the year of 2002, Al-Faysal Investment Bank, another group entity, merged into Faysal Bank Limited. The State Bank of Pakistan issued the Islamic Banking License No. BL(i)-01 (2022) on December 30, 2022. Consequently, the Bank transitioned into a full-fledged Islamic bank and commenced operations as such from January 1, 2023. The registered office of the Bank is located at Faysal House, St-02, Shahrah-e-Faysal, Karachi, Pakistan.
Operations
The Bank is engaged in Shariah-compliant modern corporate, commercial and Consumer banking activities. During CY24, the Bank opened new branches,
taking its branch network to 855 branches. The Bank is engaged in consumer finances (secured and unsecured), car financing, and secured Islamic personal finances. The Bank provides financing primarily through Murabaha, Musawamah, Istisna, and other Islamic modes. It also offers wealth management solutions to its customers.
Ownership
Ownership Structure
Faysal Bank Limited is a Pakistani Islamic bank, 66.78% of which is owned (directly and indirectly) by Ithmaar Bank B.S.C. (Closed). Ithmaar Bank is a fully owned subsidiary of Ithmaar Holding B.S.C., which serves as its parent company. At the top of the structure, the ultimate parent is Dar Al-Maal Al-Islami Trust (DMIT), which is the holding company of Ithmaar Holding. State Life Insurance Corporation of Pakistan holds 5.3% shares of the Bank. Remaining shares (27.94%) are spread among the general public and the directors of the Bank.
Stability
The ownership structure of the bank is considered strong as the major shares are held by Ithmaar Bank B.S.C. (Closed). The equity base of Ithmaar Bank B.S.C. (Closed) is PKR 79bln by Dec'24.
Business Acumen
Ithmaar Holdings B.S.C. (Ithmaar Holdings) is a Bahrain-based holding company that is licensed and regulated as an investment company and is listed
on the Bahrain Bourse, Boursa Kuwait and Dubai Financial Market.
Financial Strength
Ithmaar Holdings B.S.C. and its subsidiaries are engaged in a wide range of financial services including retail, commercial, investment banking,
private banking, takaful and real estate development.
Governance
Board Structure
The overall control of the Bank vests in the ten-member Board of Directors (BoD), including the CEO. Ithmaar Bank, the key shareholder, is
represented by five non-executive directors on the board who are nominees of the Bank. The remaining four are independent directors.
Members’ Profile
Mr. Mian Mohammad Younis, Chairman of FBL, is a seasoned economist and civil servant with over 39 years of experience in finance, governance, and public policy. Mr. Ahmed Abdulrahim Bucheery, Vice Chairman, is a veteran Bahraini banker and former CEO of Ithmaar Group with extensive international banking experience. Mr. Yousaf Hussain, President & CEO, has over 31 years of banking experience and led Faysal Bank’s transformation into a full-fledged Islamic bank. Mr. Imtiaz Ahmad Pervez is a senior banking professional with over 35 years of international experience and a key figure in Faysal Bank’s early development. Mr. Ali Munir is a Chartered Accountant with extensive experience in banking reforms and senior roles at MCB, Citibank, and HBL. Mr. Juma Hasan Ali Abul is a finance executive with global board memberships and a background in accounting and Islamic finance. Mr. Abdulelah AlQasimi brings 45 years of diverse public and private sector leadership, especially in development and education. Ms. Fatima Asad Khan is a transformation leader and CEO of Abacus Consulting with expertise in digital strategy and governance. Mr. Mohsin Tariq is an entrepreneur and turnaround strategist behind Nimir Chemicals’ success, with a strong focus on financial oversight. Ms. Sadia Khan is a fintech leader and former CEO of AutoSoft Dynamics with a track record of core banking and digital banking innovations.
