Financial Results – September 2019 Investors’ Relations Presentation

Date : 10 December 2019

Place : Karachi

Presented by : Syed Majid Ali – Chief Financial Officer

Table of Contents S. No. Contents Page Number

1 2 3 4 5 6 7

Introduction Strategic Focus Key Performance Highlights Financial Performance Six Years Financial Summary Performance of Subsidiary Islamic Conversion

3 5 8

11 17 21 24

2

Introduction

3

4

Faysal Bank – Basic Information

Incorporated in Pakistan October 3, 1994

Registered Office Faysal House, ST-02, Shahra-e-Faisal, Khi.

Parent Company Ithmaar Bank, Bahrain

Credit Rating (Long Term / Short Term) "AA" / "A1+"

Branches (30 Sept 2019) 487 (including 312 Islamic Branches)

Branches (28 Nov 2019) 514 (including 354 Islamic Branches) By Dec 31, 2019 (555 Branches including 414 Islamic Branches)

Cities covered 160 Cities

Market Capitalization PKR 30.6 Bln (dated: 6th Dec 2019)

Assets PKR 602 Bln / USD 3.8 Bln

Deposits PKR 434 Bln / USD 2.8 Bln

Advances - net PKR 307 Bln / USD 2.0 Bln

ADR 70.70%

Capital Adequacy Ratio 18.45%

Staff Strength 6,511

Strategic Focus

5

6

FBL Corporate Strategy (2019-2023) – Corporate Goals, Objectives & Ambition Levels

Mission Statement

“Achieve leadership in providing financial services in chosen markets through innovation”

Grow low cost CASA deposit- focus on mass-affluent customer segment

Network growth and branding

Complement growth through volume deposits from HNWIs & affluent segments

Drive volume from large corporates

Drive new business growth from smaller corporates

SME financing – Branch led model

Consumer financing - Branch-focus and cross-sell propositions

Network: Over 600 Branches by 2020. Deposits: Grow at a CAGR of 13%. Grow market share. CASA Ratio: Improve

Lending: Grow at a CAGR of 11% (underwrite cautiously, comply RACs – maintain low NPL levels).

High Quality Lender

Strong Contender

In Retail

Goals/ Positioning

Strategic Objectives

Ambition Levels/ Targets

7

FBL Corporate Strategy (2019-2023) – Corporate Goals, Objectives & Ambition Levels

Innovative ADC/ Digital propositions & functionalities Manage branch traffic through diversion to ADC/ Digital

Channels Use BI to leverage data/ analytics to support sales/ cross

sales/ loyalty programs

Convert responsibly without impacting franchise value

Improve top-line/ core income & NFI in all segments Cost management on both staff / non-staff side Maintain healthy CAR levels to support business growth

• Internally focused digital transformation - investment in Digitization

• Products/ service offerings through digital channels

Gradual Transformation Islamic Banking to constitute 80% of the Bank’s Balance Sheet by 2023.

ROE: Improve to reach 18% - 20%. CIR: Reduce to reach 55-58%. CAR: Maintain at a minimum of 14%.

Improved Customer

Experience – ADC/ Digital

Convert Responsibly

Increased Shareholder Value with

Capital Stability

Goals/ Positioning

Strategic Objectives

Ambition Levels/ Targets

Key Performance

Highlights September 2019

8

9

Statement of Financial Position – Sep ‘2019

A B C A - C A - BSeptember December September Variance Variance

2019 2018 2018 YoY Sep vs Dec

Cash and bank balances 48 45 41 17% 6.7%Lendings to FIs 7 3 - 100% 133.3%Investments - net 195 214 130 50% -8.9%Advances - net 307 296 297 3% 3.7%Fixed assets 21 13 13 62% 61.5%Other assets 25 28 23 9% -10.7%Total Assets 603 599 504 20% 0.7%Borrowings 79 98 38 108% -19.4%Deposits 434 409 399 9% 6.1%Other liabilities 42 49 25 68% -14.3%Total Liabilities 555 556 462 20% -0.2%

Share Capital 15 15 15 0% 0.0%Reserves 9 9 8 13% 0.0%Revaluation Surplus 5 5 5 0% 0.0%Unappropriated profit 19 14 14 36% 35.7%Total Equity 48 43 42 14% 11.6%

