Press Release

VIS assigns Positive Outlook to Entity Ratings of Faysal Bank Limited

Karachi, June 28, 2024: VIS Credit Rating Company Limited has maintained the entity ratings of Faysal Bank Limited (‘FABL’ or the ‘Bank’) at ‘AA/A-1+’ (Double A/A-One Plus). Medium to long term rating of ‘AA' indicates high credit quality; protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. Short-term rating of 'A-1+' indicates strongest likelihood of timely repayment of short-term obligations with outstanding liquidity factors. Outlook on the assigned ratings has been changed from ‘Stable’ to ‘Positive’. Previous rating action was announced on June 27, 2023

Assigned ratings reflect improved asset quality of the Bank. Non-performing loans (NPLs) remained contained despite an expanding loan portfolio amidst heightened credit risk environment. Gross and net infection ratios compare favorably to peers. The transition to an Islamic bank has aided in lowering the cost of deposits, enhancing competitiveness compared to other medium-sized banks. The spread improvement was a key driver of bank's strong financial performance in CY23, underscoring the effectiveness of its transition to Islamic banking. Capitalization profile demonstrated sound capital buffers with Capital Adequacy Ratio remaining well above regulatory requirements. The bank's equity position remains robust due to substantial profitability gains. FABL has been assigned Shari’ah Compliance and Fiduciary Rating at “SCFR (pk) 1” on the national scale by Islamic International Rating Agency (IIRA).

Revision in outlook takes into account the completion of transition to Islamic bank offering greater opportunity to grow in an expanding market. It incorporates the recently announced offshore sale of management control, subject to regulatory approvals, of FABL from Ithmaar Bank to Gulf Financial House, also a Bahrain-based group, with diverse investments across sectors. As of Dec 31, 2023, the equity base of GFH stood at USD 1billion.

Going forward, the successful transition of management control to the new sponsors along with their support and enhancing the low cost deposit base will remain important for maintaining future profitability of the bank.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.


Applicable Rating Criteria:

Financial Institutions
https://docs.vis.com.pk/Methodologies%202024/Financial-Institution-v2.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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