The ‘Police is your friend’ is a cliché many are familiar with, but most do not know that this friendship extends to financial services. Incorporated as a community bank in 1993, with License No. FC 00200, the Nigerian Police Force (NPF) Microfinance bank has been providing banking services to the Nigerian banking public for almost three decades.  

However, it is one of those stocks that hardly make the headlines, except for landmark events. This friendly microfinance bank is the pick for Nairametrics corporate profile this week.  

READ: CBN releases new capital base, sanctions for Microfinance Banks in new draft guidelines

Incorporation  

NPF Microfinance Bank Plc (Formerly NPF Community Bank Ltd), was incorporated on 19th May, 1993, to provide services such as retail banking, loans and advances, and other allied services to both serving and retired officers and men of Nigeria Police Force, its ancillary institutions, and later on, the general banking public.  

The Bank mission says it is targeted at providing “banking and other permissible financial services to poor and low-income households and micro enterprises,” with emphasis on members of the NPF Community. 

It commenced operations on 20th August, 1993 with a single branch in Ikoyi, having obtained a CBN provisional license to operate as a community bank. The bank obtained its full license to operate as a Community Bank on 24th January 2002. Five years later, it converted from its Community Bank status to a Microfinance Bank, following a CBN directive which allowed it to open branches in all the states. It was registered as a Public Limited Company on 13 July, 2006, and received an approval-in-principle to operate as a Microfinance Bank on 10 May 2007. 

NPF microfinance bank obtained the final license on December 4, 2007, but its stocks did not get listed on the main board of the NSE, until December 2010, after 17 years of operations. 

READ: Strong performance from Stanbic IBTC, despite weak retail banking position

Its stock price is considered quite stable, trading within a narrow band, with its price-earnings ratio estimated to be about 9.45 times earnings, slightly higher than the 9.3 times earnings, which is the average PE ratio on the NSE. 

The bank’s authorized capital at inception was N500,000.00, made up of 500,000 ordinary shares of N1.00 each. This has grown over the years to its current level of N2 billion, made up of N4 billion ordinary shares of 50k each, of which 2,286,637,766 ordinary shares of 50k each, are issued and fully paid up. 

At a share price of N1.22, the current Market Cap is put at N2.789 billion.  

Branch network has increased to about 35 branches across several states in the country. In August 2019, the bank reaffirmed an earlier decision to embark on another public offer to raise funds for the purpose of incorporating Information Technology to meet customers’ needs and branch improvement, and to fund a three-year strategy from 2019 to 2021. 

READ: UBA Plc H1’2020 results, a true reflection of its rightsizing decision? 

Management  

Mr. Akinwunmi M. Lawal has been Managing Director since June 2014, while the Board of Directors has been chaired by Azubuko Joel Udah (Esq.) since 2015. 

Mr. John Kwabe Tizhe and Mr. Francis C. Nelson are Executive Directors; while Mr. Usman Isa Baba, Mr Aminu Saleh Pai, Mr Jibrin G. Gane, Mr. Salihu Argungu Hashimu, Mr. Abdulrahman Satumari, Mr. Dasuki Danbappa Galadanchi, Mrs. Rakiya Edota Shehu, and Mr. Mohammed D. Saeed are Non-Executive Directors. 

Recent financials 

Although the NPF microfinance bank may not boast of a large customer base like most of the popular commercial and microfinance banks in the country, the bank has consistently shown favorable financials over the decades. The bank stocks is highly illiquid, but it has consistently and successfully paid dividends for the last 21 years, paying as much as N114.3 million in dividends for 2018.  

The audited results for FY 2018, shows a N300 million growth in gross earnings from N3.6 billion in 2017 to N3.9 billion in 2018, while there was a decline in profit. This decline is partly traceable to the 128.6% increase in marketing expenses from N63 million in 2017 to N144 million in 2018, while Directors’ remuneration rose 63%, from N65 million in 2017 to N106 million in 2018. 

READ: Access Bank posts Profit Before Tax of N74.31 billion in H1 2020

Profit before tax fell sharply from N819 million in 2017 to N287 million in 2018, and Profit after tax also dropped from N631 million in 2017 to N195 million in 2018.  For 2019, the Profit Before tax shot up to over N1 billion, while Profit after tax grew to N796.4 million.  

