Ayesha Mudassar

Faysal Bank Limited (FABL), a key player in Pakistan's Islamic banking sector, reported a 78.4% surge in its profit-after-tax in 2023, driven by higher returns earned on Islamic financing and related assets, investments and placements, reports WealthPK. On a standalone basis, FABL achieved a record-breaking profit-before-tax of Rs41.4 billion in 2023, 85% higher than Rs22.3 billion earned the year earlier. Furthermore, the earnings per share exhibited a commendable rise, soaring from Rs7.40 in 2022 to Rs13.21 in 2023.

The bank's net return, the difference between return earned and return paid, jumped 77.7% to Rs71.05 billion in 2023, as interest-earning assets grew 81.3% to Rs189.4 billion, boosted by higher interest rates in the country. In addition, the total non-markup income, which includes fees, commission, foreign exchange and dividend income, also increased 35% to Rs12.08 billion in 2023. During the year 2023, the bank continued its growth trajectory, substantially increasing its total revenue by 70% over 2022.

The robust growth in the balance sheet coupled with an increase in spreads led to a year-on-year growth of 78% in net spread earned, taking it to Rs71.1 billion. Healthy growth in current deposits of Rs49 billion (18%) and an increase in the average benchmark rate helped improve overall spreads. The non-fund income grew by 35% over last year to Rs12.1 billion in 2023. However, as a result of historically high inflation, a depreciating currency, and an expanding branch network, the bank's total non-markup expenses rose 48.4% to Rs40.8 billion.

Financial position as of December 31, 2023

The bank’s total assets increased 27.5% to Rs1.3 trillion compared to December 2022. The expansion is a testament to its strong foundation and its commitment to play its role in the economic development of the country, while maintaining a prudent approach to risk management. FABL’s strong and diversified business model, along with proactive credit policies, has been pivotal in driving growth.

In addition, the analysis of the bank’s financial position shows that total liabilities increased over the year on account of payment of increased dues to financial institutions and an enormous rise in deferred tax liabilities.

Cashflow summary 2022-2023

The bank’s operating cash flow portrays higher cash inflow generated from core activities i.e. deposit mobilisation and loans and advances disbursements. In 2023, total cash inflows generated from operating activities were Rs151.6 billion as compared to cash inflow of Rs141.3 billion recorded in 2022.

The investing activities posted a net cash outflow, indicating a significant divestment of assets or reduction in long-term investments. Moreover, the decline in financing cash outflows is due to the lower dividend pay-out in 2023, compared to the earlier calendar year.

About the bank

Faysal Bank was incorporated in Pakistan on October 3, 1994, as a public limited company, and its shares are listed on the Pakistan Stock Exchange. FABL offers a wide range of Islamic banking services to all customer segments, including retail, small and medium enterprises, commercial, agri-based and corporate. The bank surrendered its conventional banking licence on December 31, 2022 and started operations under an Islamic Banking Licence issued by the State Bank of Pakistan. Its footprint spreads over 270 cities across the country with 722 branches offering only Sharia-complaint banking services.

Future outlook

The bank remains steadfast in its dedication to delivering exceptional results and creating sustainable value for stakeholders. With a strong foundation and a strategic focus on growth, the management is confident in its ability to achieve new heights in the future.

Credit: INP-WealthPk