Faysal Bank's Rs 1b TFC redeemed
Muhammad Yasir
Faysal Bank has given a profit of Rs 249 million to its subscribers of Rs 1 billion Term Finance Certificate (TFC) which was issued back in 2006, the auditors' report made available to Daily The Pak Banker said.
The issue of TFC in July 2006 along a green shoe option of Rs 250 million for a tenor of 7 years contributed towards the bank's eligible paid-up capital. The TFC is being requested to delist from the Karachi Stock Exchange (KSE) after submission of the auditor report and its review along with different due process. It approved the request to delist the TFC on Monday 5.
The bank has further issued a TFC of worth Rs 3 billion for the purpose of raising funds to generate paid-up capital. Faysal Bank is one the two banks in Pakistan which opted to covert its operation into full-fledged Islamic Bank in next few years.
The bank during first nine months of 2014 managed to post a healthy Rs 1.416 billion profit as against Rs 1.305 billion in the corresponding period last year. This achievement is significant as the bank was able to absorb all VSS and BPR related expenses during the year. During the period under review the bank was able to further improve CASA deposits mix from 64.9% to 65.7%. Net margins as a result improved by Rs 2.318 billion, from Rs. 7.637 billion to Rs.9.955 billion.
For the last two years, Faysal Bank Limited 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, nonperforming loans of FBL also increased during the years however non-distributable Capital Reserve, created on acquisition of RBS Pakistan Operations, was utilized for withdrawal of Forced Sales Value (FSV) benefit relating to ex-RBS non-performing loans, as per instructions of the State Bank of Pakistan, consequent to this, provision coverage against nonperforming loans increased to 76.8%.
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.