With a single digit top line growth, Faysal Bank (FABL) commendably quadrupled its profits during 1QCY15. FABL is among the few banks still lending more than investing in government papers. A high ADR in the 60s is to show for that. Although, investments have picked up of late, FABL has not got all out parking the bulk in PIBs.
The gross spreads are understandably thin, as yields slow down. FABL lends more than it invests and a high infection ratio shows that well. Aggressive provisioning in the previous year helped the post provisioning net mark-up income improve considerably. That said FABL still has a fair ground to cover in terms of improving its deposit mix, as the CASA sits at a low 65 percent.
The most significant contribution came from the non mark-up income which more than doubled to make up for a modest top line growth. FABL made the most of the opportunity on offer at the stock market as gain on sale of securities increased manifolds. A reduction in administrative costs - a rarity for banks - supplemented the noncore income well, helping FABL to achieve a tremendous profit growth.
With government papers becoming less lucrative, FABL would have to focus more on the lending side. Luckily, it already has a decent sized advances portfolio, but it needs to be cleaned up fast and also provided for more adequately. An improved deposit mix would not do much harm either, especially when rates are all set to be lower.

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Faysal Bank Limited
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Rs (mn)                              1QCY15   1QCY14     chg
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Markup Earned                         8,433    7,776      8%
Markup Expensed                       4,668    4,456      5%
Net Markup Income                     3,765    3,320     13%
Provisioning/(Reveral)                  234      639    -63%
Net Markup Income after provisions    3,531    2,681     32%
Non Mark-up/Interest Income           2,141    1,072    100%
Total income                          5,672    3,753     51%
Non Mark-up/Interest Expenses         2,795    3,125    -11%
Profit Before Taxation                2,874      627    358%
Taxation                                994      195    409%
Profit After Taxation                 1,880      432    335%
EPS (Rs)                               1.80     0.41
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