Faysal Islamic Bank Operations Review

Faysal Islamic Bank Operations Review

 

INCORPORATION:

Faysal Bank  Ltd (“Bank”) was incorporated in Pakistan on October 3, 1994 as a public quoted company listed on the Karachi and Lahore stock exchanges. The six Pakistani branches of Faysal Islamic Bank od Bahrain E.C. amalgamated with the bank when it commenced business operations effective January 1,1995.

 

SHAREHOLDERS:

The bank has been incorporated with an authorized share capital of Rs 1.5 billion of which Rs 1.210 billion is issued and paid up. As at Dec 31, 1996 the banks share capital was held by;

 

Faysal Islamic Bank of Bahrain E.C. (FIBB) including its nominee directors        60%

 

NIT, General Public and employees                                                                                                40%

 

BRANCH NETWORK:

The bank has 11 branches, 3 at Karachi, 2 at Lahore, 1 each in Faisalabad, Islamabad, Rawalpindi, Peshawar, Quetta and Mirpur, Azad Kashmir.

 

MISSION STATEMENT

 

OVERALL VISION:

 

We strive to be a world class multi-purpose financial institution providing a range of services, working on Shariah Principles. Our endeavor for excellence continues.

 

OUR VALUES:

 

• Translate the spirit of Shariah into modern Financial products and services.
• Maintaining a high reputation for prudence in the financial community.
• Developing our operational infrastructure, system architecture and business strategy, focused customer needs, with whom we endeavor to share our success.
• Practicing the culture that each staff member is not a mere personnel number, but part of one family, treating each other with respect. We insist on quality training and management development programmes.
• Reflecting high standards of integrity, propriety, goodwill and team work in our conduct, within the family and in the market place.

 

FINANCIAL HIGHLIGHTS

 

	1996 Rupees in Millions		1995 Rupees in Millions		% Change
1.       Paid-up Capital		1,210		1,100		10
2.     Shareholders’ Equity		2,215		2,107		5
3.     Total Assets		17,738		12,004		48
4.      Financing		10,839		7,106		52
5.      Investments		3,658		2,141		71
6.      Deposits		12,769		7,477		71
7.      Profit before Taxation		697		402		73
8.      Profit after taxation		382		280		36

 

 

RATIOS

 

	1996 Rupees in Millions	1996 Rupees in Millions	% Change
Earning per Share	3.16	2.55	24
Return on assets	2.15	2.33	-8
Deposit/ Financing Ratio	84.88	95.04	-11
Deposit/ Equity Ratio	5.76	3.55	62
Income/ Expense Ratio	3.11	2.55	22
Revenue per Employee	3.43	2.59	32

 

 

 

CONSUMER BANKING

 

Deposit mobilization is and will remain a major initiative in the coming years. During 1996, a very healthy increase in deposits of 71% was achieved. It was mainly due to Consumer Banking initiative launched in mid 1995. The bank also successfully launched another product, Rozana Monafa Plus in early June., which was targeted towards tapping individual deposits by offering to enhance value through a monthly disbursement facility.

 

Consumer banking initiatives in the pipeline are “24 hour banking facility” through tele-banking and ATMs, a branded foreign currency account launch and consumer asset programme.

 

CORPORATE BANKING/ RISK MANAGEMENT

 

In 1995 Risk Management Group was formed to ensure that the rapid growth of the portfolio is managed in an orderly and professional manner. Target marketing approach continued to be the mainstay of planned portfolio of growth.

 

SHARIA’S IMPLEMENTATION

 

Faysal Bank continues to make the prescribed liquidity requirement by making investments only in Sharia’s compatible instruments. The bank has engaged a full time Sharia’a Auditor to monitor the operations of the bank from the Sharia’a point of view

 

Review of operations

In the face of new realities of demands of the marketplace, the group undertook major

re-engineering initiatives in the year 1996 with a view to further strengthening it as a service oriented organization able to successfully meeting the new challenges of the fast changing time.

 

The steps taken in the year were directed at:

 

1)generating better environment for positive corporate culture.

2)fine-tuning norms and standards.

3)restructuring internal corporate groups, focusing on enhanced performance and management processes, and

4)getting employees merged into highly motivated teams charged with corporate spirit and purpose, winning trust by sharing their knowledge and skills and developing excellence

through leadership, teamwork and accountability.

 

Corporate banking group(CBG)

 

The CBG provides a wide range of Islamic financial services to local and international

corporate clients. The group has advised clients on mergers , acquisitions and international strategies and processes in conjunction with CMG, its key assignments handled during the year included advice and negotiation behalf of clients for the acquisition of an international commercial bank, industrial establishments and a group of leasing companies.

 

Capital Markets  Group ‘CMG’

 

The CMG was formed in pursuance of the group’s policy concentrating on lucrative investment opportunities to its clients while enhancing yield on its own investments together with diversification of risk. The CMG manages an in-house international equities portfolio. On the strength of its highly profitable track record , it is planned to expand this activity in 1997.In order to smooth out market volatility , the portfolio provides for building of internal reserves.

 

The Gulf  Marketing Group ‘GMG’

 

The GMG was conceived with a view to obtaining  quality improvement in marketing of the Islamic financial  products and services to clients in the GCC countries. During the year 1996, the following new funds were launched by the GMG raising over US$45 million:

a)Faysal international Real Estate Fund

b)Faysal Investment Fund

c)Makkah Al Mukarammah Real Estate Fund, and

d)Faysal Saudi Real Estate Fund no.2

 

 

Financial Institutions Group ‘FIG’

 

The FIG manages the investment of the groups liquid and quasi-liquid funds in islamically

acceptable modes .In particular, the FIG offers Islamic short term funding facilities to other Islamic financial institutions .The group also offers its cooperation to other   financial

institutions in issuing class ‘B’ shares as a new product to be traded in the market.

 

Systems and Technology ‘IT’

 

Systems and technology are of greater importance in the sense that the requirements of its operations are well extended and explanatory. Each client account is separately managed in terms of its respective matching assets being in the form of

a separate balance sheet. The group has   and continues to invest heavily in IT to facilitate maximum information availability for the clients as well as its own management

 

Strategic Alliances

The group maintained its active cooperation with the accounting and auditing organization for Islamic financial institutions ‘AAOIFI’ in the formulation and adoption of accounting and auditing standards .The group has taken a lead in implementation of the standards at the group in accordance with the AAOIFI pronouncements.