PACRA Assigns Preliminary Rating to Faysal Bank Limited - PPSukuk - PKR 7.0bln - TBI

The ratings upgrade reflects Faysal Bank Limited's (“FABL” or the “Bank”) stable financial profile, supported by a strong trajectory in Islamic banking following its successful transition into a full-fledged Islamic bank. This transformation has reinforced FABL’s emerging position as one of the country’s leading Islamic financial institutions. Building on this progress, the Bank has focused on strengthening its marketing strategy, executing innovative campaigns, and forging strategic partnerships, all of which have enhanced its brand identity. The management has also prioritized the strengthening of the Bank’s balance sheet through improved asset quality, enhanced operational efficiency, and optimization of deposit costs. The Bank’s transformative approach to digital banking has positioned it as a frontrunner not only within the Islamic banking segment but also as a key digital innovator across the broader banking industry. During FY25, FABL recorded substantial growth in digital transaction volumes, processing payments exceeding PKR 3 trillion. Retail Banking also delivered strong performance, with total deposits surpassing PKR 1.4 trillion—a 36.7% increase over Dec’24—while market share improved from 3.5% to 3.8%. Current accounts grew robustly as well, reaching PKR 536 billion, up 31.3% from Dec’24. Overall, the Bank delivered a solid performance in 2025, maintaining strong returns. During CY25, it sustained resilient topline momentum, with total income reported at PKR 99 billion (CY24: PKR 98 billion). The Bank’s net financing portfolio grew by 37.6% to PKR 872 billion as of Dec’25, with market share increasing from 4.2% to 6.1%. While the industry’s ADR stood at 37.5%, the Bank’s ADR improved to 61.1% at Dec’25 (Dec’24: 60.7%) – a hallmark of the management’s philosophy. Lending adds value to the economy while providing sustainability to the Bank over the longer horizon. As a result of balance sheet expansion, the Capital Adequacy Ratio (CAR) declined to 14.04% from 16.54% in the previous year; however, it continues to remain comfortably above the minimum regulatory requirement for 2025. The Bank is also planning to issue Tier-II capital to strengthen its capitalization and support business growth.
Going forward, the Bank’s strong foundation and strategic growth focus will remain key to delivering sustained performance and creating long-term value—both essential to the assigned rating. Maintaining asset quality will also be critical.

About the Entity
Ithmaar Bank B.S.C (closed), a wholly owned subsidiary of Ithmaar Holdings B.S.C, is the parent company of the Bank, holding directly and indirectly 66.78% (2024: 66.78%) of its shareholding. Dar Al-Maal Al-Islami Trust (DMIT), the ultimate parent, serves as the holding company of Ithmaar Holdings B.S.C. The remaining shareholding is held by the general public and is distributed among directors, the CEO, Banks, and DFIs.

About the Instrument
The Bank is planning to issue rated, unsecured, subordinated, privately placed, DSLR-listed Tier II qualifying long-term Sukuk ("Sukuk" or the "Instrument") of up to PKR 7.0 bln (including a PKR 2.0 bln green-shoe option) with a tenor of up to ten years. The Sukuk, structured in line with the Companies Act, PSX regulations, and SBP Basel III guidelines, will carry a floating profit rate linked to 6-Month KIBOR plus a spread, payable semi-annually, with principal repaid at maturity. It includes a call option after five years but no put option. Payments of principal or profit are restricted if they breach the Bank’s MCR or CAR. The instrument is also subject to loss absorbency provisions, allowing SBP to require conversion into ordinary shares or write-off upon a Point of Non-Viability (PONV) event. Proceeds will strengthen the Bank’s Tier II capital and support ongoing banking operations.