Institute of management studies

University of Peshawar

Name of Group Members:

Haziq Wali Khan (75)
Abdul Rashid (73)
Nisab Ullah (72)
Section: B
Semester: 6th
Assignment: Faysal Bank
Submitted To: Sir Amir Hussain
History:

Faysal Bank started in Pakistan in 1987 with a tiny branch and as a subsidiary of Faysal
Islamic Bank, a Bahraini bank owned by Mohammed bin Faisal Al Saud, the son of
the late King Faisal of Saudi Arabia.

Mr. Yousaf Hussain, President & CEO Faysal Bank, has around 25 years of diverse
professional experience.Within 10 years, Faysal Islamic Banking grew to be the largest
Islamic branch network of a conventional bank in Pakistan, having 400 plus dedicated
Islamic Banking branches amongst a network of 550 plus branches.

Operations:
Faysal Bank Limited was incorporated in Pakistan on October 3rd, 1994 as a Public
Limited Company under the Companies Ordinance, 1984. The Bank’s shares are listed
on Pakistan Stock Exchange. Faysal Bank is engaged in Commercial, Retail, Corporate
and Islamic banking activities. Faysal Bank’s footprint now spreads over more than 200
cities with over 550 (including 414 Islamic) branches. With total assets in excess of PKR
601.974 Billion, placing it amongst the significant players in Pakistan’s banking
industry.  Faysal Bank’s aim is to achieve leadership in providing shariah compliant
products and services to its customers.

Faysal Bank Limited has been duly licensed as a Commercial Bank by the State Bank
of Pakistan (SBP). Faysal Bank is on track to convert the entire bank, including its
branch network, into a full-fledged Islamic Bank. Our branch network of 555 branches
includes 414 Islamic branches and 141 conventional branches. Faysal Bank carries on
banking business activities in line with the Banking Companies Ordinance, 1962.
Vision:
Be the leading Islamic bank of Pakistan.

Mission:
Achieve leadership in providing shariah compliant financial service, with customer care
and employee focus at the heart of our business ethos together with innovation and
technology being pillars of our growth.

Bank Products:

Short Term Finance

Short term loan are facilities offered for the period of less than one year. These are generally
used by the businesses to finance their working capital requirements. These short term loans
are intended to fiancé inventory, account receivable and seasonal business needs. The short
term finance comprises of the following.

1- Overdraft – Running Finance

Running finance or overdraft facility is a short term finance provide to customers to fulfill
their working capital needs by allowing withdrawals from their account in excess of the
credit balance, maintained with the Bank.

Salient Features

 Available for working capital requirements e.g. purchase of stocks, raw material etc.
 One year tenor. (Renewable upon expiry).
 Principal with multiple withdrawals and deposits to be adjusted on or before expiry.
 Mark-up to be paid on monthly/quarterly basis.
 Facility will be primarily secured against mortgage of property and/or hypothecation of stock.

2- Pledge Financing
The pledge financing facility is offered to the customer against delivery of goods to the
Bank. The goods are held as security and are placed under the custody of the Bank’s
approved Mucaddum. Drawing power is determined on the basis of value of the goods
placed under pledge along with stipulated margin.

Salient Features

 Available for procurement of various local commodities, including (but not limited to)
purchase of rice, wheat, yarn etc.
 Each drawdown is required to be adjusted within a stipulated period along with proportionate
mark-up.
 Drawdown is allowed on receipt of goods for pledge
 To be adjusted within six months (maximum).
 Mark-up to be paid on monthly or quarterly basis as per agreement.

Short Term Trade Facilities

In order to facilitate trade business of SMEs, FBL offers a number of products to its
customers

A) Letter of Credit –Foreign & Inland

FBL offers to issue letter of credits (LCs) on behalf of SME clients for routing their imports
through the Bank. A letter of credit (LC) is the assurance given by FBL to pay the
beneficiary on behalf of the importer as per agreement, provided that certain documentary
delivery conditions are met. Sight & Usance are two of the main types of LCs offered to the
customers.

