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KARACHI: Pakistan’s first fully conventional to Islamic converted bank, Faysal Bank Limited (FBL) has planned to expand its branch network up to 1,000 branches and strengthen its operations through technology upgradation and introducing best Islamic banking products.

Talking to Business Recorder Mian Mohammad Younis, Chairman of the Board of FBL- the second largest Islamic bank in Pakistan briefed about the Faysal Bank’s journey from conventional to Islamic Bank and Bank’s future plan to capture the market share of Islamic banking industry in Pakistan.

He informed that the steps that are being taken after having an Islamic Banking license effective 1st Jan 2023, to align with BoD’s vision, direction and dedication is to prepare a strategic plan of growth from 2023-2028.

“Under this plan, FBL has decided to expand the branch network up to 1,000 branches from 700 and penetrate not only major cities but also unbanked or rural areas to enhance financial inclusion”, he added.

Mian Mohammad Younis, appointed in July this year as Chairman BoD FBL, has over four decades of financial expertise holding positions in different Government, and Autonomous Bodies such as FBR, Economic Affairs Division, Ministry of Food and Agriculture, Board of Investment and Pakistan Software Export Board, Finance Division.

Replying to a question on international operation, Younis said that at this stage priority is to further strengthen its footing in Pakistan by expanding the branch network and introducing new Islamic financing products.

“Currently we are focusing on further expanding, consolidating and strengthening operations in Pakistan as there is a massive scope of Islamic Banking in the country. However, we seek comfort in our affiliation with the Ithmaar Bank Bahrain which gives international exposure and is highly beneficial,” he added.

He added that the most difficult area of Islamic way of Financing is the Agriculture Sector, as specialized and specific Islamic products are required to be introduced which Faysal Bank has already done and is also in the process of developing more Islamic products with technological resources.

He said that a complete conversion from conventional to Islamic was a very big and difficult decision but the entire management and staff makes it a success story for other financial institutions.

Now other conventional banks can take full advantage of FBL’s journey to become a fully-fledged Islamic bank. Now with the documented conversion of Faysal Bank as the finest roadmap, it is strongly equipped to support the conversion of other banks, he added.“On behalf of FBL we will welcome all other financial institutions and are pleased to extend expertise wherever they need facilitation in the conversion process,” he said.

While Faysal Bank’s conversion was planned, the Shariah Board and Shariah Compliance Department was set up for acquisition and it allowed the gradual conversion of already existing branches as well as launching of new Islamic Branches. Accordingly, some 90 branches were converted by 2021 and entire banks successfully converted by January 1, 2023.

“The Senior Management, Shariah Scholars, and our employees each played their active role in facilitating us on this journey. We didn’t close the banking operations for a single day, trained the staff, and not only retained all our customers but grew by leaps and bounds,” he added.

Younis said that as a regulator the State Bank of Pakistan (SBP) has played a very positive role and not only extended its full support but also encouraged conversion.

Simultaneous development of innovative Islamic products such as Modaraba, Musharakah, Istisna, etc, as advised by Shariah Board scholars, covered all aspects of financing, and helped the teams make headway in appeasing customers and expanding operations, Chairman BoD FBL said.

“We make sure to derive modern technological convenience in all our products and presently at Faysal Bank, we have the largest cluster of products within the Islamic Banking industry,” he maintained. He mentioned that FBL is among those, which have been requested by the SBP to set up an exchange company. As per the direction of the regulator, Faysal Bank has planned to establish its own Foreign Exchange Company subject to BoD and regulatory approvals.

He said that FBL has invested heavily in digitalization to ensure the expansion of our outreach and maximum inclusivity. The 21st century is all about instant access and ease of services, therefore our focus will be on enhancing the Faysal App and offering maximum digital products to our customers, he added.

The last quarter of 2022 saw, Islamic banking shares at 20.3 percent of banking sector assets with 22 percent of deposits. SBP’s target for the Islamic banking sector is to contribute over 30 percent to the overall banking industry assets and deposits, by 2025 and the Faysal Bank is making efforts to meet the SBP’s target, he said.

The FBL has also proved that with dedication, conversion is achievable with a strong positive impact, if well planned, he concluded.

The current year is the inaugural year as an Islamic Bank and the FBL achieved remarkable financial performance and unprecedented growth. Despite the challenges, FBL achieved a record Profit Before Tax (PBT) of Rs 15.1 billion during the first half of CY23, marking a remarkable 73.6 percent higher than Rs 6.4 billion in the corresponding period last year.

Profit After Tax (PAT) rose to Rs 7.5 billion in H1’23 representing a 71.7 percent increase from Rs 4.4 billion in December 2022.

Copyright Business Recorder, 2023

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