Faysal Bank to set up ‘wholly-owned’ Exchange Company

The Board of Directors of Faysal Bank Limited (FABL), one of the country’s largest Islamic banks, announced on Thursday that it will establish an Exchange Company (EC) as a wholly-owned subsidiary, becoming the fifth entity to make such an announcement this month.

The development was shared by the bank in its notice to the Pakistan Stock Exchange (PSX).

“The Board of Directors of Faysal Bank Limited (FABL) in its meeting held on September 27, 2023, has approved the establishment of an EC with an initial paid-up capital of Rs1,000 million,” read the notice

Faysal Bank shared that the development is subject to the approval and clearance by the State Bank of Pakistan (SBP), Securities and Exchange Commission of Pakistan (SECP) and the completion of other regulatory compliance requirements.

“This Exchange Company shall be a wholly-owned subsidiary of FABL,” read the notice.

The development comes after Bank Al Habib Limited (BAHL) announced that it will establish an EC as a wholly-owned subsidiary. MCB Bank Limited, Meezan Bank Limited, and United Bank Limited (UBL) have also announced they would establish an EC as a wholly-owned subsidiary.

Earlier this month, the SBP, in its bid to strengthen controls amid the massive fall in rupee’s value in the open market, decided to introduce ‘structural reforms’ in the EC sector.

“As part of these reforms, leading banks actively engaged in foreign exchange business will establish wholly-owned Exchange Companies (EC) to cater to the legitimate foreign exchange needs of general public,” said the SBP in a statement.

Further, the SBP also raised the minimum capital requirement for EC from Rs200 million to Rs500 million, raising the barrier to entry for the private sector.

As per Faysal Bank’s latest financial results, the bank declared a consolidated profit before tax (PBT) of Rs7.66 billion for the first half of 2023 (January-June), nearly 76% higher than the Rs4.36 billion recorded in the same period of the previous year.

Faysal Bank announced earnings per share (EPS) of Rs5.05, as compared to EPS of Rs2.87 in SPLY. In addition, the Board of Directors of Faysal Bank Limited announced an interim cash dividend of Re1 per share of Rs10 each i.e. 10%.