Pakistan Credit Rating Agency maintains Entity Ratings of Faysal Bank Limited

Lahore, June 26, 2013 (PPI-OT): PACRA has maintained the long-term and the short-term entity ratings of Faysal Bank 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 incorporate FBL’s concerted efforts to address the core issues the bank is facing: high cost structure and deterioration in asset quality. While progress is achieved to rationalize the operating cost, the bank is absorbing the cost by expanding its volume and is embarking upon a strategy to tap private sector credit demand. This highlights the risk-appetite of the bank, which, though is essential to push up profits, must be handled carefully.

The trend in NPLs accretion has stalled though a wholesome approach is required to bring it down to a comparable level. This would also provide cushion against the low capitalization level and improve the bank’s performance. FBL’s association with a foreign business group (Dar Al Maal Al-Islami Trust) remains a key factor.

The ratings are dependent on the bank’s ability to effectively execute its strategy to keep a tight lid on its cost, without compromising the quality of HR and breadth of services to its customers. Further weakening in asset quality, in turn, putting pressure on the 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

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