alfaisal bank

Al-Faysal Investment Bank

INTRODUCTION

It gives us pleasure to introduce Al Faysal Investment Bank

Limited (AFIBL), a member of the Dar Al Maal Al Islami Group

(DMI).

AFIBL was incorporated in 1991 with an authorized capital of

Rs.500 million, later enhanced to Rs 1.0 billion. Today it is

the largest investment Bank in Pakistan with paid up capital

of Rs.978.7 million and total equity of over Rs. 24.5 billion.

AFIBL’s share is listed on the national bourses and today it

has the largest market capitalization compared to any

investment Bank in the country.

AFIBL has had a very successful track record and

performance. The operating profit of Rs 434 million in 1999

was 14% higher as compared to 1998. Despite the

depressed market conditions and constraints in the financial

sector, AFIBL reported an increase of 6.5% in profit after tax

from Rs. 170 million to Rs 181 million in 1999.

AFIBL’s parent institution Dar Al Maal Al Islami is based

in Geneva, Switzerland. DMI has a paid up capital in excess

of US$ 347 million and total assets of over US$ 1 billion. It

also manages fiduciary funds of US$ 3.5 billion. The DMI

Business Institution 1


Group spans the European, Asian and African continents by

virtue of a sophisticated network of financial institutions

acting as a vital nexus between the business houses of the

Orient and West. The synergy that drives from such a

multifarious network is our strength. Today DMI’s cross

border commitments to Pakistan are in excess of US $ 700

million.

AFIBL has a vast network of sister concerns in the

Middle East. Two prominent institutions; Faysal Islamic Bank

of Bahrain E.C. (FIBB) and Islamic Investment Company of

the Gulf E.C Bahrain (IICG) were merged to form the Shamil

Bank of Bahrain E.C. in June 2000. AFIBL and its parent have

been honored by having as their chairman, HRH Prince

Mohammed Al Faisal Al Saud, son of late King Faysal of Saudi

Arabia.

AFIBL has been assigned an Entity Credit Rating for

long term of AA+ (A One Plus). The rating has been

conducted by the Pakistan Credit Rating Agency (Pvt.)

Limited which is an affiliate of IBCA Limited of UK. This is

one of the highest credit rating that any financial institution

has received in the country.



The phenomenal growth of AFIBL in a short period has

been achieved through its multifaceted contributions to all

spheres of Banking activities. Its fine sense of the market

and its close watch on the rapidly changing economic

horizon have been incorporated in a proactive and dynamic

flexibility that grants us the competitive edge to formulate

solutions for the most complex financial problems of our

sophisticated clients.

AFIBL has been a major provider and arranger of debt

and equity finance for power plants, refineries, pipelines, oil

terminals, cement plants, fertilizer projects,

telecommunication companies, chemical projects, and

transport projects. We attach a list of some of our

accomplishments to date, which are unparalleled in this

market.

AFIBL has strong relationship with local corporations,

government and various institutions, which are carrying out

major trade and commerce of the country. Our leadership in

corporate finance activities is evident from the growth on our

revenues over last seven years.

In 1997 AFIBL’s after tax profit of RS 319 million was

more than the combined profits of the 9 investment Banks

operating and registered in Pakistan. AFIBL has a balance



sheet footing of Rs.24.5 billion, which is not only larger than

all investment banks but also greater than many other local

& foreign commercial Banks. The balance sheet has growth

at a remarkable rate of 58% over the last 8 years.

AFIBL has shown the capability and commitment

to locate international investors with an appetite for the

Pakistan market. Due to its strong bonds with the Middle

East, its principals and their customers, AFIBL has been in

the past able to efficaciously arrange funding for numerous

sources.

AFIBL has also forged Strategic Alliances with world-

renowned institutions for providing a vital link to

international markets and facilitating the arrangement and

placement of equity & debt. As such we have an enviable

record in raising funds for the infrastructure projects. AFIBL

has appointed as the Financial Advisor for the privatization

of Industrial Development Bank of Pakistan. AFIBL and

Goldman Sachs were short-listed as Financial Advisor for

privatization of PTCL to a strategic investor in 1995. Also,

AFIBL with Kleinworth Benson, Regent Pacific and Alliance

Capital was short, listed for Financial Advisor of Privatization

Fund. AFIBL Price Water House and Indosuez W. I Carr have

been short listed for sale of GOP shareholding in Attock

Refinery Limited & Pakistan Oil Field Limited.