Salient Features

 Facility offered for Import of goods from foreign countries and also for local purchases, where
the seller requires a surety of payment.
 LC – Sight: the assurance is given to pay at sight of the goods and the relevant documents
are held by the Bank as security, until the same are retired by the applicant.
 LC – Usance: where the assurance is given to pay at certain time or date on behalf of the
customer. The imported goods are released to the applicant upon his acceptance to make
the payment at maturity.
 Tenor of Sight LC is 5 working days from date of presentation of documents and 180 days
for usance LC.
 Minimum Cash Margin is determined on case to case basis or as per requirement of SBP.
Finance against Imported Merchandise (FIM)
FIM is a short term facility offered by FBL to the importers for retirement of Sight-LC. The
facility is given against the pledge of imported goods. FIM is settled thorough release of
pledged goods against gradual or lump sum payments made by borrower.

Salient Features

 Available for retirement of LC & procurement of imported commodities

 Time period for adjustment is around 6 months (maximum)
 Mainly secured through pledge of imported commodities
 Mark-up to be paid on monthly or quarterly basis as per agreement.

Finance against Trust Receipt (FATR)

FATR is a type of import financing offered to FBL customers. In FATR deals, the imported
goods are released to the importer on the basis of a trust receipt. This is a short term facility
for financing imported goods.

Salient Features

 Available for retirement of Sight LC or procurement of  commodities

 Should be adjusted within 6 months (maximum)
 Secured through trust receipt signed by the borrower.
 Mark-up to be paid on monthly or quarterly basis as per agreement.

Export Finance Facilities

The exporters usually require financing for production and supply of goods as per their
contracts with the buyers. In order to support the export business, Bank offers Pre & Post
Shipment financing (own sources), SBP Refinance (Pre/post) and bill discounting facilities.
The salient features of these facilities are as follows:

Salient Features

 Available for catering working capital needs of exporters & manufacturers.

 Financing is available in both local and foreign currencies (FE-25).
 Standard Tenor is 180 days, but can be varied on the basis of contract.
  Secured through lien over Export Contract/LC or Purchase Order (for Local manufacturer) in
addition to other security that may be required by the Bank.

Pre-shipment (own sources)

Pre-shipment Finance or ‘Packing credit’ is offered to exporters for catering their financing
needs for purchasing, processing, manufacturing or packing of goods prior to shipment. In
some cases, this facility is also used by local producers for financing supply to reputed
buyers

Post shipment (own sources)

Post-shipment (own) is the financing facility offered to manufacturers and exporters of
goods after shipment of goods till the date of realization of export or local proceeds.
Through post shipment finance facility, exporters and other local manufacturers obtain
finance and run day to day business without waiting for sales proceeds from their overseas
or local buyers.

Export Refinance Finance Facility under SBP

As per directives from State Bank of Pakistan, FBL offers Export finance facility under SBP
ERF scheme to support export oriented companies. Both pre-shipment and post shipment
finance facilities are available at subsidized rates communicated by SBP.

All major value added commodities exported from Pakistan are eligible for financing
excluding exceptions identified by SBP.

(i) Pre-shipment & Post-shipment ERF (Part 1)

This is a transaction-specific facility offered by FBL to provide export finance to the
exporters on case‐to‐case basis for pre or post shipments against firm export orders,
contracts & LCs. The exporter is required to show export proceeds equivalent to the loan
amount as performance.

(ii) Pre-shipment ERF (Part 2)

Pre-shipment ERF Part 2 is a specialized working capital facility available to traditional
exporters for purchasing, processing, manufacturing or packing goods prior to shipment.
Under this facility, a company can avail finance facility from the SBP equal to half of the
export volume routed in the previous year, as long as the company shows export
performance twice the utilized limit.
Bank Guarantees
Bank Guarantee is a binding undertaking given by the bank (the guarantor), to pay against
the presentation of a written statement of the guarantee holder (the beneficiary), if a
contract is not fulfilled by the customer (the applicant).

Salient Features

 Different types of guarantees like Bid Bonds, Performance Bonds and guarantees against
advance payments are offered by FBL.
 Cash margin (varying from case to case basis) is required by the bank for offering
guarantees.

