Faysal Bank Limited, in sharp contrast to the industry trend, posted a massive 36 percent year-on-year decline in net profits for the half year ended June 30, 2012. The decline came despite a sizeable increase of 14 percent in deposits over December 2011, which is significantly higher than the industrys performance on advances. The increase in advances, however, failed to translate into high mark-up income as it soared by only two percent year-on-year. Recall that the interest rates have significantly come down since July 2011, which lowered the mark-up on both advances and investments. The investments dipped by 14 percent over December 2011, as the Bank focussed on its core function of lending. Deposits, on the other hand, witnessed an above average growth of 10 percent, mainly on the back of addition of 20 new branches in the FABL network. The gross spread ratio, in line with the industry trend, declined by three percentage points YoY at 29 percent, as low interest rates on assets coupled with the requirement of 100 bps higher rate on PLS deposits. As a result, the NII dipped by eight percent year-on-year. Provision charges on NPLs, which have eased for nearly all commercial banks this season, more than doubled for FABL versus the same period last year. Hence, the post provisioning mark-up income slid farther, against the industry trend. Similarly, FABL also felt the jolt on mark up income which fell by 14 percent year-on-year as dividend income and capital market gains were kept in check. A positive account on an otherwise disappointing income statement was a reduction in administrative expenses by six percent year-on-year. This is a commendable feat in a high inflation scenario and speaks volumes of FABLs focused efforts of targeted cost reduction despite expansion in branch network.
=========================================================== Faysal Bank Limited =========================================================== (Rs mn) 1HCY12 1HCY11 chg =========================================================== Mark-up Earned 14,045 13,756 2% Mark-up Expensed (9,978) (9,313) 7% Net Markup Income 4,067 4,443 -8% Provisioning (297) (128) 131% Net Mark-up income 3,770 4,315 -13% after provisions Other income 2,277 2,650 -14% Operating revenues 6,344 7,093 -11% Other expenses (5,337) (5,689) -6% Profit before taxation 711 1,275 -44% Profit after taxation 505 794 -36% EPS (Rs) 0.61 0.96 ===========================================================
Source: Company Accounts
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