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 SGCOI MICOI
REGULAR COI SPECIAL GROUTH MONTHLY
COI INCOME
PROFIT UP TO 13.5 UP TO 13.34% UPTO 13.14
RATE* % P.A P.A. P.A
RS. 1,095
PROFIT AMOUNT(e.g. RS .6,750 RS. 96,700
ON INVESTMENT OF RS. EVERY SIX MONTH AT MATURITY
EVERY MONTTH
100,000 FOR FIVE YEAR

RS .50,000 RS. 100,000 RS.500,000
MINIMUM
INVESTMENT
AMOUNT
INVESTMENT TENOR 1 MONTH TO 5 1 YEAR TO 5
2 YEAR TO 5 YEAR

YEAR YEAR
ON MATURITY ONLY MONTHLY
PROFIT FREQUENCY EVERY SIX MONTH OR
AT MATURITY ,
WHICHEVER IS EARLIER

PREMATURE ALLOWED ALLOWED ALLOWED
ENCASHMENT
THIS SCHEME IS THIS SCHEME IS SPECIALLY THIS SCHEME IS
DESIGNED FOR CUSTOMERS DESIGND FOR THOSE
DESIGNED FOR
WHO COULD INVEST FOR A WHO WISH TO EARN A
CUSTOMERS WHO
LONGER TERM AND EXPECT REGULAR MONTHLY
COULD INVEST THEIR
A HIGH RATE OF RETURN AT INCOME ON THEIR
FUND FOR A FIXED
THE MATURITY AND HAVE INVESTMENT TO MEET
PERIOD AND EXPECT
NO PERTICULAR NEED FOR THEIR REGULARLY
A HIGHER RETURN AT A REGULAR RETURN. RECURRING EXPENSES.
ACERTAIN
FREQUENCY.
*Expected rate of profit for a tenor of 5 years.



COMPARISON OF AFIBL COI’s

WITH NAIONAL SAVINGS SCHEMES
ALFAYSAL NATIONAL AFIBL
BANK SAVINGS PROFIT
HIGHER BY
ON AN RATEP.A NETPROFIT RATEP.A NETPROFIT

INVESTMENT OF
RS 100,000
MONTHLY PROFIT 13.14% RS.986 12.48% RS.936 RS. 50 PER
SCHEME(5- MONTH
YEARS)
RS. 417 PER
HALF-YEARLY PROFIT 13.15% RS.5,917 11% RS.5,500
SCHEME (3-YEARS)
HALF-YEAR
GROWTH RS.3,030 AT
19.34% RS.87,030 16.8% RS.84,000

SCHEME(5-YEAR)
MATURITY

NOTE: Net Profit amounts have been calculated after

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


Alfaisal Bank

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