Jaiz Bank Plc has announced its audited financial results for 2023, reporting a profit before tax of N11.1 billion. This is a 67% increase from the N6.6 billion profit recorded in 2022.
The bank posted a gross earning of N47.2 billion in FY 2023, representing a 42% increase from the N33.2 billion reported in 2022.
It reported an income of N28.7 billion from financing contracts and N15.8 billion from investment activities.
The bank recorded an unrealized exchange gain of N59 million during the year and an operating income of N327.7 million.
Key highlights FY 2023 vs FY 2022
- Gross earnings: N47.2 billion, +42% YoY
- Gross income from financing and investing activities: N44.5 billion, +42% YoY
- Impairment charges: N4.3 billion, +11% YoY
- Gross income after provisions: N40.2 billion, +46% YoY
- Return to equity investment accountholder: N11.1 billion, +61% YoY
- Total income: N31.8 billion, +41% YoY
- Total expenses: N20.8 billion, +31% YoY
- Profit before tax: N11.1 billion, +67% YoY
- Profit after tax: N11.2 billion, +63% YoY
- Earnings per share: 32.53 kobo, +63% YoY
- Total assets: N580 billion, +108% YoY
- Deposits: N466 billion, +123% YoY
Commentary
Jaiz Bank Plc is Nigeria’s first full-service non-interest financial institution. It operates fully on Islamic banking principles. Thus, the bank’s major sources of earnings are from financing and investing activities.
With respect to its financing activities, Jaiz Bank recorded income from its Murabaha transactions and its Ijara transactions. Murabaha transactions are a type of Islamic finance arrangement where a financial institution purchases goods on behalf of a client and then sells those goods to the client at a marked-up price.
The bank recorded a total profit of N18.5 billion from its Murabaha transactions, with N13.4 billion as profit from corporate Murabaha transactions.
In corporate Murabaha, organizations finance the purchase of assets such as machinery, inventory, or real estate. And instead of interest, Jaiz Bank charges a profit margin, which is agreed upon at the outset and clearly disclosed.
Jaiz also posted a total profit of N6.3 billion from its Ijara transactions. Ijara transactions are a type of Islamic finance contract that is like a lease agreement. In an Ijara transaction, the financial institution (the lessor) purchases and leases out an asset to a client (the lessee) for a specified period and rental fee.
For Jaiz Bank, Ijara wa Iqtina is the most utilized model of Ijara. It is a type of Islamic finance lease that includes a purchase option. It combines the principles of Ijara (leasing) with a promise of eventual ownership transfer.
The bank recorded profits of N2.1 billion and N3 billion from Ijara wa Iqtina to corporate and retail clients respectively.
Jaiz Bank posted N1.36 billion profit from interbank Mudarabah for FY 2023. Interbank Mudarabah is a type of Islamic finance arrangement where one bank (the “rab al-mal” or investor) provides funds to another bank (the “mudarib” or manager) to invest in Sharia-compliant ventures.
As a Mudarib, Jaiz Bank earned N15.2 billion for FY 2023, representing a 99% increase from 2022’s N7.6 billion.
Jaiz Bank’s recapitalization exercise
As the solo bank in Nigeria with a national non-interest banking license, Jaiz Bank has a new minimum capital requirement of N20 billion. However, the bank currently has a paid-up capital base of N18.6 billion which falls short by N1.4 billion.
It is presumable that the Muhammadu Indimi owned bank has a plan in place to raise additional funds to meet up with the new capital requirement.
