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The Pakistan Credit Rating Agency Limited
Press Release

Date
26-Jun-20

Analyst
Kanwal Ejaz
kanwal.ejaz@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Faysal Bank Limited

Rating Type Entity
Current
(26-Jun-20 )
Previous
(27-Dec-19 )
Action Maintain Maintain
Long Term AA AA
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

Faysal Bank Limited (FABL) continued its focus on growth while maintaining its relative positioning among peer banks. The bank has an enduring emphasis on CASA deposits, 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, the bank was able to keep costs under control. These initiatives have supported the bank’s profitability and provided a cushion against risk absorption capacity. 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's conversion into Islamic banking is a medium-term plan, which is being rolled out as envisaged. FABL opened 100 new Islamic branches during FY19 increasing the Islamic branch network to 413 branches including 1 Islamic sub-branch, making it the biggest network of dedicated Islamic Branches amongst all conventional banks in Pakistan. The banks’ capital adequacy has seen substantial improvement, gradually over the years. Meanwhile, the ratings recognize FABL's association with a foreign business group (Dar Al Maal Al-Islami Trust). FABL remains a highly capitalized commercial bank with a common equity tier 1 (CET1) ratio of 15.5% as at Dec-19. Covid-19 has posed challenges to the banking sector, as almost all segments of the economy, worldwide and domestically, are getting negatively impacted. The ramifications would continue to unfold, warranting vigilance and timely actions where needed.
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.

About the Entity
FABL, operating with a network of 555 branches, holds ~3.0% share in total banking deposits at Dec-19. Bahrain based IB Bank B.S.C (Closed) is the parent company of the Bank holding directly and indirectly 66.78% of FABLs shareholding. 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, the CEO since May 2017, is an experienced banker with over 26 years of experience primarily with ABN AMRO and the last 12 years with Faysal Bank and is supported by an experienced and qualified team.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.