Description

--------------- Bln Rupees ---------------

10

Operating Results – Sep ‘2019

Net markup income 15,137 11,050 37%Non-markup income 5,208 4,908 6%Total income 20,345 15,958 27%Admin expenses 12,142 10,545 15%Profit before provisions 8,203 5,413 52%Provisions / (reversals) 728 (825) -188%Profit before tax 7,475 6,238 20%Taxation 3,048 2,651 15%Profit after tax 4,427 3,587 23%

EPS (rupees) 2.92 2.36

YTDSep 2018

--------- Rs in Mln ---------

VarianceDescription YTDSep 2019

Financial Performance

11

12

Advances

NPL Coverage

Gross Advances Composition Segment Wise

Gross Advances Composition

Gross Advances Composition Sector Wise

PKR in Bln

13

Investments - Net Investment Composition Dec’18 Investment Composition Sep’19

14

Deposits Deposit Growth Trend (PKR Bln)

Deposit Mix Sep’19 Deposit Composition Sep’19

Deposit Composition Sector wise (PKR Bln)

15

Key Ratios Profitability Ratios 2014 2015 2016 2017 2018 Sep'19Return on avg assets 0.7% 1.0% 1.0% 1.0% 0.9% 1.0%Return on avg equity 11.7% 17.6% 15.6% 14.4% 13.4% 14.5%Cost to Income Ratio 66.8% 54.3% 61.3% 64.4% 64.3% 58.7%

Liquidity Ratios 2014 2015 2016 2017 2018 Sep'19Capital adequacy ratio 12.2% 14.4% 14.6% 15.9% 16.8% 18.5%CASA 65.6% 67.2% 67.1% 69.9% 68.8% 69.5%CA 31.8% 32.1% 33.8% 34.5% 33.0% 34.1%Advances to Deposits Ratio 64.0% 62.0% 60.2% 62.3% 72.4% 70.7%NPL Ratio 14.3% 14.8% 13.1% 10.7% 8.3% 9.1%NPL Coverage 78.6% 79.1% 81.7% 86.8% 86.7% 77.2%

Investment / Market Ratios 2014 2015 2016 2017 2018 Sep'19Price earning ratio (MV/EPS) 11.2 5.6 7.7 7.1 7.2 5.5 Earning per share 1.6 2.8 2.8 3.0 3.2 2.9 Book value per share 17.3 20.0 23.1 25.9 28.7 31.5 Book value per share - excl reval 14.4 17.2 19.2 22.2 25.3 28.2 Market value per share 18.2 15.4 21.8 21.3 23.0 16.0 Market value as % book value 105.0% 77.2% 94.4% 82.4% 80.3% 50.8%

No. of employees 3,036 3,141 3,611 3,977 6,141 6,511

No. of branches 274 280 355 405 455 487

16

FBL Industry Ranking Sep’19

S.No. Description Ranking

1 Total Assets 11

2 Advances 10

3 Deposits 12

4 PAT 11

5 CAR 3

6 Branch Network 10

Six Years Financial Summary

17

18

Statement of Financial Position Rs in Mln

Cash and bank balances 21,709 27,152 38,378 39,735 45,022 20% 47,677 6%Lendings to FIs - 250 5,000 9,010 2,997 86% 7,000 134%Investments - net 155,211 195,516 170,209 179,728 214,186 8% 194,659 -9%Advances - net 182,656 181,090 204,831 231,532 296,445 13% 306,796 3%Fixed assets 11,543 11,343 12,112 12,940 12,944 3% 21,749 68%Other assets 17,008 14,722 21,492 21,989 28,321 14% 24,093 -15%Total Assets 388,127 430,073 452,022 494,934 599,915 12% 601,974 0%Borrowings 60,927 90,565 52,806 54,789 98,352 13% 78,600 -20%Deposits 283,105 291,945 339,633 371,624 409,384 10% 433,731 6%Other liabilities 17,793 17,210 24,576 29,275 48,680 29% 41,802 -14%Total Liabilities 361,825 399,720 417,015 455,688 556,416 11% 554,133 0%

Share Capital 10,433 11,998 11,998 13,197 15,177 10% 15,177 0%Reserves 5,703 6,423 7,158 7,936 8,779 11% 8,652 -1%Revaluation Surplus 4,470 4,294 5,917 5,613 5,094 3% 5,079 0%Unappropriated profit 5,696 7,638 9,934 12,500 14,449 26% 18,933 31%Total Equity 26,302 30,353 35,007 39,246 43,499 13% 47,841 10%

