PACRA Assigns Initial Rating to Faysal Bank Limited - PP Sukuk - PKR 7.0bln

The assigned ratings reflect 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 3trln, while total deposits surpassed PKR 1.4trln — up 36.7% over Dec'24 — and current accounts reached PKR 536bln, up 31.3%. Overall, the Bank delivered a solid performance in CY25, with total income of PKR 99bln (CY24: PKR 97.7bln) and net financing portfolio growth of 37.6% to PKR 872bln, driving financing market share from 4.2% to 6.1%. The Bank's ADR improved to 61.1% against an industry average of 37.5%, reflecting management's philosophy of value-accretive lending. As a result of balance sheet expansion, the CAR declined to 14.04% from 16.54%; however, it remains comfortably above the minimum regulatory requirement for 2025. To further strengthen its capital position, FABL has issued Tier II Capital Sukuk of up to PKR 7.0bln, aimed at reinforcing its regulatory capital base and supporting ongoing business expansion, underpinned by a growing deposit franchise and sound asset quality.
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
On May 25, 2026, Faysal Bank Limited successfully issued the Rated, Unsecured, Subordinated, Privately Placed, DSLR-Listed, Tier II Capital Qualifying Long-term Sukuk ("Sukuk" or the "Instrument") of up to PKR 7.0bln (including a PKR 2.0bln green-shoe option). Structured on a Mudarabah basis in line with the Companies Act, PSX regulations, and SBP Basel III guidelines, the Sukuk carries a tenor of up to ten years and a floating profit rate of 6-Month KIBOR + 45 bps, payable semi-annually, with principal repaid in a bullet at maturity. The instrument includes a call option exercisable on or after five years from the Issue Date, subject to SBP approval, with no put option available to investors. Payments of principal or profit are restricted if they would breach the Bank's MCR or CAR thresholds. The Sukuk is also subject to loss absorbency provisions, allowing SBP to require conversion into ordinary shares upon a Point of Non-Viability (PONV) event. Proceeds from the issuance will strengthen the Bank's Tier II regulatory capital and support its ongoing banking operations.