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Tuesday, March 28, 2023

Jaiz Bank Beats Conventional Lenders With Continual Increases in Earnings

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When Jaiz Bank Plc commenced operations 9 years ago, the founding fathers of the Non-interest Islamic Bank had known the lender would be a tremendous success, surmounting the macroeconomic headwinds, and delivering higher returns to shareholders.

Of course, the Bank is taking advantage of a benign religious demographic to magnify earnings, while lifting a lot of people out of poverty.

In Nigeria, 53.30 percent of a population of 200 million people are Muslims, according to a 2018 estimate in The World Factbook by the CIA.

Non-Interest Banking is a growing global phenomenon practised in nearly 80 countries across the world including the United Kingdom, Canada, the United States of America, the United Arab Emirates, Malaysia, China, Singapore, South Africa, Kenya etc. Global Banks like HSBC, Citibank, Barclays Bank, Standard Chartered etc. are also offering non-interest banking products and services.

It is an alternative financial service offering that is open to all, irrespective of race or religion. It is based on the ethical principles of fairness, transparency and objectivity. Non-Interest Banking offers almost all the services of conventional banks.

It is pure stroke of genius on the part of the management and board of directors of Jaiz Bank to record consistent earnings growth despite the fact that it does not charge interest on loans unlike the conventional banks.

Ironically, while conventional banks are reeling from a low yield environment and central bank’s punitive rules that have undermined income and resulted in slow growth in profit, Jaiz Bank is turning each Naira invested in sales by shareholders into high profit.

The grandiose performance validates the stewards’ (directors) focus and market penetration strategies, deploying latest technologies to attract customers and reduce cost.

Investors like numbers, as numbers do not lie, they are as clear as the sky is blue.

For the first nine months through September 2021, Jaiz Bank’s net income spiked by 36.65 percent to N2.90 billion from N1.84 billion the previous year.

Interestingly, profits have been growing since 2018, with the biggest jump in 2017, the year that the country exited its first recession in 25 years.

The Islamic lender’s net margin also followed the same growth trend as it increased to 22.32 percent in 2021, from 19.06 percent in 2020, 16.30 percent in 2019, 3.15 percent in 2018, according to MoneyCentral calculations.

Drilling down the third quarter financial statement shows income from financing contracts was up 35.25 percent to N10.69 billion.

Jaiz Bank is giving loans to small business as it is working assiduously hard to ensure that poverty is being alleviated, while contemporaneously ensuring that banking services reach farmers in the rural area.

It has launched a non-interest loan scheme of 200 million to the Micro Small and Medium Enterprises (MSMEs) in Kano State.

The scheme, which is in collaboration with the Nigerian Competitiveness project (NICOP), is to support the MSMEs under garment and leather value chains with a soft loan that will help them boost their businesses.

Jaiz Bank has received a $25 million shariah-compliant Line of Financing (LOF) from Islamic Corporation for the Development (IsDB) to support small and medium scale enterprises in the country.

The Islamic lender is not resting on its oars, or being complacent and overly laid over its recent achievement. In short, it strengthened its balance sheet and working capital position with

It plans to deepen its balance sheet and working capital position after successfully completing a private placement of N3.30 billion.

Jaiz Bank’s total assets stood at N255.65 billion as at September 2021, which is 9.46 percent higher than 2020’s N233.59 billion.

A breakdown of total assets shows Murabaha receivables were up 33.25 percent to N54.50 billion in September 2021 from N40.90 billion the previous year. Investment in Ijara assets increased by 24.40 percent to N31.05 billion and N24.96 billion.

The bank has N72.24 billion in investment in Sukuk, with cash and cash balances of 37.51 billion.

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