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Faysal Bank Ltd (PSX: FABL) sustained its robust profitability trajectory in 2023, achieving a net profit of Rs. 20.2 billion, marking a notable 77% surge from the preceding year. The financial results revealed that the second-largest Islamic bank in Pakistan recorded profits exceeding Rs. 20 billion in 2023, a substantial increase from Rs. 11.4 billion in 2022, reflecting a remarkable rise of Rs. 8.81 billion. According to Arif Habib Limited, this represents FABL’s highest-ever post-tax profit, driven by a surge in earnings attributed to a 600 basis points increase in interest rates throughout the year.
The significant upturn in overall earnings primarily stemmed from the expansion of total income.
In the fourth quarter of CY23, the bank’s net profit reached Rs. 21.9 billion, marking a 68% YoY increase and a 19% QoQ rise. Consequently, the total net profit for CY23 escalated to Rs. 71.1 billion, indicating a substantial 78% YoY growth. Profit earned experienced an 81% surge during CY23, while profit expensed rose by 83%.
Net Foreign Income (NFI) exhibited a notable 127% YoY increase and a 129% QoQ surge in 4QCY23, contributing to CY23’s total of Rs. 13.1 billion, a 37% YoY augmentation. The rise in NFI during CY23 was primarily attributed to increased fee and commission income, posting a 30% YoY increase at Rs. 9.4 billion. Additionally, FX income witnessed a significant 67% rise in CY23, reaching Rs. 4.8 billion. However, FABL reported a loss on securities amounting to Rs. 1.8 billion, compared to a loss of Rs. 1.5 billion recorded in the same period last year.
FABL recorded provisioning reversals of Rs. 2.8 billion in 4QCY23, a substantial 13x YoY increase from 4QCY22 reversals of Rs. 204 million. This brought the total provisioning for CY23 to Rs. 1.2 billion, compared to CY22 reversals of Rs. 940 million.
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The bank’s Operating Expenses (OPEX) witnessed a 55% YoY increase in 4QCY23, totaling Rs. 13 billion (4QCY22: Rs. 8.3 billion). Consequently, the Cost/Income ratio stood at 47.2% in 4QCY23, compared to 54% in the same period the previous year.
The effective tax rate was set at 54% during 4QCY23, a slight increase from 51% in the same period last year. The effective tax rate for CY23 was reported at 52%, compared to 50% in CY22.
FABL reported an Earnings Per Share (EPS) of Rs. 13.34 for 2023, a significant increase from Rs. 7.54 in the same period last year.
In addition to the financial results, FABL announced a final cash dividend of Rs. 2 per share of Rs. 10 each for CY23. This is in addition to the 10% interim cash dividend for the second quarter ended June 30, 2023, and the 10% dividend for the third quarter ended September 30, 2023, already distributed to shareholders.