AFIBL has a team of highly trained and experienced

Corporate Finance specialists. We offer an array of services

both for the Corporate as well as individual clients. These

includes:

INVESTMENT PRODUCTS AND

PORTFOLIO MANAGEMENT

Local And Foreign Currency Deposits.

Funds Management

Money Market Operations

Capital Market Operations, Equity Participation,

Underwriting, Pre IPO Placements

Guarantees



Financing

Morabaha Financing

Project Financing

Islamic Redeemable Capital (TFCs)

Arrangement & Syndication

Advisory Services

Corporate & Finance Restructuring

Mergers, Acquisition & Divestitures

Privatization

Debt Structuring

Raising Foreign Investment

Identification of Joint Venture Partners

Feasibility, Market & Industry Studies

Capital Market & Funds Management Advisory

Services

As an investment Bank, we are able to offer excellent

rates on our certificates of deposits. Our rates match the

very best in the industry. The tenor of such COIs ranges

from one month to five years. New products and investment

schemes are also constantly in the pipeline. We also make

investment plans tailored to address the specific needs of

our valuable clients.



In a short time AFIBL has achieved a unique position

among the financial institutions of the country. Our

commitment to progress is evident from the latest annual

accounts, which are enclosed for your information.

Morabaha Service

The Bank extends Short, Medium & Long Term (project

Finance) financing through the Islamic mode of

financing primarily MORABAHA.Morabaha financing

represents more than two thirds of the Bank’s total

assets portfolio.

The Bank thus has an asset portfolio of varying terms,

short term – one year or less, to long term project

finances – up to seven years. While the Bank focuses

on cash flow based financing, all financing is secured

through additional collateral’s as allowed and /or

required by the state Bank of Pakistan.

Security collateral’s vary from charge on assets

(Mortgage on Land & Building, Hypothecation of Fixed

& Current Assets and Hypothecation of Receivables),

scuritization of Receivables, Bank Guarantees, Cash



Deposits (Pak Rupee & Foreign Currency), under

structured transactions, the Bank manages larger

funding requirements.

Larger funding requirements are met through

syndicated arrangements comprising of consortium of

more than one financial institution.

Exposure Detail:

Short & Medium Term Over Rs 11 billion

Long Term Over Rs 5 billion

The Bank can also arrange Redeemable Capital (TFC)

that is Shariah compatible. Both Listed and Non-Listed

TFCs are managed through private and public

placements (with specific benefits).

In order to meet additional financing requirements of

the clients the Bank facilitates financing through

Leasing arrangements. For this purpose the Clients of

the Bank facilitates financing through leasing

arrangements. For this purpose the Bank has

developed strategic partnership with some of the

leading Leasing arrangements. For this purpose the

Bank has developed strategic partnership with some of

the leading Leasing Companies in the country.



DEPARTMENTS

ADMINISTRATION

CARPORATE FINANCE

CREDIT ADMIN

PRIVATE CLIENT SERVICES

OPRATIONS

CAPITAL MARKETES

TREASURY

PERSONAL

INFORMATION TECHNOLOGY

FINANCIAL CONTROL

INTERNAL AUDIT

RISK MANAGEMENT



Administration

Administration is Branch function reporting to the

respective Regional Head. It comprises of teams at the

three locations facilitating the core activities of the

bank. Administration is responsible for all

administrative issues from house keeping,

maintenance, transport, communications, protocol and

other associated activities.

Corporate Finance

Corporate Finance represents the major part of the

front office of the bank (the other being private client

services) and is the main Revenue Generator. The

Department comprises a team of qualified &

experienced professionals reporting directly to the

respective Regional Heads. The total strength of the

department is 10 people at the three locations. The

department is responsible for marketing the Banking

Services and for Relationship Management. Corporate

Finance undertakes transactions directly & through

Syndication. Complete scope of services including

Financing, Guarantees, Advisory, Privatization, Mergers

& Acquisitions etc are all under taken by the

Department.



