After 1999 which was a loss year, the bank made steady growth in all round results. But year 2003, proved to be a landmark year as all the key operating and financial ratios were the highest. Profit after tax exceeded the combined results of the last eight years.
The profit before tax at Rs 2.75 billion and profit after tax at Rs 2.15 billion registered growth of 119% and 228% respectively.
While financing activities continued to expand significantly the mark-up spread also swelled despite declining interest-rate in the banking and finance sector. By taking advantage of the bull run in the stock market, as well as to channelise more funds to investment activity the bank made efficient decision.
This proved fruitful strategy in the wake of falling interest rates. The leadership in the bank has set its sight.
The availing, the opportunities of reaching further potential markets and map intensively the consumer, agricultural and SME markets.
Dar Al Maal Al Islami (DMI Trust) Bahamas, (through its subsidiaries) is the ultimate holding company of Faisal Bank Ltd.
The bank was incorporated on October 3, 1994 as a public limited company in Pakistan. Its shares are listed on Karachi and Lahore Stock Exchanges.
Currently the bank is engaged in commercial, consumer and investment banking activities. The bank is operating through 39 (2002: 23) branches with the registered office at Trade Centre I.I. Chundrigar Road Karachi.
The branch network includes sixteen new branches. These branches opened at strategic locations round the country, with a view to, not only expanding the bank's deposit base but also its credit portfolio, by more intensively covering the consumer, agricultural and SME credit markets.
In future also Faysal Bank intends to continue its policy of growth by opening more retail outlets in high potential markets and is planning major technological revamping.
The Management's thrust in these areas are to be market leader. The directors major focus in the coming months will be concentrated on extending credit to the small and medium enterprises believing that development of this sector will contribute towards the revival of Pakistani Economy.
During the year under review, JCR VIS upgraded the Bank's Credit Rating to AA (double A) for the medium to long term and A1 for the short term with a stable out look.
For the bank year 2003, proved to be the land mark year wherein profit after tax exceeded the combined results of the last eight years since inception.
Compared to last year, profit before tax at Rs 2.745 billion and profit after taxation at Rs 2.151 billion registered growth of 119% and 228% respectively. Earning per share jumped by over 3 times to Rs 8.12 compared to Rs 2.48 for last year.
During the year under review financing portfolio of the bank reached 29.420 billion showing 34.12% growth over the preceding year's figure of Rs 21.935 billion.
In this portfolio, Morabaha and Term Finance Certificates comprised 78.14% of Gross Financing of Rs 30.945 billion. Ijara Financing was 17.13% and Bills discounted and purchased was 4.71% on the liabilities side, Deposit and other accounts amounted to Rs 31.332 billion registering 28.1% rise over the preceding year's amount of Rs 24.458 billion.
This portfolio has two major components - ie customers' deposits/accounts and financial institutions deposits. On the customer side there are term deposits, savings deposits, current accounts and margin accounts. Current accounts comprises of remunerative account and non remunerative account.
The largest component of this portfolio was savings deposits at Rs 15.21 billion (2000: 9.21 billion). The second largest was financial institutions deposits at Rs 771.54 billion (2000: 3.291).
It can be seen from the foregoing that core banking activities continued to register higher growth. The bank's strategy was to channelise sizeable funds to investment activity yielding higher tax efficient return compared to sliding yields on financing activity in the wake of falling interest rates.
The management emphasised that this proved to be efficient decision. Its investments portfolio shot up to Rs 11.425 billion by 67% to Rs 6.842 billion in the preceding year.
The expansion in financing, however, continued as can be seen from the financing/deposit ratios. Despite of declining mark-up/return earned, the bank's mark-up spread percentage was higher, much higher at 54.38% as compared to 28.84%.
The higher spread is more pronounced in the net mark-up income which increased by Rs 249.55 million to Rs 1128.13 million from Rs 878.58 million in the previous year. The bank declared cash dividend for the year at 45% compared to 17% in the previous year. It also declared 10% bonus shares.
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Performance Statistics (Million Rupees)
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December 31 2003 2002
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Share Capital-Paid-up: 2,647.85 2,647.85
Reserves & Profit: 2,432.43 1,472.62
Shareholders Equity: 5,080.28 4,120.47
Surplus on Revaluation of Assets 2,368.86 1,143.52
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Liabilities
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Bills Payable: 430.86 273.51
Borrowings From
Financial Institutions: 6,529.81 5,344.31
Deposits & Other Accounts: 31,332.17 24,457.99
Liability Against Assets
Subject To Finance Lease: 16.41 -
Other Liabilities: 1,848.01 1,331.51
Total Liabilities: 40,157.26 31,407.32
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Assets
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Cash & Balances Treasury Bank: 2,866.28 1,850.39
Balances With Other Banks: 648.66 285.04
Lending To Financial Institutions: 872.13 2,986.48
Investments: 11,424.75 6,841.91
Financing: 29,419.97 21,934.70
Other Assets: 1,183.32 1,802.25
Operating Fixed Assets: 1,030.35 685.92
Deferred Tax Assets: 160.94 284.62
Total Assets: 47,606.40 36,671.31
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Revenue, Profit & Pay Out
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Net Mark-up Interest
Income After Provisions: 879.85 899.91
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Non Mark-Up Interest Income
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Fees, Commission &
Brokerage Income: 251.19 205.30
Dividend Income: 763.70 391.35
Income From Dealing in
Foreign Currencies: 107.47 177.75
Gain on Sale of Investments: 1,588.94 198.15
Other Income: 2.55 4.57
Total Non Mark-Up Income: 2,713.85 977.12
Total Income: 3,593.70 1,877.03
Non Mark-Up/Interest (Expenses): (848.43) 622.46
Profit Before Taxation: 2,745.27 1,254.57
Profit After Taxation: 2,151.34 656.40
Capital Market Reserve: (238.34) -
Proposed Dividend Cash Rs 4.50
(2002: Rs 1.70) Per Share: (1,191.53) (450.13)
Earnings Per Share (Rs): 8.12 2.48
Share Price (Rs) Dated 13.04.2004: 40.95 -
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Financial Ratios
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Price/Earning Ratio: 5.04 -
Book Value Per Share: 19.19 15.56
Markup Spread Margin (%): 54.38 28.84
Net Profit Margin (%): 59.86 34.97
Financing/Deposit Ratio (%): 93.90 89.68
R.O.E (%): 42.35 15.93
R.O.A (%): 4.52 1.79
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COMPANY INFORMATION: Chairman: H.R.H. Prince Mohamed Al Faisal Al Saud; President & C.E.O: Farook Bengali; Company Secretary & Legal Advisor: Mohammed Siddique Memon; Registered Office: 11/13, Trade Centre I.I. Chundrigar Road Karachi; No of Branches: 39.
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