Board Effectiveness
Board meetings are conducted at regular intervals. The BoD exercises close monitoring of
the management’s policies and the Bank’s operations through board committees. There are six board committees in place, namely: 1) Audit and Corporate Governance Committee 2) Risk Management Committee 3) Recruitment Nomination and Remuneration Committee 4) Stretegy Committee 5) IT Committee 6) Sustainability and Development Committee. Additionally, nine directors out of the total ten directors are certified and have completed the mandatory Director's training programme.
Financial Transparency
The External Auditors of the Bank, KPMG Taseer Hadi & Co., Chartered Accountants, issued an unqualified audit opinion pertaining to annual
financial statements for CY24. Furthermore, the Board has set up an effective internal audit function that reports independently to the Board Audit & Corporate
Governance Committee regularly on compliance with critical policies and procedures and recommends amendments to these policies in line with the industry's best
practices.
Management
Organizational Structure
The Bank has a well-defined organizational structure. Operations are segregated into various departments wherein clear lines of responsibility
are defined for each cadre.
Management Team
Mr. Yousaf Hussain is the President & CEO since May-2017. Mr. Hussain has been associated with Faysal Bank since 2008 and has banking
experience over two decades. He is supported by a management team of well-experienced and qualified individuals. Mr. Shuja Haider is the Head Treasury & ECM, boasting 28 years of experience, with 16 years at the bank and 2.2 years in his current role. Mr. Raheel Ijaz, the Chief Operating Officer, has 45 years of overall experience, including 10 years with the bank and 7.7 years in his current position. Mr. Syed Majid Ali is the Chief Financial Officer with 33.3 years of experience, 16.9 years at the bank, and 16.8 years in his current role. Mr. Mian Salman Ali, the Chief Risk Officer, has 21.6 years of overall experience, including 14.2 years with the bank and 7.7 years in his current position.
Effectiveness
A Management Committee (MANCOM), comprising group heads, meets on a quarterly basis to review the performance of each division vis-à-vis set
targets. The MANCOM also provides strategic input for setting the direction of the Bank vis-à-vis the economic environment and decides on the implications of new
business initiatives for the Bank.
MIS
The Bank has implemented a robust IT Governance framework aligned with regulatory requirements and guided by the IT Steering Committee, Board IT Committee, and regulatory bodies. This framework ensures alignment between IT strategy, business goals, and cybersecurity, promoting accountability and adherence to global best practices. By integrating advanced technologies, automation, and strong cybersecurity, the Bank enhances agility and innovation. These efforts support regulatory compliance and enable the delivery of cutting-edge financial solutions. Through continuous IT governance enhancement, Faysal Bank remains a leader in secure digital transformation.
Risk Management Framework
The Bank is exposed to a wide range of internal and external risks, including credit, market, liquidity, operational, cybersecurity, and reputational risks, among others. With its transition to a full-fledged Islamic bank, Shariah non-compliance has become a key operational concern. To address these challenges, the Bank has implemented a Board-approved Integrated Risk Management framework. Major risks are actively monitored by specialized management committees such as Country Credit
Committee (CCC), Enterprise Risk Management Committee
(ERMC), Assets and Liabilities Committee (ALCO), Investment
Committee (IC), IT Steering Committee (ITSC) and Compliance &
Fraud Risk Committee (C&FRC) within their respective areas. This approach ensures effective risk oversight and alignment with regulatory and strategic objectives.
Business Risk
Industry Dynamics
During CY24, Pakistan's Banking sector's total assets posted growth of ~15.81% YoY whilst investments surged by ~14.50% to PKR ~29.79trln (endDec23: PKR ~26trln). Gross Advances of the sector recorded growth of ~29.11% to stand at PKR ~16.914trln (end-Dec23: PKR ~13.101trln). Non-performing loans witnessed an increase of 7.34% YoY to PKR ~1,068bln (end-Dec23: ~995bln). The CAR averaged at 20.6% (end-Dec23: 19.7%). Looking ahead, given the expected monetary rate cut and high cost environment, Banks are likely to sustain some dilution in profitability by CY25. Source: SBP Compendium)
Relative Position
FABL is a medium-sized bank with sustainable growth and has witnessed an increase in its total deposit base to PKR 1044bln (CY23: PKR 1018.3bln). The Bank holds a customer deposit base of PKR 840bln other than financial institutions, at end-December 24 (end-Dec23: PKR 828bln). On such basis, the
market share of deposits of the bank dipped to 2.86% (end-Dec23: 3.13%).