Investments in projects is made through direct funded

facilities in the shape of term loans or indirectly through

Syndicated arrangements, through underwriting of

public issues of stocks/shares/securities, short term and

long term participation Term Certificates and Term

Finance Certificates.

The financing is provided at market competitive rates.

Both fixed and variable rate facilities are offered.

The department also undertakes contingent risk

exposure based on non-funded facilities like Bank

Guarantees and Counter Guarantees.

The department undertakes a multitude of corporate

financial services, including: acting as advisor and

financial agents for clients in obtaining bank loans,

syndicated loans, export credits etc

Private placement of debt and equity in domestic and

foreign markets adviser with regard to financial

restructuring as well as preparation of resource

mobilization adviser with regard to financial

restructuring as well as preparation of resource

mobilization plans

Adviser with regard to mergers, acquisitions and

divestitures.

Advisory with regard to privatization of state owned

enterprises.



Preparation of feasibility studies, market and

industry studies etc.

Financial intermediary.

Credit Admin

The credit admin department comprises of three units

one in support of each branch. Each unit is headed by a unit

head reporting to the respective regional head at the branch

level. The total strength of the credit admin function is 9

persons. The credit admin department is responsible for the

post approval formalities including legal documentation,

creation of security, post disbursement monitoring, remedial

asset management. Additional responsibilities include

management & regulatory reporting and audit.



Private Client Services

A person at the three locations represents private client

services (PCS). PCS is focused towards meeting the banking

requirements of high net worth individuals. The customer

base comprises of over 150 customers.

OPERATIONS

The operations department provides the required back office

support facilitating all disbursement and receipts with regard

to transactions. The department comprises a team of 10

persons distributed at the three offices. Operations are a

branch function reporting to the respective regional heads.



Capital Market

The capital markets department operates out of Karachi, the

main business center of the country. The department

undertakes the required capital market activities for the

bank including:

Trading in listed securities, both equity and other

instruments

Providing professional analysis of securities

Issuing long term certificates of deposit or investment,

underwriting of stocks and shares, participation term

certificates etc.

Managing portfolios

Providing margin loans, capital market reports, reverse

reports etc

Offering cash management accounts

Treasury

The treasury function is handled out of Karachi. Inter and

Intra bank lending & borrowing is the domain of the treasury.

The department undertakes the following activities for the

bank:

Issuing short term paper, certificates of deposit or

investment.



Trading in commercial paper, government securities,

promissory notes, banker’s acceptance etc.

Assisting in issue of commercial paper

Acting as broker in call money market cash & fund

management for clients.

Personnel

The personnel function is located at Islamabad and is

headed by the regional head – north, Mr. khalid Pervaiz.

The department is responsible for developing the personnel

policies and undertakes human resource planning and career

development. In this regard various arrangement of in-

house training programs and assigning personnel to various

training programs and seminars is undertaken. In addition

the department manages the employment records of all the

employees.

Information Technology

The information technology department, headed by

Mr.Usman Hameed, has a team of six IT professional based

in Karachi, Lahore and Islamabad.

Operations of the bank are automated under ORACLE /

developer 2000 based systems, which run under SCO UNIX



platform. Microsoft products are used for the automation of

the office/ time / mail management systems. UNIX and

windows NT based networks are installed at all branches.

Approximately 100 workstations are installed in the bank.

Financial control

Financial control department is headed by Mr. Mansoor H.

Hamdani, who is a chartered accountant with over 30 years

varied experience. Besides financial control the

responsibility of corporate secretary is also vested with Mr.

Hamdani.

The head office function is based in Islamabad. Other

executives of the department includes a manager (based in

Karachi) and two deputy managers with a total strength of

seven persons.

The department is responsible for managing the books of

accounts, budgeting, annual general meetings, and matters

pertaining to the board of directors & shareholders.

