Pakistan Credit Rating Agency Limited maintains entity ratings of Faysal Bank Limited

Lahore, June 22, 2015 (PPI-OT): PACRA has maintained the long-term and the short-term entity ratings of Faysal Bank (FBL) at “AA” (Double A) and “A1+” (A One plus), respectively. These ratings denote a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments.

The ratings reflect FBL’s sustained focus on consolidation amid efforts to strengthen its relative positioning. This entails prudent asset deployment and endeavours to achieve cost efficiencies: in operational expenditure and funding cost. The bank’s deposit base has experienced cost rationalization, though it has some signs of concentration. Faysal Bank continues to earn good spreads, also supported by structure of its lending book.

There is need to harness recoveries while arresting NPLs. This, while supporting the bank’s profitability, would provide cushion against risk absorption capacity. FBL’s conversion into Islamic banking is a medium-term plan, which must be rolled out carefully to avoid business disruption or squeeze. Meanwhile, the ratings recognize FBL’s association with a foreign business group (Dar Al Maal Al-Islami Trust) as a key factor.

The ratings are dependent on bank’s ability to sustain improvement in its financial profile. Any material weakening in asset quality, in turn, putting pressure on bank’s profitability and risk absorption capacity would have negative implications for the ratings.

For more information, contact:
Hammad Rashid
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com