PACRA Maintain Entity Ratings of Faysal Bank Limited

Faysal Bank Limited (FBL) continued its focus on cautious growth and consolidation of its relative positioning among peer banks. The bank has enduring emphasis on low cost CASA deposits, prudent deployment of assets for better yields and carefully planned loan book growth. FBL is targeting reduction in Non-Performing Loans through various measures including recoveries and settlements under the approved policy. The bank has a continued focus on operational efficiency and was able to keep its costs under control and improve its efficiency ratio. These initiatives have supported the bank’s profitability and provided cushion against risk absorption capacity. The management is cognizant of dynamic competition in the industry and is taking steps to strengthen FBL's positioning amongst medium-sized banks operating in Pakistan. FBL's conversion into Islamic banking is a medium-term plan, which is being rolled out as envisaged. Meanwhile, the ratings recognize FBL's association with a foreign business group (Dar Al Maal Al-Islami Trust).

The ratings are dependent on 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 bank's profitability and risk absorption capacity may have negative implications for the ratings.

About the Entity
FBL, operating with a network of 355 branches (including 146 Islamic branches), holds ~3% share in total banking deposits at end-Dec16. Bahrain based IB Bank B.S.C (Closed) is the parent company of the Bank holding directly and indirectly 66.78% of FBLs shareholding. IB Bank B.S.C (closed) is a wholly owned subsidiary of Ithmaar Holding B.S.C which has an asset base of USD 8.3 bln and equity of USD 0.43 bln as at Dec-16. Ithmaar Holding 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.

The ten-member BoD, including the Chairman, comprises a mix of experienced bankers and businessmen having domestic and international experience. Mr. Yousaf Hussain has been designated as acting CEO in May-2017. He is an exprienced banker with over 22 years of experience primarily with ABN AMRO and last 9 years with Faysal Bank and is supported by an experienced and qualified team.