Press Release
VIS Assigns Preliminary Rating to Proposed Tier -II Capital Sukuk of Faysal Bank Limited
Karachi, March 24, 2026: VIS Credit Rating Company Limited (VIS) has issued preliminary rating of ‘AA(plim)’ (Double A Preliminary) to proposed Tier-II Capital Sukuk of Faysal Bank Limited (‘FABL’ or the ‘Bank’). Medium to long term rating of 'AA(plim)' indicates high credit quality; protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. Outlook on the assigned rating is ‘Stable.’ FABL has an outstanding entity rating of ‘AA+/A1+’ with ‘Stable’ outlook. Rating assigned to the proposed Sukuk will be finalized upon review of final Shariah and regulatory approvals along with signed legal documents.
FABL is planning to issue a rated, unsecured, subordinated, privately placed Tier II Capital Sukuk to strengthen its regulatory capital base in line with the Basel III requirements of SBP. The proposed instrument will have an issue size of up to PKR 7 billion, inclusive of a PKR 2 billion green shoe option, with a face value of PKR 1 million per certificate. The Sukuk will carry an expected floating profit rate of six-month Karachi Interbank Offered Rate (KIBOR) plus 45 basis points, with semi-annual profit payments and a tenor of up to 10 years, while the principal will be redeemed in bullet payment at maturity. The Bank will retain a call option after five years, subject to regulatory approval, while no put option will be available to investors. The proceeds will primarily be utilized to support the Bank’s regulatory capital requirements and ongoing banking operations.
The proposed Tier II Capital Sukuk will be structured on a Mudarabah basis, with Sukuk holders acting as Rab-ul-Maal and the Bank as Mudarib. Proceeds will be deployed in the Bank’s general pool of Shariah-compliant assets, enabling investors to share in profits in line with Mudarabah principles and the pool management guidelines of the State Bank of Pakistan (SBP). The Bank will assign periodic weightages to the Sukuk within the pool to determine its share of distributable profit, while retaining a Mudarib share as permitted by SBP. Profit and loss will be allocated in accordance with the approved Mudarabah framework. As a Tier II instrument, the Sukuk will be subordinated to depositors and senior creditors. Redemption remains subject to regulatory guidelines, with SBP retaining the right to restrict payments under stress. Upon a Point of Non-Viability (PONV), the Sukuk may be written down or converted into equity, as determined by SBP, based on the residual value of assets after senior claims, thereby ensuring loss absorbency and regulatory capital eligibility.
The proposed Tier II Capital Sukuk aims to strengthen the Bank’s regulatory capital base and support its ongoing business expansion. FABL benefits from a strong market position as the second-largest full-fledged Islamic bank in Pakistan, a growing deposit franchise, and sound asset quality, which underpin its overall credit profile. Furthermore, the Bank’s financial risk profile is underpinned by strong growth in deposits and financing, improving market share, and adequate capitalization; however, some moderation in the liquidity profile underscores the continued importance of capital augmentation. The assigned rating is also supported by FABL established Shariah governance framework, sponsor profile, and adequate capitalization, further reinforced by the planned capital augmentation through the proposed Sukuk issuance.
For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Financial Institution
https://docs.vis.com.pk/Methodologies%202024/Financial-Institution-v2.pdf
Instrument Rating
https://docs.vis.com.pk/Methodologies-2025/IRM-Apr-25.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf