Faysal Bank Ratings Upgraded by VIS Credit

VIS Credit Rating Company Pvt Ltd. has once again affirmed Faysal Bank Limited’s long-term and short-term entity ratings at, maintaining a stable outlook as of June 27, 2023. The long-term ‘AA’ rating reflects FBL’s high creditworthiness and strong protection factors, indicating only modest but manageable risks amid economic fluctuations. Meanwhile, the ‘A-1+’ short-term rating highlights excellent liquidity and a reliable ability to meet obligations promptly, closely approaching the safety standards of Pakistan Government short-term debt.

This reaffirmation recognizes Faysal Bank’s position as a medium-sized player holding a 3.4% market share in March 2023. Notably, the bank successfully completed its conversion to a fully Islamic banking model at the start of the year a strategic move that has opened doors to the expanding Islamic finance sector. Asset quality has witnessed improvement, with a gross infection rate declining to 0.6% and specific provisioning coverage at a satisfactory 85.6%, though analysts believe it could be strengthened further .

While the bank’s liquidity profile remains above regulatory norms, deposit concentration particularly from larger customers has slightly eroded the diversity of its funding base and modestly affected its Liquidity Coverage Ratio (LCR). Profitability metrics such as return on asset are on par with its peers, with anticipated margin enhancements expected to cushion future provisioning entries in a tighter credit environment. Capital adequacy remains solid, despite potential pressure from growing risk-weighted assets and increased provisioning, ensuring Faysal Bank’s CAR stays comfortably above industry averages.