Revenues
During CY24, FABL’s NIM witnessed an increase of 13.1% YoY to stand at PKR 80.3bln (CY23: PKR 71bln), where return earned recorded an increase of 18.8% YoY to stand at PKR 225.05bln (CY23: PKR 189.44bln). The bank’s asset yield inclined to 18.2% (CY23: 18.1%), however, the spread of the Bank showed a small dip to 6.7% (CY23: 7%) inline with the market rates.
Performance
During CY24, other income increased by 43.5% to stand at PKR 17.36bln (CY23: PKR 12.10bln). Other expenses increased by 22% YoY to stand at PKR 49.8bln (CY23: PKR 40.81bln). The other income to total income inched up to 17.8% (CY23: 14.6%). The increase in the other expenses is mainly driven by the high cost of technology infrastructure and branch expansion initiatives. Subsequently, the net profit stood at PKR 23.03bln (CY23: PKR 20.05bln). The PAT remained intact across the industry due to the declining policy rate environment.
Sustainability
Going forward, FABL plans to focus on mobilising low-cost core deposits and enhancing business volume via branch outreach. additionally, on the digital front, the Bank has embraced a transformative approach in digital banking, positioning itself amongst the industry leads,
not only within the Islamic banking but also as a key digital player in the broader industry.
Financial Risk
Credit Risk
In CY24, FABL showcased a strong performance, with its financing portfolio growing by 9.2% YoY to PKR 633.9bln from PKR 580.7bln in CY23. This increase highlights the bank's effective strategies in expanding its lending activities, predominantly financed through deposits. The growth
in financing is reflected in the increased advances to Deposit Ratio (ADR), and it is recorded at 60.7% during the year (CY23: 57.1%). On the asset quality front, Non-Performing financing
increased marginally to PKR 24.3bln from PKR 23.06bln in CY23, The increase is relatively modest compared to the substantial growth in the financing portfolio. Overall,
FABL’s financial health appears strong, with a growing financing portfolio supported by a solid deposit base and manageable levels of non-performing assets.
Market Risk
In CY24, FABL's investment portfolio demonstrated significant growth, expanding by 14.9% YoY to PKR 677.4bln from PKR 589.5bln in CY23. A notable
aspect of FABL's investment strategy is its strong concentration in government securities, which constitute 90% of the total portfolio, The majority of the funds generated
from deposits were invested primarily in Ijara Sukuks it reflects FABL's commitment to adhering to Sharia-compliant financial principles. Overall Bank focus on stability,
low-risk investments.
Liquidity and Funding
In CY24, FABL's liquidity position improved, with the liquidity ratio rising to 54.9% from 52.1% in CY23. This increase reflects the bank’s
enhanced ability to meet short-term obligations.
Overall, FABL’s strategy in CY24 highlights a strengthened liquidity position and a dynamic approach to managing its deposit base, ensuring financial stability and
flexibility. 90% of FABL's investment portfolio is parked in government securities. The current account ratio (CA) stood at 39% (CY23: 31%), the saving account ratio (SA) stood at 46.5% (CY23: 43%), and the CASA ratio stood at 85.5% (CY23: 75%).
Capitalization
The Bank remains well-capitalized, maintaining strong buffers above regulatory requirements. As of end-December 2024, the Capital Adequacy Ratio (CAR) stood at 16.5% (CY23: 17.5%), with a Tier I CAR of 13.2% (CY23: 14.6%). The equity base of the Bank stood at PKR 108.4bln by the end of CY24 (CY23: PKR 90.2bln).
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