Press Release

JCR-VIS Reaffirms Ratings of Faysal Bank Limited

Karachi, June 26, 2013: JCR-VIS Credit Rating Company Limited (JCR-VIS) 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’.

Growth in lending portfolio of the bank surpassed industry growth rate during the out-going year. Instances of non-performance have been limited within fresh lending undertaken by the bank in recent years; nevertheless overall portfolio quality has room for improvement with net infection recorded at 5.4%.

Increase in lending activities has largely been supported by growth in deposit base of the bank. Liquidity profile draws strength from the improving deposit mix. Over time, growth in small ticket deposits has reduced the bank’s reliance on large sized deposits. Moreover, growth in deposits has been achieved through higher volumes of current & savings accounts while proportion of term deposits has reduced in the deposit mix.

Profitability was maintained in FY12, supported by bank’s ability to control costs. Bottom line also derived support from capital gains on trading of government securities and limited provisioning expense. The impact of past credit loses has yet to be fully absorbed by the bank. In view of this, the bank’s ability to realize recoveries against non performing loans will impact future profitability significantly. Over the last year, exposure to equity price risk has been curtailed significantly as the bank shed off its equity holdings. This is also likely to reduce volatility in earnings profile.

Capital Adequacy of FBL stood at 10.75% at end-Dec’12. Capitalization indicators warrant strengthening, given that the bank has sizeable non-performing exposures in relation to equity base. Any developments in this regard will be closely tracked by JCR-VIS.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-70 or fax to 35311872-3.



Jamal Abbas Zaidi
Deputy CEO

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 2013 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .