Faysal Bank Limited

Introduction:
1.1 Group Information: Ithmaar Bank B.S.C. (stock code "ITHMR") is licensed by the Central Bank of Bahrain and listed on the Bahrain Stock Exchange and the Kuwait Stock Exchange. It has a paid-up capital of US$598 million, total equity of US$1.1 billion and is a full service investment bank with its direct business covering the Middle East and North Africa (MENA) region, as well as South Asia, Asia-Pacific and Europe. Besides holding significant investments in the banking and financial service sectors in different markets, the main direct activities of the Bank include underwriting (equity and other financings), private equity (structuring, participation and portfolio management), Islamic financing and

advisory services covering project financing, investments, capital markets and mergers and & acquisitions. include Ithmaar Shamil Bank's of flagship Bahrain

subsidiaries

associates

Bank

(headquartered in Bahrain), Ithmaar Development Company, Faysal Bank Limited (Pakistan), Faisal Private Bank (Switzerland), Sakana Holistic Housing Solutions, Solidarity (an Islamic insurance company), BBK B.S.C., Bahrain based First Leasing Bank, and Ithraa Capital (Saudi Arabia).

1.2 Board of Directors

1- Farooq Rahmatullah Director 2- Mohammed A. Rahman Bucheerei Director 3- Mohamed A. R. Hussain Director 4- Naved A. Khan President & CEO 5- Syed Naseem Ahmad Chairman 6- Tariq Iqbal Khan Director 7- Graham Roderick Walker Director 8- Shahid Ahmad Director

1.3 Management Team

Naved A. Khan President & CEO Naved A. Khan has over twenty-three years of work experience with twenty years of broad-based and varied Corporate and Investment banking experience. Before joining Faysal Bank, Naved Khan was associated with ABN AMRO Bank, Pakistan as Chief Executive Officer with the primary responsibility of strategic management of the Banks local franchise and its key businesses. He has also been associated in senior management positions with Bank of America, Pakistan. Naved Khan has international work experience with General Electric / RCA in USA in the companys Pacific Rim operations and holds an MBA from Butler University, School of Business, Indianapolis, USA. He is currently Chairman of ECH Task Force State Bank of Pakistan, Board Member of Rotary Club of Karachi Metropolitan, Board Member on Export

Processing Zones Authority, Board Member at the Virtual University of Pakistan, Chairman Academic Board IBP, Director Karachi Shipyard and Engineering works and Board Member of Pakistan Stone

Developing Company.

Nauman Ansari Head Corporate & Investment Banking and Acting Head Commercial

Banking Nauman Ansari has 15 years of rich credit, corporate and investment banking experience having been associated with Standard Chartered Bank-Karachi, Bank of America-Karachi, ABN Amro (in Pakistan, Middle East and Asia Pacific regions), Fortis Bank in Middle East and Crescent Commercial Bank in Pakistan. Nauman Ansari holds a Bachelors of Science degree in business studies from USA. Aarij Ali Head Retail Banking & Acting Head Strategic Development Aarij Ali has over 25 years of banking experience in various capacities within Retail, Consumer, Corporate and Operations areas. He has also handled business support projects related to HRD, Technology and Strategy Development. He holds an MBA Degree from IBA, Karachi. Prior to joining Faysal Bank, Aarij has been associated with ANZ Grindlays, MCB Bank and Saudi Pak Commercial Bank. Salman Ahmed Usmani Head Treasury Salman Ahmed Usmani has extensive experience of over 22 years in both the multinational and local banking sector with expertise in Treasury and Risk Management, Asset and Liability Management, Strategic Planning, Corporate Restructuring, Strategic Negotiations, Acquisitions and Strategic Alliances and International Operations. Prior

to joining Faysal Bank Limited, he was associated with MCB Bank Limited as Global Treasurer and Head Investment Banking Group. His past experience has been with organizations like ANZ Grindlays, American Express, Bank of America, Mashreq Bank, and United Bank Limited. Ahmed Kamran Head Services Ahmed Kamran possesses over 30 years of multifaceted experience. He has held various senior positions during his career at Faysal Bank, Al Faysal Investment Bank, Faisal Islamic Bank of Bahrain, Electronic Information & Energy Systems Limited, Duty Free Shops Limited and National Bank of Pakistan. Ahmed Kamran has a Masters in

International Relations from Karachi University and has attended Advanced Management Course at McGill University held at KL,

Malaysia. He has also attended Advanced Management & International Marketing Course at INSEAD, France. Mehreen Amin Head Human Resources Mehreen Amin possesses over 26 years of work experience, in the areas of IT and HR. She has been professionally associated in senior positions with leading multinationals i.e. G. D. Searle, U.K., Shell Pakistan and Reckitt Benckiser where she was the HR Regional Director for the Africa Middle East region. In her last assignment at ABN AMRO

Bank Pakistan Limited she was the Head of Human Resources. She is the Member of the Board of Governors of Pakistan Society for Training & Development. Nasir Islam Head Compliance Nasir Islam is a qualified Chartered Accountant with over 18 years of multifaceted experience. His first assignment was as Manager Finance in ANZ Grindlays in Karachi from where he was posted at the ANZ HO in Melbourne, Australia as Manager Commercial Banking System (CBS) Project. He returned to Pakistan in 1997 as Manager Audit and in 2000 joined ABN Amro Bank as Audit Manager, and in 2004, he was appointed as Country Head of Compliance. Bashir A. Shaikh Acting Chief Risk Officer and Advisor on Special Assets Bashir Ahmed Sheikh possesses over 39 years of core banking experience. He has handled Regional Head Punjab positions at both Faysal Bank and at Al Faysal Investment Bank Limited. He is a seasoned banker and started his career at United Bank Ltd. Has held senior positions at BCCI (Overseas) Limited, Indus Bank Limited and Askari Commercial Bank Limited. He has a Graduate Degree (Economic and Political Science) from University of Punjab, Lahore and has attended Executive Development Program at Johnson Graduate School of Management at Cornell University NY, USA.

Syed Majid Ali Chief Financial Officer Syed Majid Ali is a Fellow member of the Institute of Chartered Accountants. He has over 18 years of diversified experience,

progressively responsible in the accounts and finance disciplines of banking with exposure in IT and HR activities. He has been associated with Emirates Bank International as CFO, KPMG as Partner and Saudi Pak Commercial Bank as CFO.

2- VISION
Excellence in all that we do

3- MISSION
Achieve leadership in providing financial services in chosen markets through innovation.

4- VALUES
Our daily code of conduct is exemplified by eight core values: Four threshold values values at the heart of our brand.

Four differentiator values values that set our brand apart. Threshold Values
Teamwork We function as we a team.

Differentiator Values
Passion Within We bring zeal and enthusiasm for banking to work.

functions,

cooperate.

Between functions, we collaborate.

We are excited to provide customers

Together, we aim for excellence and with the best or the best-suited. leadership in our chosen markets. We go the extra mile in legitimate, acceptable Our Team: Our Asset. Our Passion: Our Worth. Respect Innovation ways.

We hold our customers, investors We pioneer novel and more efficient and regulators in high esteem. ways to deliver solutions.

We uphold our customers rights to We are dedicated to a culture of demand We efficient and service. respect improvement and modernization.

appreciate

our We stand for originality, in thought, in action and in belief.

profession and, above all, our bank.

Our Respect: Our Duty.

Our Innovation: Our Strength.

Integrity

Responsiveness

We are recognized by our reliability, We are receptive to the need for credibility We believe and in character. change and improvement.

ethical,

honorable, We are proactive and anticipate our of customers needs and wants.

time-proven uprightness.

principles

We act quickly to modify, adjust or for new realities.

We stand for and abide by honesty, prepare truth and transparency. Our Our Integrity: Our Identity. Professionalism

Responsiveness:

Our

Distinguisher. Compassion

We are proficient and efficient in all Our concern for our colleagues, our that We we provide do. banking and customers, our communities, and our services country sets us apart.

knowledgeably

skillfully.

To each other, we are a family. For each other, we are a meaningful source of shared humanity.

We uphold regulatory obligations.

Our

Professionalism:

Our Our Compassion: Our Gift.

Competence

5- History of Faysal Bank:

Faysal Bank started operations in Pakistan in 1987, first as a branch set-up of Faysal Islamic Bank of Bahrain and since 1995 as a locally incorporated Pakistani bank under the present name of Faysal Bank Limited. On January 1, 2002, Al Faysal Investment Bank Limited, another group entity in Pakistan, merged into Faysal Bank Limited which resulted in a larger, stronger and much more versatile

institution. In fact it has the highest share capital amongst private banks in Pakistan and is amongst the largest in terms of equity. Faysal Bank Limited is a full service banking institution offering consumer, corporate and investment banking facilities to its

customers. The Banks widespread and growing network of branches in the four provinces of the country and Azad Kashmir, together with its corporate offices in major cities, provides efficient services in an effective manner.

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6- BRANCH NETWORK
6.1- SINDH -------- 41 Branches 2 38 1

Hyderabad Karachi Sukkur

6.2 PUNJAB --------- 78 Branches Arifwala Bahawalpur Burewala Chichawatni Daska Depalpur Dera Ghazi Khan Dina Faisalabad Gujar Khan Gujrat Gujranwala Islamabad Jhang 1 1 9 1 1 1 1 1 1 1 1 4 1 1

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Jhelum Kharian Lahore MAndi Bahauddin Mian Channu Multan Okara Rawalpindi Rahim Yar Khan Sadiqabad Sialkot Sargoda Sahiwal Toba Tek Singh Vehari

1 1 32 1 1 3 1 6 1 1 1 1 1 1 1

6.3 Balochistan ---- 3Branches Quetta 3

6.4 NWFP------------- 7 Branches Abbotabad Peshawar Sawat 1 5 1

6.5 Azad Kashmir - 2 Branches

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Chaksawari Mirpur

1 1

Upcoming Branches in Multan area are in: Khanewal, Pakpattan, Haroonabad and bahawalnagar

7- Deposit Products
Banks progressive approach to banking is reflected in their range of deposit products. They offer their customers innovation, accessibility, quality and convenience. Their diverse deposit suite caters to

individual and corporate banking needs. From basic banking accounts to high value investment products, any one can choose one that is best suited to his needs. 7.1- Faysal Sahulat - Current Account : Faysal Sahulat Current Account gives customers a host of banking facilities that add convenience to customersr banking

experience/transactions. It provides customers the flexibility to access customers account wherever customers go. 7.2- Faysal Moavin - Savings Account: Faysal Moavin Savings Account allows individual savers like customers to enjoy regular profits on a monthly basis. Customers deposited

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savings increase in value as monthly profits are added to customers savings. 7.3- Faysal Izafa - Term Deposit: Faysal Izafa is one of the most convenient ways of receiving profit on an annual or monthly basis. Customers can now enhance customers lifestyle on customers own terms.

