Karachi, June 1, 2010: 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). Rating of the unsecured, subordinated term finance certificates (Issue-I) of FBL has also been reaffirmed at ‘AA-’ (Double A Minus).

Over the last two years, FBL has enhanced its footprint, which has facilitated some increase in the core deposits of the bank. On a timeline basis, liquidity indicators feature improvement although the deposit mix remains concentrated while long-term lending comprised a sizable proportion of the banking book. In recent periods, the bank has directed focused efforts at increasing penetration in the retail market.

The corporate loan book has led the growth in the bank’s advances portfolio, while exposures in the consumer and SME segments have reduced over the out-going year. As witnessed across the banking sector, non-performing loans of FBL also increased during FY09.

The recovery in stock markets helped sustain bottom line profits for 2009, even though earnings from core operations were adversely affected by the incremental provisioning requirement and rise in administrative expenses. The bank has invested into people and systems, which has driven up operating costs. With narrower margins on lending operations, further increase in expenses may need to be curtailed.

In view of the planned acquisition of The Royal Bank of Scotland Limited (Pakistan operations), the ratings of FBL have been placed under ‘Rating Watch-Developing’ status, while the ‘Negative’ outlook assigned in July 2009 has been removed. The management expects positive synergies to arise from the acquisition. JCR-VIS will monitor the transaction for likely impact on the risk profile of FBL and update investors accordingly.

For further information on this rating announcement, please contact Ms. Sabeen Saleem (sabeen@jcrvis.com.pk) or Ms. Sobia Maqbool (sobia@jcrvis.com.pk) at 92-21-35311861 or fax to 92-21-35311873.



Faheem Ahmad
President & CEO

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-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. JCR-VIS Credit Rating Company Limited is paid a fee for most rating assignments. This rating is an opinion on credit quality only and is not a recommendation to buy or sell any securities. Copyright 2010 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS Credit Rating Company Limited.