Internal audit

Internal audit reports directly to the bank’s

president as well as the group head office in Geneva. IA

undertakes an independent audit of the banks operations on



a regular basis with a special focus towards verifying

operational conformity with the banks policies, procedures

and guidelines. In addition conformance with the SBP &

other regulatory policies are also examined.

IA operates out of Karachi and is headed by Mr. Kamran

Mukhtar.

Risk Management

The risk management department is headed by Mr. Khalid

Qayyum, country risk head. Risk management is a head

office function reporting directly to the bank’s president.

Risk department is primarily responsible for outlining the

banks investment/ exposure policies based upon the risk

assessment under changing market conditions. All

investment/ exposure proposals prepared by the Branches

are evaluated independently by the risk department and

recommended to the management for further approvals.

In addition to the risk management of the banks

operations the department deals manages the

reporting requirements of the regulatory bodies.



Bank Guarantees

Non funded facilities comprising of Bank Guarantees

and Indemnities constitute the Contingent Liability of

the Bank. These comprise the major source of Fee

based income for the Bank. Bank Guarantees are

issued in the form of Bid Bonds, performance Bonds,

surety Bonds and for financing.

The Guarantees are issued for varying time periods. As

a minimum the Guarantees are issued for a single

quarter while the maximum exposure under a

guarantee is over 10 years. The Bank Guarantees are

secured through collateral’s as allowed and are

required by the State Bank of Pakistan.

The security collateral’s vary from charge on Assets

(Mortgage on Land & Building, Hypothecation of Fixed

& Current Assets and Hypothecation of Receivables),

counter Bank Guarantees, Cash deposits (Pak Rupee &

Foreign Currency), pledge of shares, lie on Stock etc.

The bank’s Per Party Limit, for the non-funded facilities,

as defined by the state bank of Pakistan, stands at

approx. RS 450 million (the funded exposure can be up

to RS 300 million). Larger requirements are met

through Syndicated arrangements comprising of more

than one financial institution.

Exposure Detail: Nearly Rs 3 billion



Certificates of Investment

Regular certificates of investment (roci)

This scheme is designed to cover the vast majority of

those depositors who wish to invest their funds for a

fixed period of time and get higher returns.

Features:

The minimum deposits requirements is Rs. 50000

The tenors are one month of five years.

Profit will be paid at maturity for investments of

under one year. For investment of one year and above,

the profit will be paid annually.

Upon premature encashment after 90 days, profit on

RCOI will be paid at the profit rate prevailing on the

dates of issue and corresponding to the tenor of RCOI

completed.

Additional bonus rate over and above the expected profit

rate will be given to depositors with deposits of following

amounts.

Rs. 10 MIO to 24.999 – 0.10%

Rs. 25 MIO to 49.999 – 0.25%

Rs. 50 MIO and above – 0.50%



Zakat expectation certificate/ affidavit/ declaration, duly

certified by Notary Public should be filled with the bank

one more prior to the valuation date.

Zakat (if applicable) will be calculated on the Zakat

valuation date and principals and shall be deducted at the

time of profit payment or encashment which ever is

earlier.

Monthly Income Certificate of Investment:

(Micoi)

This scheme is designed for those depositors who wish to

earn a regular monthly income on their fixed investment.

Features:

The minimum deposit requirement is Rs.500,000

The tenors are one year to five years.

Monthly profit will be paid to the depositors after

deduction of withholding tax and any other levies (if

applicable).

Upon premature encashment after 90 days but before

one year, profit will be paid at the RCOI profit rates

prevailing at the date of issue of MICOI & corresponding

to the tenor completed. Any difference between the

calculated profit amount and the profit already paid will

be deducted from the principal. However, profit on



premature encashment after completion of 1,2,3 & 4

years will be paid at the MICOI profit rates corresponding

to the tenor of MICOI profit rates corresponding to the

tenor of MICOI completed.

Zakat exemption certificate/ affidavit/ declaration, duly

certified y Notary Public, must be filed with the bank at

the time of investment in MICOI completed.