7.4- Faysal Market Link - Savings Account: Faysal MarkeLink is Bankss latest offering to help customers control and manage customers savings the way customers always wanted to. Now with Bankss innovative KIBOR-linked savings product, customers can benefit from a daily changing market rate. 7.5- Faysal Savings Account: Faysal Savings Account addresses customers basic banking needs. It allows individual depositors, like customers to enjoy profits on

customer savings. 7.6- Basic Banking Account: Basic Banking Account is a Pak rupee current account with no minimum balance requirement. 7.7- FCY Savings Plus - Foreign Currency Account

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FCY Saving Plus is a foreign currency savings account which allows customers to earn profit on a monthly basis. 7.8- Mahfooz Sarmaya - Foreign Currency Account To provide convenience and value to customers with foreign currency related needs, Faysal Bank's Mahfooz Sarmaya foreign currency account offers customers many attractive features.

7.9- Rozana Munafa Plus - Savings Account Rozana Munafa Plus is a unique savings account designed to pay profits on a monthly basis while giving customers the benefit of the daily balance in customers account.

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8.0- Retail Services

8.1- Faysal Pocketmate Combining the wide acceptability of a credit card and the thoughtful prudence of an ATM card, Faysal Bank Pocketmate is the most convenient way to carry cash. No more fear of overspending. No more searching for the nearest ATM. Faysal Pocketmate provides customers with the freedom of world wide acceptability at over 29 million point of sale (POS) terminals and more than a million VISA ATMs globally. Worldwide Acceptance, Countrywide Acceptance, Maximum Security, Easy Traveling, Balance Inquiry, Fund Transfer, Utility Bill Payment, SMS Alert, 24-Hour Customer Service

8.2- Faysal Lockers Faysal Safe Deposit Lockers are carefully placed within the bank's professionally guarded premises with courteous Locker Custodians to facilitate customersr visit. With assurance of privacy customers can lease a locker that best meets customer needs, at very reasonable annual rentals

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nominal

(non-refundable)

key

deposit

is

applicable

at

locker

issuance. Annual locker rental is as per applicable Schedule of Charges of the bank Customers have the option to operate the locker only himself or add an additional operator to the usage of customers locker. However, only one key per locker will be issued by the bank

8.3- Transfer of Funds SWIFT Money Transfer Customers of Faysal Bank can now easily and speedily transfer funds in foreign currency through the SWIFT system installed at the Bank Western Union Service Customers who receive money transfers from overseas through the Western Union service can now withdraw their funds through any Faysal Bank branch

8.4- Non-stop Banking All branches of Faysal Bank remain open for business from 9 am to 5 pm from Monday to Thursday and Saturday. On Friday, the bank is open from 9 am to 12.30 pm and then again from 3 pm to 5 pm. To suit customer needs, bank have extended banking hours on Saturdays. Can enjoy Banks consistent and quality service from 9 am to 5 pm. *Saturday is announced off by Govt. for some limited duration.

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8.5- Internet Banking Faysal banks customers now can also avail facility of internet banking

8.6- SMS Alert Service With Faysal instant SMS Alerts customers can get alerts on customers mobile phone whenever they use Pocketmate Visa Debit Card or account locally and globally .

9.0- Consumer & Agriculture Finance

Banks consumer finance solution provides with the flexibility to tailor terms to fit customer unique needs. Customers can experience the convenience first hand through Faysal Bank.

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9.1- Faysal Car Finance: Faysal bank offers Car finance. Faysal Car Finance is available for Locally manufactured vehicles Tenure upto 5 years Variable rate lease (12 month KIBOR + 5% annually) Minimum customer equity 20% Comprehensive insurance cover at nominal rates available

9.2- Faysal Home Finance Home finance is also offered by Faysal bank. Faysal Home Finance is available for Buying a new Home Building a new Home Remodeling or Renovation of existing Home

9.3- Faysal Personal Finance Personal finance offered by Faysal bank with out any security on the basis of bank statement and monthly income. Faysal Personal Finance is available for Upto an amount of Rs. 500,000/-

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Equal monthly installments Repayable over 3 months to 60 months Repayable over 03 months to 36 months

9.4- Faysal Khushaal Kisan Scheme Offers specialized products for the agricultural sector. All Faysal Bank branches located in agricultural areas of Pakistan are equipped to help local farmers improve yield and methods of farming by offering timely and affordable financing for all purposes detailed in SBPs list of eligible items for Agricultural Loans.

10.0- Corporate Banking Services

Faysal Banks Corporate Banking Group offers standard Loan & Trade Financing Facilities including: Short Term & Long Term Funded & Non-Funded Facilities Trade related products including Letters of Credit and Bank Guarantees Pre & Post-Shipment is only for exports loans

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Discounting of local & foreign trade bills

10.1- Corporate Financing Faysal Bank Limited is fully geared to meet the changing economic challenges present in Pakistan. They are ever striving to build meaningful relationships with their customers and become partners in their growth and progress by acting as financial advisors and

consultants as well as financiers. Faysal Banks Corporate Finance Group extends both short and long term financing facilities designed to fulfill the individual need of each corporate customer. 10.2- Small & Medium Enterprise Financing Small and Medium Enterprise (SME) unit of the Bank is geared towards catering to the banking requirements of small to medium businesses in a timely and therefore cost effective manner. All the branches of Faysal Bank are equipped to speedily attend incoming financing requests from SMEs. Bank help customers grow from strength to strength by acting as their bankers and financial advisors. 10.3- Trade Financing Faysal Bank has established a strong presence globally in Trade Financing through its network, affiliates and correspondents. The Bank has conveniently maintained relationships with major banks in the international financial market and continues to develop new ones

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wherever needed. Banks Trade Finance services include a full range of import, export and guarantee products, thus offering tailor-made solution to fit the individual need of each customer. 10.4- Treasury & Capital Markets Faysal Bank Treasury has carved out a niche for itself as a dominant participant in the Financial Markets. The focus of Treasury Department is predominantly client centric where use extensive experience and expertise in providing balance sheet solutions to banks vast and diverse client base by offering a wide range of Fixed Income (Sovereign as well as Corporate) and Foreign Exchange products.

10.5- Investment Banking Faysal Bank maintains one of the leading Investment Banking setup in the country. Banks Investment Banking comprises of the following units: -- Project and Structured Finance (PSF):
PSF focuses on structuring and meeting the capital requirements of green field projects in various industrial sectors, often on limited or non recourse basis

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-- Debt Capital Markets (DCM):

DCM primarily caters to large ticket medium/ long term financing requirements of corporate relationships, requiring risk distribution/ sharing with other financial institutions and/ or access to local and offshore capital markets. Debt instruments include term loans, listed and privately placed Term Finance Certificates and Islamic financing products including Murabaha, Musharika and Sukuk Issues

--

Equity and Advisory:

E and A desk deals with Advisory on mergers and acquisitions, valuations, provides access to onshore equity capital markets through Ordinary and Preference share issues, IPOs and listings and Private Equity placements

10.6- Cash Management

Bank offer Payables and Receivables Management product suite to Bankss clients; conventionally through real time and online branch network and electronically through Internet based products. Products include Collections, Automated Cheque Payments, Electronic Banking, Salary and Employee Fund Management, Dividend Processing and Payments, and Customized Bulk Processing.

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10.7- Financial Institutions

Faysal Bank's Financial Institutions (FI) Group is focused on providing a wide range of correspondent banking services to customers through Bankss strong relationships with many global financial institutions, ensuring access to Bank customers to all the major global financial hubs. The above arrangements ensure most efficient settlement of import & export payments and foreign receipts/ payments of Bank customers. In addition to these global correspondent banking relationships, Bank also maintain onshore correspondent banking arrangements with large local banks to ensure coverage throughout the country.

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11.0- Organizational Structure

BOARD OF DIRECTORS
Audit Committee Head of Audit

Company Secretary/ Legal Siddique Memon CEO Secretariat Seema Hasan Trudy Ann Dsouza

President & CEO Naved A Khan

Head of HR Business Manager TBD Head of Compliance

Head of Strategic Development

Head of Commercial Banking

Head of Services

Head of Equity Capital Market

Head of Corporate & Investment

Head of Retail Banking

Branch Distribution Consumer Finance

Investment Banking

Commercial North

Head of Treasury

DCEO & Head of Islamic Banking

Operations

Product Development Payment Solutions

Advisor on Special Assets

Head of Risk / CCM Chief Financial Officer

Corporate North

Commercial South

General Services

Head of Communication

Corporate South

Agri Finance

Commercial Central

IT

Wealth Management

Transaction Banking

Head of Service Quality

FI

Cash Management

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12.0- Departments of Faysal Bank Limited

Different departments of Faysal Bank are as under ;

12.1- Operation Department: Operation Department is subdivided into following 4 departments: a. Remittance b. Cash c. Account Opening d. Customer Service e. Locker/CDR/Floor Services

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12.2- Agriculture Finance Department

This department provides agriculture loans to the formers at nominal rates with easy terms. It includes short term financing for fertilizers, seeds, pesticides etc and long term financing for purchase of

harvesting machines and installation of tube-wells etc.

12.3- Credit Department:

This department supervises the loans either given or received in the form of deposits. It administers the conditions imposed at the time of delivering of loan like security etc.

12.4-

Marketing

Department

Customer

Relationship

Department:

It peruse the customers to make business with the bank either in the form of deposits or by applying for financing. Different toots and techniques of marketing are used such as making contact personally with the customers, advertisement through television, news papers and on the website.

12.5- Consumer and Finance Department:

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This department provides loans to the ultimate consumer in the form of car leasing, house financing and as well as personal loans. Besides this it also administers the loans already given.

12.6- Documentary Credit and Foreign Trade Department:

This department provides assistance to customers regarding foreign trade, such as it deals with the international companies and provides gods and services required by customers. The kind of assistance it provides includes letter of credit facility, guarantor and also helps in foreign remittances. 12.7- Human Resource Department

HR department sets the rewards (salaries, bonuses etc) according to the performance and the target achievement of the employees, If one is working satisfactorily and efficiently then he is awarded with such incentives that will motivate others to do well. If the performance shows downfall, he is warned

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13.0- Working at Faysal Bank

13.1- Principal Accountabilities: a. Timely handling of all front office activities associated with the opening of customer accounts at the branch to enhance customer satisfaction and process efficiently. b. Maximize sales of banks product/ services to meet targets assigned with Finance. c. Receipt of ATM forms and timely issuance of ATM card. d. Manage and handle processing and operations of all FCU related activities of the branch including printing of all associated reports. 13.2- Compliance a. Positive internal audit rating with low incidents of audit objects. b. Complete adherence to FBLs SOPs as per laid policies and procedures. c. Full compliance with SBP and other regulatory requirements. regards to Deposits/ Risk/ Assets/ Customer

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13.3- Documentation a. Preparation of daily position of balance sheet/profit and loss with details of other assets and liabilities for review of Branch Manager. b. Reporting of demand and time liability figures and weekly position to Treasury c. Preparation of JVs and payment vouchers for settlement of vendors bills d. Record responding entries debited by Main Branch pertaining to FCU. e. Preparation of monthly results duly signed by the Branch Manager for head office FCU. f. report to H.O. FCU for SBP of monthly expenses, cost of funds, liabilities and assets g. Preparing details of assets charged off during the month. i. Preparation of details of addition, disposals and transfer of fixed assets along with summary. j. Aging of accounts appearing in other assets and liabilities pertaining to FCU k. Preparation of data files and e-mailing of same for Enterprise Reporting l. Preparation of details of leases written during the month. m. Cost of funds report for the month with year to date figures. n. Variance report on actual vs. budget figures.

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o. Preparation of quarterly/yearly income tax reports for Head Office and Income tax Department. p. Maintenance of staff personal files q. Preparation of weekly deposit comparative positions. r. Submission of withholding tax deduction, its reporting and related returns only for staff/suppliers. s. Branch related financial reporting on

daily/weekly/quarterly/biannually.

13.4- Problem Solving and Services a. Provide highest level of personalized service to customers through proper handling, timely assistance, promptly attending to their queries and complaints, catering to their personal banking needs and building a strong and cordial relationship to avoid dissatisfaction. b. Deciding and providing the right type of product/service to meet the need of individual customer. c. Maintaining and improving the service standards of the Bank to avoid incidence of complaints related to service issue from banks customers. d. Close coordination with all other functions of the branch to facilitate smooth customer transaction processing.

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13.5 Other Responsibilities: a. Backup of other Customer Services Officers (CSO) b. To generate business through local sales promotion, in-branch walk In customers and marketing calls on existing as well as potential individual customer to increase sales thereby increasing the branch business. c. Coordinate the sales effort of sales team where needed and to forge strong rapport with the customers to ensure strengthening of relationship on an ongoing basis, d. Maintain a high standard of appearance of the customer service center and self. e. Any other responsibility assigned by Operations manager/ Branch Manager.

13.6 Software used in Faysal Bank

In Faysal Bank Symbols software is used for all kind operational and financing activities. Its real time software and all data are saved on servers based in head office of the bank. Symbols automates a bank's retail, corporate, treasury and

investment banking operations. It allows the bank to track asset performance, enables liquidity management and computes profitability at customer, product, branch and bank levels. This unique ability of Symbols will boost the

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competitiveness of bank by translating their back office efficiency into front office effectiveness.

14.0 Analysis of Financial Statements Financial Year 2005 - Financial Year 2009
RECENT RESULTS CY09 2009 2008

________________________________ Rupees in millions

Operating Profit Provision for non performing advances Provision for diminution In value of investments Profit before tax

3,492 1,940

3,843 1,456

2,192 1,300

2,047 1,796

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Provision for taxation Profit after tax

100 1,200

681 1,115

Faysal Bank posted a profit after tax (PAT) of Rs 1200 million in CY09, which is 8% higher than the last year, largely due to large deferred tax asset posted in the current year. However, the profit before tax (PBT) has on the other hand shown a decline of 28% from the last year. The reason was primarily an increase in mark-up expense, which grew by 42% from the last year and represented 71% of interest earned in CY09, compared to 63% last year. Net Interest Margin (Rs 000 ) Interest Revenue Yield on Earning Assets Interest Expense Cost of Funding Net Interest Income Net Interest Margin 2008 13,404 11% 8,4551 8% 4,949 3% 2% 2009 16,958 13% 1,968 11% 4,990.

The sizeable interest expense had a significant negative impact on the net interest income that as a result increased by only 1%,

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On a positive note The CASA ratio (current and saving deposits to total deposits) showed improvement for Faysal Bank, as it stood at 50% this year compared to 43% last year. Yet it is still not even near to what some big players in the industry have with MCB and UBL leading the lot with CASA ratios as high as 88% and 75% respectively which allow them to operate very cost effectively. The non-interest expenses, especially the administrative cost cannot be ignored as these represent a substantial portion of the interest earned (25%). They also chipped in to reduce the banks profit by growing at a rate of 31% from last year. Another factor that reduced the profitability was the provision against non-performing loans, which increased by 27% largely due to the poor economic conditions of the country. 14.1- BANKING SECTOR PERFORMANCE IN CY09 As analyzed in the Financial Sector Review of the SBP CY08 was a challenging year for the banking sector when adverse developments in various risk factors severely tested its resilience. Although the overall banking system was able to withstand these shocks by escaping any serious threat to its stability, a few small banks are still reeling from the impact, while a number of financial indicators deteriorated visibly during the year. Consequently, the banking sector stepped into CY09 with a few financially weak small banks, a potential threat to the erosion of the capital base with the lagged impact of deterioration in

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asset quality, heightened market and credit concentration risks, and a difficult macroeconomic environment. 14.2- DEPOSIT GROWTH Encouragingly, the expansion in assets was funded by healthy growth in the deposits of the banking sector during CY09, which increased by 10% percent. As in case of assets, the increase in deposits was observed only in Q2-CY09, which can be attributed to the reviving confidence (of the depositors) in the banking sector, the multiplier impact of credit expansion for commodity finance, and banks effort to mobilize deposits, especially to meet end June targets. FBL s results show a deposit growth twice that of the market of 20%. 14.3- NON-PERFORMING LOANS Weak economic activities have taken a heavy toll on banks asset quality. The impact of mounting NPLs and restrained lending, is clearly visible from the increase in the NPLs to loans ratio, which has reached 11.5 percent in CY09 as against 10.5 percent for CY08. Faysal Bank was no exception in these asset quality issues, with its non-performing loans (NPLs) rising by 42% and representing 15% of total advances compared 10% last year. 14.4- FINANCIAL PERFORMANCE (CY05-CY09)

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The difficult macroeconomic environment of the last 2 years had an equally negative impact on Faysal Bank as it had for the industry as a whole. Although it was able to show encouraging improvements this year, its results depict a stark difference from levels achieved 5 years ago. Profits after tax are 61% lesser in CY09 than in CY05. The primary reason for this plummeting decline in profits has been a steady increase in costs and the fact that the earnings have not been able to keep pace with them. The reason is the high cost components of the bank have kept on increasing. As depicted in the graph the interest expense has grown at a much higher pace (261%) than the interest revenue (168%) from CY05 to CY09. Furthermore the administration cost that represented 25% of interest earned in CY09 increased by 200% from CY05 to CY09. The non-interest income declined by 33% in CY08 from CY07, but was able to recover a little bit by increasing to Rs 2.8 billion in CY09, but has not reached to the level where it once was. On the other hand the administrative cost have not subsided with the decrease in noninterest income, but has increased at a much higher rate thus showing inefficiency as part of the bank s operations. However on a more positive note, although Faysal has been lagging on the non -interest income, it has shown improvement in terms of net interest income represented 64% of total revenue in CY09. The net

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interest income has grown by 65% since CY05. However due to poor economic conditions rising interest rates and inflation resulted in shrinking of net interest margins, as the cost of funding interest bearing liabilities increased more steeply than the yield on interest earning assets. 14.5- EARNINGS RATIOS Return on equity, return on assets and return on deposits all decreased from the previous years. In fact all these ratios have been deteriorating continuously since FY05. The return on equity particularly is gone consistently low due to stringent capital requirement posed by the SBP.

14.6- BALANCE SHEET GROWTH

The overall liabilities and assets of Faysal increased by 32% and 31% respectively from CY09 to CY08, however when looked closely the interest earning assets of the bank increased by 24% while the interest bearing liabilities grew by 37%. From the chart, there seems to be clear policy followed by Faysal Bank of increasing its investments in government fixed income securities as to take advantage of the higher interest rates prevailing currently. Furthermore the growth in

investment could also be a result of increasing NPL and so to invest in

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safer securities. The investment increased by 68% while the advances only increased by 9%. 14.7- CASA RATIO ( CASA-Current Account & Saving Account) The CASA ratio of FBL has more or less remained at 45-50% from the last 5 years. This ratio although seems to be increasing going forward however it is no where near the CASA levels of 75% and 88% of UBL and MCB. Faysal Bank s comparatively low CASA ratio also explains the low net interest margin of 3-2%. High CASA ratio of the banks such as Allied Bank have a much higher margin of 5-6%. Higher CASA reduces the cost of funding and thus increases the profitability. 14.8- MARKET VALUE RATIOS The average prices as quoted in the Karachi Stock Exchange have reflected the banks drop in profitability expectations. The price has fallen to Rs 17.53 from Rs 74.1 in CY05. Although it recovered somewhat from the Rs 11.51 level in FY08, it has still a lot to gain a lot.

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15.0 Human Resource Department

Main HR Department is located at Faysal Bank Head Office Karachi. There are HR Co-coordinators in each branch of Faysal Bank which supervises the applications and practices of HR department. If in any branch of Faysal Bank, a particular vacancy is to be filled, the applicant will make contact to the Branch Manager of that particular branch which will refer the candidate to the Head Office. All the recruitment and selection process will be will be conducted at Head Office. Then the Head Office selects the candidate on the basis of information provided by the candidate. The selection process includes the testing and interview process. After selection, the employees are then transferred to their particular branches, where the duties are assigned to them as well as training is provided them on the basis of their nature of job. HR department sets the rewards (salaries, bonuses etc) according to the performance and the target achievement of the employees, if one is working satisfactorily and efficiently then he is awarded with such

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incentives that will motivate others to do well. If the performance shows downfall, he is warned. The Manager of each branch is responsible for the appraisal of the employees. Then on the basis of appraisal, promotion and salary increments are awarded.