Description Sep'19 VsDec'18

Sep'19CAGR20182017201620152014

19

Profit and Loss Rs in Mln

Net markup income 13,832 13,948 12,045 13,935 16,275 4% 15,137 Non-markup income 4,374 5,564 6,955 5,640 6,260 9% 5,208 Total income 18,206 19,512 19,000 19,575 22,535 5% 20,345 Admin expenses 12,384 10,812 11,805 12,774 14,755 4% 12,142 Profit before provisions 5,822 8,700 7,195 6,801 7,780 8% 8,203 Provisions / (reversals) 2,270 1,780 536 (492) (422) -30% 728 Profit before tax 3,552 6,920 6,659 7,293 8,202 23% 7,475 Taxation 1,075 2,698 2,357 2,763 3,365 33% 3,048 Profit after tax 2,477 4,222 4,302 4,530 4,837 18% 4,427

EPS (rupees) 1.63 2.78 2.83 2.98 3.19 18% 2.92

Description Sep'192014 2015 2016 2017 2018 CAGR

20

DuPont Analysis 2014 2015 2016 2017 2018 Sep 2019

Net Operating Margin PAT / Net Revenue A 13.61% 21.64% 22.64% 23.14% 21.47% 21.76%

Asset Utilization Net Revenue / Avg Assets B 4.90% 4.77% 4.31% 4.13% 4.12% 4.51% *

Reurn on Assets C = A x B 0.67% 1.03% 0.98% 0.96% 0.88% 0.98%

Levrage Ratio / Equity Multiplier Avg Assets / Avg Equity D 17.52 17.08 15.99 15.10 15.20 14.81

Return on Equity C x D 11.68% 17.63% 15.60% 14.44% 13.43% 14.54%* Annualized

Description

Faysal Asset Management

Ltd. Subsidiary

21

FAML – Business Case

• Retention of HNW individual and corporate relationships in the Group • Completion of product suite for wealth management services • AMC Business is poised to continue higher growth as Pakistan’s savings to GDP and AUMs

to GDP ratios are very low compared to regional markets (Pakistan: 5%; Far East 25%). • AMCs offer a tax efficient investment avenue for investors • AMC business is expected to be a beneficiary of strong drive on KYC/AML as investment

in bearer instruments is becoming difficult.

• FAML’s rating is upgraded to AM3+ from AM3 with “Positive Outlook”. • FAML’s AUMs have increased by 108% to PKR 15 billion till October 19 from Nov-18 while

industry AUM’s declined during same period. • FAML’s premier corporate Fund, Faysal Money Market Fund has consistently improved

performance against peers and has positioned itself in the top quartile. • On the equity front, all three of FAML’s equity linked funds managed to secure top

quartile spot. The primary equity Fund, Faysal Stock Fund managed to close the quarter (Jul-Sep 2019) as the only stock fund with positive return of 0.39% against negative benchmark return of 5.38%.

FAML – Post Acquisition Improvements

22

23

Faysal Asset Management Limited – Subsidiary

Investors Percentage

Individuals 35.46% Corporates 20.47% Trusts/Foundations/Charity/Retirement Funds 10.45% Others 33.62%

100.00%

7.4 7.8 9.0

6.7

4.9 5.3

8.4 7.7

8.7 7.8 7.9 8.5

15.0

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Oct-19

FAML AUMs (PKR Billion)

Islamic Conversion

24

Faysal Bank, Conversion to Islamic (BTP)

The Bank is progressing well with its plan to convert into a full fledged Islamic bank.

The first task was to develop capacity in the areas of human resources, technology and products offering so that the process of conversion could start. In this respect we have achieved the following: On the HR side we have divided staff into different categories based on the level of responsibility

and nature of job to establish Islamic Banking Training requirements. The rule is ‘the higher the level of responsibility the higher the level of training’ On the technology side we are using existing core banking system by developing required

capability. In the next phase we plan to upgrade to include the Islamic banking module. We have developed a number of products to cater to the needs of our Islamic banking customers.

This is continuous process and new offering will continue to be added as we move forward.

On the branch expansion side, our Islamic banking network has grown from 69 in 2016 to 352 as at November 27, 2019. All 232 branches opened since 2016 are Islamic and we have also converted 36 branches from conventional to Islamic banking.

We are also converting financing facilities offered to Islamic and are progressing as per plan.

Rebranding of the bank with a new logo with an Islamic touch has been done.

25