Press Release

JCR-VIS Reaffirms Ratings of Faysal Bank Limited

Karachi, June 28, 2011: JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Faysal Bank Limited (FBL) at ‘AA/A-1+’ (Double A /A-One Plus). Ratings of the unsecured, subordinated term finance certificates (Issue I & II) of FBL have also been reaffirmed at ‘AA-’ (Double A Minus). Outlook on the outstanding ratings is ‘Stable’.

The acquisition of Pakistan operations of Royal Bank of Scotland (RBS) has expanded FBL’s footprint to 226 branches and increased deposit base, with a market share of 3.6% at year-end 2010. FBL’s cost of deposits has experienced reduction, with deposit concentration levels also having showcased improvement, easing the bank’s liquidity profile.

While the merger led to accelerated growth in loan portfolio, non-performing loans inherited from RBS and further accretion of NPLs in FBL’s own loan book has increased the level of infection. The bank seeks to gain potential upside from recovery of non-performing exposures, and is actively mobilizing efforts for recoveries of NPLs. While corporate sector continues to be the mainstay in terms of lending activities, FBL has acquired a diversified consumer portfolio and is looking to tap cross-sell opportunities within the retail segment, while also envisaging growth in credit cards portfolio acquired from RBS.

Post merger, FBL is now operating with high overheads. The bank is looking to optimize its cost base through reductions across all business and support functions, particularly in IT and branch operations. Realization of profitability targets depends on management’s ability to optimize cost structure and improve revenue streams. Developing quality of credit portfolio will also have significant bearing on profitability. Given the combined exposure to various sources of risks and the current economic environment, capitalization level may need to be strengthened.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 506) at 92-21-35311861 or fax to 92-21-35311873.



Syed Ziauddin Ahmed
Advisor

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2011 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .