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EARNINGS RATIOS Return on equity, return on assets and return on deposits all decreased from the previous years. In fact all these ratios have been deteriorating continuously since FY05. The return on equity particularly is gone consistently low due to stringent capital requirement posed by the SBP. BALANCE SHEET GROWTH The overall liabilities and assets of Faysal increased by 32% and 31% respectively from CY09 to CY08, however when looked closely the interest earning assets of the bank increased by 24% while the interest bearing liabilities grew by 37%. From the chart above there seems to be clear policy followed by Faysal of increasing its investments in government fixed income securities as to take advantage of the higher interest rates prevailing currently. Furthermore the growth in investment could also be a result of increasing NPL and so to invest in safer securities. The investment increased by 68% while the advances only increased by 9%. Faysal Bank s borrowings have increased by 134% from CY05, although it remained somewhat at the same level from the last 4 years. This hints that Faysal Bank was more in need of liquidity than the last 4 years, due to a much higher level of Non Performing Loans compared to CY05 (242% higher than CY05). CASA RATIO The CASA ratio of FBL has more or less remained at 45-50% from the last 5 years. This ratio although seems to be increasing going forward however it is no where near the CASA levels of 75% and 88% of UBL and MCB. Faysal Bank s comparatively low CASA ratio also explains the low net interest margin of 3-2%. High CASA ratio banks such as Allied bank have a much higher margin of 5-6%. Higher CASA reduces the cost of funding and thus increases the profitability. ASSET QUALITY The NPLs of the banking system witnessed an astonishing rise of 64. 8 percent during CY08 to Rs 359. 3 billion by the end of the year. This is the biggest increase in a single year since CY97. Therefore, the NPLs to loans ratio increased by 290 bps, from 7. 6 percent in CY07 to 10. 5 percent by end-CY08. Bank level information reveals that 31 out of 40 banks with asset share of 89. 7 percent in overall assets, recorded an increase in the NPLs to loan ratio. As can be seen from the graph, the NPLs for FBL rose steeply from CY07 onwards and now stand at Rs 1. 4 billion. Similarly the NPLs to advances or also increased in the same manner. MARKET VALUE RATIOS The average prices as quoted in the Karachi Stock Exchange have reflected the banks drop in profitability expectations. The price has fallen to Rs 17. 53 from Rs 74. 1 in CY05. Although it recovered somewhat from Rs 11. 51 level in FY08, it has still a lot to gain a lot. DEBT MANAGEMENT

The debt to equity ratio has jumped from 8 to 12 times for CY07 to CY08 and further 13 times in CY09. However the Capital Adequacy Ratio (CAR) has stayed varied from 13. 6 to 10. 2% in the 5 year period. The increase in debt to equity was witnessed because both increasing level of debt and also because of decrease in equity of 33% in FY08 due to losses on sale of securities and losses on revaluation.

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EARNINGS RATIOS Return on assets decreased from 0.66 in FY09 to 0.45 in FY10, due to the lower income realised post acquisition (RBS losses were transferred to Faysal Bank) as well as the increase in assets from Rs. 180.87 billion in FY09 to Rs. 267.32 billion in FY10. For the same reason, return on equity also decreased from 9.39 to 7.21, as the total equity increased from Rs. 12.78 billion in FY09 to Rs. 16.52 billion in FY10. The return on deposits also dropped from 0.97 to 0.61 corresponding with an increase in deposits from Rs. 123.66 billion in FY09 to Rs. 195.32 billion in FY10. All these ratios point towards a deteriorating bottomline performance of Faysal Bank, with a need to increase income and limit losses in the future. The advances increased from Rs. 91.35 billion in FY09 to Rs. 133.71 billion in FY10 after the acquisition. The deposits showed a similar significant increase from Rs. 123.66 billion to Rs. 195.32 billion over FY0910. Investments increased from Rs. 56.53 billion in FY09 to Rs. 86.52 billion in FY10. Borrowings from financial institutions remained almost constant as shown. The major change observed in the earnings assets composition was the complete elimination of lendings to financial institutions. Tying up of funds in the advances and investments portfolio could have contributed to this change. It indicates decreased earning power of Faysal Bank as a major asset has been divested. ASSET QUALITY The non-performing loans increased significantly from Rs. 10.67 billion in FY09 to Rs. 24.71 billion in FY10, due to the additional NPLs of RBS incorporated into Faysal Bank's accounts and the various macroeconomic factors contributing towards rising NPLs, such as the floods. The NPLs to advances ratio also increased from 11.68 in FY09 to 18.48 in FY10, providing further proof of the deteriorating NPLs scenario, as more loans are now classified as non-performing, out of the existing loan portfolio as well as the new loans being extended. However, the provisions to NPLs ratio declined from 18.43 in FY09 to 7.72 in FY10, as the State Bank provided relief to the banking sector by increasing the FSV benefit from 40% to 50%. MARKET VALUE RATIOS

The average prices as quoted in the Karachi Stock Exchange reflected the bank's drop in profitability expectations. The price fell from Rs. 74.10 per share in FY05, to a low of Rs 11.51 per share in FY08 and stabilizing to Rs. 15.92 per share in FY10. The price earnings ratio demonstrated a similar trend from 11.37 in FY06 to a low of 5.45 in FY08 and partially recovering to 9.77 in FY10. DEBT MANAGEMENT The debt to asset ratio increased slightly from 92.93 in FY09 to 93.82 in FY10. While the deposit times capital ratio increased from 9.67 in FY09 to 11.82 in FY10, due to a greater increase in deposits during the acquisition, as compared to the increase in equity. The capital adequacy ratio fell from 11.93 in FY09 to 9.95 in FY10, which indicates a required increase in Tier I and Tier II capital, in order to bring it in conformance with the 10% requirement set by the SBP. The earnings assets to assets ratio declined significantly from 90.06 in FY'09 to 82.34 in FY'10 due to the elimination of the asset category, lendings to financial institutions. This reduced the bank's source of earnings. The yield on earning assets correspondingly decreased from 2.21 in FY09 to 1.08 in FY10. The advances to deposits ratio decreased from 73.87 in FY09 to 68.46 in FY10, showing that the bank does not endorse a policy favouring advances, and that more deposits than advances were obtained during the acquisition. The cost of funding decreased significantly from 22.04 in FY09 to 12.65 in FY10, showing that the bank is following the right policy of obtaining funds through low cost sources, ie demand deposits. The equity to assets ratio declined from 7.07 to 6.18 over FY09-10, as there was an increase in assets from Rs. 180.67 billion to Rs. 267.32 billion in the RBS acquisition, whereas the increase in equity was smaller from Rs. 12.78 billion to Rs. 16.52 billion. The equity to deposits ratio similarly fell from 10.34 in FY09 to 8.46 in FY10, as a result of the increase in deposits from Rs. 123.66 billion to Rs. 195.32 billion. The earning assets to deposits ratio declined from 1.32 in FY09 to 1.13 in FY10, due to the coupled reasons of decrease in earning assets (lendings to financial institutions were reduced to nil), and the sharp increase in deposits post acquisition.