15.1- Job Analysis The procedure for determining the duties and skill requirements of a job and kind of person who should be hired for it. Job analysis has two components i.e. Job Description Job specification

Job Description:
Job description is the process through which we determine the duties, responsibilities, supervisory responsibilities and behaviours required to perform the job

Job Specification:
Job specification is the process of determining the job related skills, abilities required for a job Job Analysis of Faysal Bank

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Basically there is no specific Job Description and Job Specification for a particular job in Faysal Bank. Change in banking system and size of operations is affecting the duties, responsibilities of job. Faysal Bank for writing job description and job specification intensely focus on the immediate supervisor. If there is any job vacant at low level in the Faysal Bank, the immediate supervisor of concerned department with the assistance of Branch Manager will transfer the relevant job description and specification to the HRM Department of Faysal Bank situated at Karachi. The head office will use this written job description and specification to select the right employee for Faysal Bank. But one thing is important that job related duties and responsibilities at low level can change with the will of immediate supervisor. Practically when we talk about the Faysal Bank low level staff, about more than 40 employees are working under the authority of

operational manager. Operational manager can change the duties and responsibilities of employees working under his authority. At the middle level management, the operational manager and all the concerned department head come under this part. The Branch

manager of the concerned branch will write job description and job specification of the vacant job and transfer it to the head office of Faysal bank. At the top level, the Branch manager of the concerned branch come. In practical side, their job analysis is done directly by the head office. And

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the head office use the mostly internal source of recruitment here to fill the vacant top level job or succession planning.

Job Requirement: Minimum Qualification Experience

Supervisory Responsibilities: Number of person reporting Direct Report Report to

15.2- Recruitment and Selection Process Recruitment refers to the process of attracting job applicants from the available labor force. Selection is the process of choosing from a group of applicants those individuals best suited for a particular position. Sources used by Faysal Bank: 1. Internal Sources 2. External Sources 15.2.1- Internal Source: 1- Job Posting:

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Faysal Bank publicizes open job to its existing employees by listing its attributes e.g. qualification, experience and pay rates. Bulletin Boards and Notice Boards inside the organization are used for this publication.

2. Contacts and References: Faysal Bank encourages the contacts and references of its existing employees. It means if there is any job vacant in the bank, the candidates referred by the employees / branch manager are preferred.

15.2.2- External Source: 1. Advertisement: Advertisement is a major external source adopted by Faysal Bank. Organization extensively focuses on advertisement about vacant jobs and thus attracts the potential candidates. I e news paper. 2. Direct Approach: Faysal Bank approaches directly to experienced employees of other banks and offers them higher rewards to pursue them to leave their existing jobs and join Faysal bank. Disadvantage of this method is that they have to pay higher salary for the post offered

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15.3- Methods of Recruitment & Selection :

15.3.1 Testing: Test is conducted by the regional offices of Faysal Bank to choose the potential candidates. Test is divided mainly into two portions a. b. c. d e. General IQ level test (30% weightage) Job Related Test (70% weightage) Duration of test is 2-3 hours Minimum 50% marks are required to appear in the interview. There is no negative marking in the test.

Qualifies candidates are then called for an interview. 15.3.2 Interview: In an interview information is obtained from the candidates through oral responses. a. b. c. Regional office conducts the interview Panel Interview is conducted Panel consists of 3-7 members

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d.

Expected salary and information about information about past job is gathered

e.

Nature of job and responsibilities are discussed with the candidate

f.

Preferences of candidate are asked in the interview.

15.3.3- Process of Training

After the selection of employees, the process of training starts. We will discuss the training of prospective and current employees. 15.3.4- Job Rotation: To rotate the employees from one job to another within same department as to enhance his experience for increased job duties. In Faysal Bank there is no specific criteria for job rotation. It depends upon the will of Branch Manager whether to rotate the employee or not. ( Inter Departmental Transfer) 15.3.5- Coaching: Initially the employees are selected as MTOs (Management training Officers). They are provided with necessary training relevant to their job in specific branches as directed by regional office. On job training is also provided to the employees. Permanent

employees are trained with respect to certain changes in banking

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system and its policies such as installation of new software, change in pattern of transaction, change in Govt. policies etc.

15.4- Apprenticeship: Fresh graduates and master degree holders of reputed institutes are invited to get training regarding operations of a particular organization against a little reward. Faysal Bank also has an attractive offer for fresh graduates and master degree holders to get apprenticeship. This offer contains attraction as a reward f Rs. 750 per weak and if performance is unto the mark then an offer for permanent employee s made.

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16.0- Compensation Management

16.1- Salary: There are two way of salary setting in Faysal Bank: a- If Bank approaches to any experienced employee thin pay will be set on the will of employee. b- If the candidate approaches to Bank then B.M negotiate for salary. Bank will pay Rs. 12,000 to fresh candidates it includes 66.67% of basic salary. Salary is not providing according to rank but salary is according to performance and target achievement. Lets have a view on salary of different employees in sahiwal branch. Branch Manager Rs. 92000. Operational Manager Rs. 37500. Customer service in charge Rs. 24500. Cash in charge Rs. 23000 Customer Relationship officer: 15000 Agri finance officer: Rs: 24000 Auto Fianance officer: 18000 16.2- Probation Period:

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It is specific time period for new employees does not become a permanent employee and in this period organization can fire at any time on the basis of pour performance. Faysal Bank initially selects the new employees on the probation period of three months. 16.3 Promotion Criteria: In Faysal Bank Branch Manager is responsible for making promotion which is made on the basis of performance. Two promotion Criteria are used: a. on performance Basis b. Without performance

A- Performance Basis: On the basis of performance no specific criteria for promotion. One can be performed from OG0 to OG1 grade with 3 month. B- Without Performance: If the employee does not perform well for even consecutive three years then his promotion is must to next level. 16.4- Rent OR Residence Facility: House rent is paid to every one at a rate of 40% of basic salary. No residence facility is given to any one.

