An official said that Faysal Bank Limited plans to become a full-fledged Islamic bank by January 2023, after changing its conventional credit portfolio to Shariah-compliant loans.
Faysal Bank Chief Financial Officer Syed Majid Ali stated during a press event that the bank intends to relinquish its conventional banking mission once the regulator grants it an Islamic banking licence.
In September, Faysal Bank will formally apply for an Islamic banking licence, he said, adding that “the bank is scheduled to become exclusively Islamic on January 1, 2023.”
“The board of directors has approved the application for the licence,” Ali said, adding that the bank’s decision to begin Islamic banking was made in 2014 and preparations for achieving this objective began in 2015.
“FBL had 211 conventional branches when the changeover began. The bank has over 500,000 clients and approximately Rs260 billion in deposits. “There has never been such a massive conversion of a regular bank to an Islamic bank,” Ali remarked.
As part of the change, assets like investments and financing were given more weight than liabilities like deposits.
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During the conversion process, according to Ali, the bank created all new branches that were Sharia-compliant and converted existing conventional branches into Islamic ones.
As of today, just one of the 639 branches is traditional, he added, adding that by the end of the year, this one branch would be Sharia-compliant.
He also praised the State Bank of Pakistan (SBP) for helping during the whole process and for staying in touch with the central bank about how the conversion was going.
Pakistan is home to five Islamic banks and seventeen mainstream banks with Islamic banking offices. The share of Islamic banking assets in the whole banking sector is 18.6%, and the share of deposits that follow Sharia law is 19.4%.
Ali said that the bank will soon sell off its Treasury Bills, Pakistan Investment Bonds, and other traditional investments that Islamic banking rules don’t allow.
Upon completion of its transition to Islamic banking in the near future, the bank might be left with conventional funds totaling Rs 10 billion. He said that the company is thinking about giving the profits to charity to make its Islamic portfolio stand out from its other portfolios.
Faysal Bank The head of Islamic Banking, Muhammad Faisal Shaikh, said that the bank is now Pakistan’s sixth fully-fledged Islamic bank.
“The conversion of Faysal Bank has enabled Islamic banks to expand their market share to almost 20% from 16.6% in December 2019,” he said.