Long Term Exposure

Long Term finance facility (LTF) is offered for financing fixed assets like immovable
properties i.e. land and buildings, machinery, vehicles etc.  The loan is offered for pre-
determined length of time, usually for more than 12 months. Repayments are required on
monthly, quarterly or per mutually agreed repayment frequencies.

Salient Features

 Available for catering the fixed assets investment needs of a business.

 Tenor is usually 1-5 years
 Repayments through equal monthly or quarterly installments including principal & markup.
 Collateral can be the underlying fixed assets and/or mortgage of property
Financial Statement Of First Quarter Ended September 30, 2021:

Pakistan, FBL led the initiative for the launch of the Pakistan Banks’ Association joint
call center named ‘Mera Pakistan Mera Ghar – Helpline’ in Islamabad and Karachi. In
addition to the above Faysal Bank is also actively participating in Kamyab Jawan
Program (PM-YES) of the government, while exceeding the SBP disbursement targets
to date, as well.

Financial Highlights

Key Balance Sheet Numbers September ‘21 December ‘20 Growth

Rs. in million Rs. in million %
Investment 343,737 276,930 24.1%
Financing 366,929 318,180 15.3%
Total Assets 833,982 709,958 17.5%
Deposits 613,673 540,636 13.5%

Profit & Loss Account September ‘21 September ‘20 Growth

Rs. in million Rs. in million %
Total Revenue 25,336 25,318 0.1%
Non-Markup Expenses 15,192 14,166 7.2%
Profit before tax and provisions 10,144 11,151 -9.0%
Provisions / (Reversal) 216 2,082 -89.6%
Profit before tax 9,928 9,070 9.5%
Tax 3,859 3,555 8.6%
Profit after tax 6,069 5,515 10.0%

Earnings per share (Rupees) 4.00 3.63 10.2%

 Despite drastic cut of 625 bps in policy rate during 2020, the Bank was able to
generate net markup income of Rs. 18,921 million for the nine months ended
September 30, 2021, almost at the same level as compared to the
corresponding previous year period. This was made possible through
continued emphasis on generating low-cost deposits. The Bank also focused
on increasing revenue from nonmarkup income and generated 43% higher
fee-based income as compared to last year with stellar growth across all
product lines. Due to higher gain on government securities during the
corresponding previous year, overall non-markup income showed marginal
increase of 1.9% to Rs. 6,414 million. Non markup expenses have increased
by 7.2% to Rs.15, 192 million mainly due to opening of 21 new branches in
last quarter of 2020 and inflationary pressures.

Net provisions for nine months under review reflected charge of Rs. 216
million as against charge of Rs. 2,082 million in the corresponding period of
last year.

Accordingly profit after tax for the nine months ended September 30, 2021 is
10% higher than corresponding period of previous year at Rs. 6,069 million.
Earnings per share for the current nine months period works out to Rs. 4.00.

On the balance sheet side deposits grew by 13.5% to Rs. 613.7 billion. The
Bank concentrated on reducing cost of deposit during the quarter and saw
significant growth in low-cost deposits. Ratio of current deposits to total
deposits has improved from 30.7% to 34.4%. Financing increased by 15.3%
from December ’20 level to Rs. 366.9 billion. Investments were 24.1% higher
at Rs. 343.7 billion. Accordingly, total assets of the Bank are at Rs. 833.9
billion as of September 30, 2021 registering a strong growth of 17.5%.
Payments:
Faysal Bank Limited (FBL) account holders can perform following

transactions by using FBL Digital: Funds transfer to FBL account holder

(Conventional & Islamic)

IBFT- Funds transfer to any other bank account
holder Utility Bill Payment
Mobile Top-Up
Credit Card Bill
payment
Government
Payments CNIC
Transfer
UPI QR Payments
NFC Payments (only for Android Users)
Generate QR
Account Services
Debit Card
Management
Add multiple accounts
Balance inquiry
Check Account Statement (30/60/90 days)

Conclusion:
The Bank's footprint now spreads over 207 cities across the country with 576 branches.
In line with FBL's strategy of transforming itself into a full-fledged Islamic Bank, 90% of
its branches are now offering dedicated sharia-compliant banking services. Indirectly,
66.78% (2020: 66.78%) of the shareholding in the Bank.