Within the 2018 financial year, customer deposit grew by 14.67% from N9.126 billion to N10.465 billion, while total asset increased from N15.952 billion in 2017 to N17.597 billion in 2018. In comparison, 2019 customer deposits grew further to N11.32 billion, and total assets increased further to N19.58 billion.  

The bank attributed the poor performance in 2018 to the adoption of the IFRS 9, which caused a rise in net impairments, a N700 million growth in operating expenses, as well as a N266.48 million fraud committed by one of its middle management staff in the Sokoto branch. Although N35 million was recovered of the sum, shareholders bore the brunt of the loss, as dividend per share dropped from 17 kobo in 2017 to 5 kobo in 2018.  

READ: Transcorp Hotels to raise N10billion through Rights Issue 

Whatever steps the company took to prevent a repeat of frauds, it was not effective; because 2019 saw an increase in frauds committed by members of its staff. The bank recorded frauds amounting to N2.1 million in four separate incidences, and another N12.26 million ATM electronic fraud. Though some of the money was recovered, over N12 million remained unrecovered at the end of the financial year.   

Conclusion 

NPF microfinance bank has shown resilience over the years, and this is reflected in its consistent positive performance. However, it will have to work more on tightening lose ends to prevent cases of fraud and forgeries, which dips into its yearly profits and takes a chunk from shareholders dividends. 

The Board of Julius Berger has approved a diversification opportunity for the company in Agro-processing, at the board meeting held on Tuesday, September 22, 2020.

The company made this known in an Adhoc announcement sent to the Nigerian Stock Exchange (NSE), the investing public, and other stakeholders in the Capital market. The Adhoc announcement, which is dated 23rd, September 2020, was signed by the Company’s Secretary, C.E. Madueke.

Explore the Nairametrics Research Website for Economic and Financial Data

Nairametrics found that the board’s decision to seek out opportunities in the Agro-processing industry, is based on its quest for more operational rigor, given the widespread economic vulnerabilities in the country, and also the resultant reforms by the Government.

READ: Julius Berger’s latest earnings report shows 56.1% profit growth in 9 months 

The board reiterated that Julius Berger’s business is centered around a long-term strategy, and the board is keen to deliver on that strategy, by maintaining and strengthening the Company’s competitive advantages in the Construction sector, and Capital market.

(READ MORE: Julius Berger Nigeria Plc announces N2 dividend payout to shareholders)

The Board of Directors and the Executive Management of Julius Berger, strongly believe that this diversification direction would support the continued success of the Group in the future, and align with the government’s strategic objectives to stimulate value creation in Nigeria.

Back-story: It is important to note that, in November 2019, Nairametrics reported that Julius Berger announced its diversification into the oil and gas industry, with the acquisition of a 20% equity stake in Petralon Energy Limited.

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The Board stated that the investment is in line with the strategic goals of Julius Berger on diversification, and would enable the acquisition of know-how and experience in the oil and gas sector.

When the idea of a Non-interest banking was first broached in Nigeria in the late 90s, it was greeted with suspicion. This was probably because its more popular name ‘Islamic banking’ had non-muslim Nigerians thinking it was a ploy to eventually Islamize the country.

Two decades and several sensitization campaigns later, Nigeria’s first non-interest bank has moved from being a regional bank to a national bank, with several branches and customers.

Nairametrics company profile this week looks at this trail-blazing bank; how it has survived its first decade, while operating a system that is completely different from that of other banks in the country, yet still holds its own in the industry.

READ: UBA Plc H1’2020 results, a true reflection of its rightsizing decision? 

History

The JAIZ movement in Nigeria dates far back to 2001, when Justice Imam Muhammad Taqi Usmani and Sanusi Lamido Sanusi, both guest speakers at a seminar hosted in Sheraton Hotel Abuja, advised the different groups clamoring for a non-interest bank in Nigeria to come together under one group, if their aim was to be achieved.

In response to this advice, the Halal group and the JAIZ group united, combining influence and resources to drive for the establishment of a Nigerian non-interest bank.

Jaiz International was set up in 2003, and after almost 8 years of trying to meet the guidelines, and capital requirements of the Apex bank (amid the Soludo-led recapitalization exercise which shook the industry) and other factors, the bank received a regional license from CBN on a historic date.

JAIZ International Plc was established on 11th of November 2011, and began the long walk to the actualization of their dreams.

(READ MORE: Jaiz Bank reports 45.3% profit increase in H1 2020, involved in 21 litigations)

On 6 January 2012, operations commenced at the branches in Abuja, Kaduna and Kano. Hassan Usman, is now Managing Director of the bank, while Alhaji Dr Umaru Abdul Mutallab, heads the Board of Directors, with Alhaji Dr Umaru Kwairanga, and Alhaji Dr Muhammadu Indimi as members.

Other members include Abdulfattah O. Amoo; Alh. (Dr.) Aminu Alhassan Dantata; Alh. (Dr.) Musbahu Bashir; Alh. Mukhtar Danladi Hanga; Alhaji Mamun Maude; H.R.H. Engr. Bello Muhammad Sanni; Mahe Abubakar Mahmud; Mall. Falalu Bello; Mall. Hassan Usman; Mr. Seedy Njie; Nafiu Baba-Ahmed; and Prof. Tajudeen Adepemi Adebiyi.

In 2013, when the bank started expanding to other urban centers, it was permitted to increase shareholding capital to $92.3 million (NGN14.3 billion), and subsequently applied for a national banking license which it received in 2016. At the end of FY 2019, it had 38 branches with over a thousand employees.

Stockholding was and is still shared among Nigerian and foreign individuals, and institutional investors, while the number of issued shares as at December 2019 was 29.46 billion.

READ MORE: Diamond Bank rebounds after hitting 5 year low

Banking with a human face

Non-interest banking is touted to be a more ethical form of banking, with less emphasis on profit, and more on societal and individual development.

Like other banks, Jaiz Bank Plc provides banking products and services like savings, current, salary, and kids savings accounts, but with slightly different terms. The bank also provides online banking, leasing, cards, bonds and guarantees, and several other investment products tailored to its principles. Customers’ deposits are used for business operations, with the understanding that the profit will be shared between the bank and customers. While sharing profit with customers, in the event of a loss, the bank tries to weather it out, since the customers’ deposits are already insured with the NDIC.

In offering its credit facilities, the bank tends to adopt a religious perspective, looking beyond an individual’s ability to repay the loan. The impact of such a business or project on the society is a priority consideration, and could be the sole reason for refusing a loan. In this regard, business ideas which go against morality or societal growth, are not given loans.

READ: Dangote Sugar Refinery: Revenue soars amid rising cost of sales

The bank also offers its loans in a manner that creates a partnership between the bank and the borrower, towards improving the society. A profit for the company is a profit for the bank, while a loss for the company is also a loss for the bank, even though steps are taken to recover the capital.

How many people will be employed by the business? How will it impact the environment and the economy? These are some of the questions considered before a loan is either granted or refused. This is why bankers in the space like to refer to it as “banking with a face” or ethical banking.

(READ MORE: Jaiz Bank Plc appoints new directors)

No matter how profitable a venture is, if any part of its operations is considered detrimental to societal welfare, it will be declined. If, for any reason, a customer is to be penalized for default, the proceeds cannot be listed as part of profits for the bank, but is ploughed into the society as charity.

Financials

Audited financials from the company shows that the company is fast growing to make up for the early years of little or no profit.

The FY 2019 audited reports show that the company declared dividends of 3 kobo per share, an improvement on previous years’ performances, where no dividend was declared. Total assets grew 54% YOY, from N108.4 billion in 2019 to N167 billion in 2019, while deposits rose 50% to N127 billion, from the N85 billion recorded in 2018.

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Gross earnings grew from N8.7 billion to N14.7 billion, and Cost to Income ratio improved from 87.28% in 2018 to 80.21% in 2019, with return on assets and equity rising to 1.26% and 13.57% respectively.

Profit before tax shot up 135% from 898 million in 2018 to N2.1 billion in 2019, and earning per share grew to 8.29 kobo from 2.83 kobo in 2018.

The recently reported Q2 2020 unaudited reports show that in spite of the COVID-19 challenges in the country, the bank had a fair outing in the second quarter of the year, with a clear improvement across all indicators in comparison to Q2 2019.

(READ MORE: CBN allows banks to pay winnings, salaries for 7 banned betting & gaming companies)

Conclusion

JAIZ Bank Plc is fast-growing, achieving much in good time, although Nigerians are yet to fully understand this system of banking. There is also the supervision of the Advisory Committee of Experts (ACE), which ensures that banking operations are done in line with the dictates of Sharia law.

The bank includes non-Islamic employees in its workforce, a point to back the claims that it is not religiously inclined, though more needs to be done in its board composition to fully corroborate this, and show the public that it is a bank that accommodates all religions.