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16.5- Medical Care: Faysal Bank provides medical facility to all of its employees. If one employee is admitted in any hospital, bank will provide 700 daily. All the medical bills are reimbursed by Faysal Bank if bills are proper invoices. 16.6- Transportation Facility: No transportation facility is provided by Faysal Bank. Only Branch Manager is provided with the patrol facility. 16.7- Vacation Criteria: Faysal Bank provides an annual leaves of 42 with pay from which: 6 sick 6 causal 15 recreation leaves 15 privilege leaves 16.8- Transfer: If an employee is periodically employed outside the town and the branch is being opened in the home town of the employee he is transferred to the home town branch. In case of any shortage, employees are also temporary transferred.

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16.9- Career Management: Initially the fresh employees are selected on contract basis. If one selected on permanent basis six month probation period is applied. An employee has following opportunities for career building 16.10- Performance Appraisal: To compare the employees current/past performance with their

standards such process is called performance appraisal. Faysal Bank adopts the traditional appraisal method which is done on yearly basis. (Branch Manager of Faysal Bank) appraises from sweeper to

operational manager and appraises of BM is done by area manager of Faysal Bank. Branch manager appraises all the employees by taking direct instructions from respective heads.

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17- SWOT Analysis

SWOT Analysis is mean for strength, weakness, opportunities and threats being faced by the organization. FBL although a good name in the banking sector yet facing many difficulties in setting up itself in the corporate banking. Here is a brief summery of the SWOT Analysis for

the FBL as mention that which are the factors that can play a key role in the growth of the organization

17.1- Strengths Faysal Bank has latest banking software symbols with all braches updated online. The bank is strengthening in the market to its qualified Human resource, The employees are committed to perform their role according to the given pattern and standards. The infrastructure of the bank has changed much from previous years, specifically after changes in management. Last year Bank changes its logo and values. And more focus is given on customer services. Faysal Bank is interconnected with intranet. All works, activities and assignments are systemized. The main strength of the bank is its high paid up capital at the time of incorporation. And Funds strength of Faysal Bank is very

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good. Currently Faysal Bank purchases Royal Bank of Scotland (RBS) and its merger with Faysal Bank is under process. State bank also offer to buy an other smaller bank. Another Strengths of bank is its providing free online all over the Pakistan and there is no need for tension if customer are in some other city. They can access their accounts in real time from any Faysal Bank Branch in Pakistan.

17.2- Weakness

Banks main weakness is its branch network coverage its in limited cities of Pakistan. All branches of the FBL is not selling all products like commercial loans LC facilities and foreign exchange counters due to heavy rise in costs. FBL have limited market to sell its products

17.3- Opportunities FBL is build under the one of the strongest business groups in the world and have good financial strengths FBL, has not only competed, but also has surpassed the decided objectives/strengths, which ware by the management.

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FBL has now regained its 8th

largest bank in Pakistan after

taking over RBS. However, it is astonishing fact that the management and the staff are committed to be at the toper position in future.

17.4- Threats
Due to some problems in banking industry FBL have less targeted market to sale its products due to limited Competition in banking industry is increasing day by day. Heavy taxation system from govt. on banks income and taxes on banks customers transaction, public hesitate to do more

business with the banks.

18.0- Conclusions
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During my practical study and internship at Faysal Bank I found that bank is providing best services to small and big business men both in low charges as comparison with other banks changes. I study all departments available in Sahiwal Branch like Deposit growth , Credits and financing, Agriculture financing, National Bank

transactions, Cash department, Remittances, lockers facilities. Banks own deposit as well as state bank is major source of finance for the Faysal Bank to invest money in order to earn profits. Faysal Bank is also rising its number of branches recently they have purchased RBS and extend its area of branch networking.

19- Recommendations
In my study and internship period after detailed examination following are my recommendations.

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Branch Network: Bank need to extend its branches network to capture more market share. Advertisement: Bank is not making proper Advertisements and many people is not familiar with faysal banks products. Bank should introduce it self in the market and it will be helpful to get more business. This is age of competition and every organization is facing hard competition not only domestic organization but also from the international organization due to globalization. Due to this competition the marketing department plays a role in the success of the

organization. FBL should have a strong marketing department like many other private banks have , for the publicity of their products and make inform the customer all the services provided by the bank and conduct detailed market researches to find out new opportunities. Compensation & Salaries: Bank is offering high salaries to the manger and upper level. Lower level of employees working at branch level is not compensated properly. Specially its marketing staff who is engage in increasing bank deposits. Compensation is a necessary thing for employees satisfaction Training updation : Bank should arrange proper training of its employees to make them updated with use of software and latest tools for working like time management

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HR Department: Hr department must be established at branch level or at least in every Area office level to control all employees related issues.

Reference & Sources:

I Used guidance and references for my internship report from: a- Management written by Robbin & Coulter b- Managing Human Resources written by Wane F. Cascio c- Compensation Management written by Mathew J. Delusa

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d- Management Development written by Joseph Prokopenko e- Labour Management Relations Written by Daniel Quin Mills. I have used sources for my internship at Faysal Bank Limited are: a- Mr. NAdeem Akram (Principle: VTC, Sahiwal) b- Mr. Azhar Iqbal (Principle, GTC, Sahiwal) c- Mr. Imran Janua (remittance In charge, FBL Sahiwal) d- Mr. Muzaffar Ahmed (Manager Operations, Sahiwal) e- Mr. Shahid Hameed (Incharge Clearing) f- www.kse.com.pk for financial analysis g- www.faysalbank.com

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