Zakat (if applicable) will be deducted @ 1/12th of the

zakat amount every month on principal only, as

calculated on the 1st of Ramdan.

Special Growth Certificate Of Investment

(Sgcoi)

This scheme is for those depositors who are willing to invest

on longer-term basis in order to get a huge rate of return at

the end of the period and have no interim requirement for

profit or income.

Features:

The minimum deposit requirement is Rs.500, 000.

The tenors are two years to five years.

The initial investment will grow at special accelerated

profit rate to become the maturity amount.

Profit will be paid at the time of maturity only. No profit

will be paid during the interim period.



Upon pre-mature encashment before the completion of

two years, profit on SGCOI will be paid at the profit rate

of the RCOI prevailing on the date of issue and

corresponding to the tenor completed. However, profit

on premature encashment of SGCOI after completion of

2,3,4, & 5 years will be paid at the SGCOI profit rates

corresponding to the tenor completed.

Sakata exemption certificate/affidavit/declaration, duly

certified by Notary Public, should be filed with the bank

one month prior to the valuation date.

Zakat (if applicable) will be charged only once, on the

total payable amount at the time of the

encashment/maturity of SGCOI.



AFIBL CERTIFICATES OF INVESTMENT (COI)

SCHEME

RCOI

REGULAR COI

SGCOISPECIAL GROUTH

COI

MICOIMONTHLY

INCOME

PROFIT

RATE*

UP TO 13.5 %

P.A

UP TO 13.34%

P.A.

UPTO 13.14

P.A

PROFIT AMOUNT(e.g.

ON INVESTMENT OF RS.

100,000 FOR FIVE YEAR

RS .6,750

EVERY SIX MONTH

RS. 96,700

AT MATURITY

RS. 1,095

EVERY MONTTH

MINIMUM

INVESTMENT

AMOUNT

RS .50,000 RS. 100,000 RS.500,000

INVESTMENT TENOR 1 MONTH TO 5

YEAR

2 YEAR TO 5 YEAR 1 YEAR TO 5

YEAR

PROFIT FREQUENCY EVERY SIX MONTH OR

AT MATURITY ,

WHICHEVER IS EARLIER

ON MATURITY ONLY MONTHLY

PREMATURE

ENCASHMENT

ALLOWED ALLOWED ALLOWED

THIS SCHEME IS

DESIGNED FOR

CUSTOMERS WHO

COULD INVEST THEIR

FUND FOR A FIXED

PERIOD AND EXPECT

A HIGHER RETURN AT

ACERTAIN

FREQUENCY.

THIS SCHEME IS SPECIALLY

DESIGNED FOR CUSTOMERS

WHO COULD INVEST FOR A

LONGER TERM AND EXPECT

A HIGH RATE OF RETURN AT

THE MATURITY AND HAVE

NO PERTICULAR NEED FOR

A REGULAR RETURN.

THIS SCHEME IS

DESIGND FOR THOSE

WHO WISH TO EARN A

REGULAR MONTHLY

INCOME ON THEIR

INVESTMENT TO MEET

THEIR REGULARLY

RECURRING EXPENSES.

*Expected rate of profit for a tenor of 5 years.



COMPARISON OF AFIBL COI’s

WITH NAIONAL SAVINGS SCHEMES

ALFAYSAL

BANK

NATIONAL

SAVINGS

AFIBL

PROFIT

HIGHER BY

ON AN

INVESTMENT OF

RS 100,000

RATEP.A NETPROFIT RATEP.A NETPROFIT

MONTHLY

PROFIT

SCHEME(5-

YEARS)

13.14% RS.986 12.48% RS.936 RS. 50 PER

MONTH

HALF-YEARLY PROFIT

SCHEME (3-YEARS)

13.15% RS.5,917 11% RS.5,500 RS. 417 PER

HALF-YEAR

GROWTH

SCHEME(5-YEAR)

19.34% RS.87,030 16.8% RS.84,000 RS.3,030 AT

MATURITY

NOTE: Net Profit amounts have been calculated after

deduction of withholding tax currently@10% p.a.,

wherever applicable


mailto:currently@10%25

alfaisal bank

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