capital market

Jaiz Bank to restructure to a Holding Company in an ‘aggressive growth strategy’

Published

2 years ago

August 26, 2022

NewsDirect

Nigeria’s first and largest fully-fledged non-interest or Islamic lender, Jaiz Bank Plc, has gotten shareholders’ approval to raise N150 billion and restructure into a Holding Company in order to achieve the bank’s short-term and long-term growth strategy.

The proposed structure will afford the bank the opportunity to penetrate into other related areas like Pension, Asset Management etc. The approval was secured on August 16, 2022, at the Bank’s 10th Annual General Meeting in Abuja.

Islamic, non-interest banking is a model of financing of partnering and sharing risks and returns, irrespective of partners’ faith/religion, tribe, etc. Over the past 10 years, the bank has grown from 3 branches to over 45 branches nationwide; growing its balance sheet from N12 billion to over N300 billion as at June 30, 2022. Over these years, the Bank has consistently delivered remarkable results to reaffirm this continuous growth trajectory as one of the most profitable banks in Nigeria.

In 2021FY for instance, gross income grew by 31.76 per cent to N25.84 billion from N19.61 billion in 2020FY. Similarly, total assets grew by 19.55 per cent to N279.28 billion from N233.60 billion in 2020, while shareholders’ funds for the period grew by 36.20 per cent to N24.31 billion compared to N17.85 billion in 2020.

In 2022FY, the released H1 2022 financial statements of the non-interest bank show that gross income inched up by 23 per cent to N14.335 billion from N11.652 billion recorded 12 months ago.

Supported by the growth in other operating income, fees and commission receipts Jaiz Bank’s total income jumped by 17.8 per cent to N10.44 billion from N8.86 billion in H1 2021. On the strength of the strong top line, the bank’s profit after tax grew by 26.82 per cent to N2.535 billion from N1.999 billion.

Driving the Bank’s strong bottom line over the years is the healthy income from financing contracts. In H1 2022, financing contracts income stood at N10.087 billion; 40.6 per cent above N7.175 billion reported in the comparable period last year. Driving the financing contract income is income from Murabaha transactions, which accounted for 66.2 per cent of the N10.087 billion financing contract income.

The outing pushed earnings per share higher by 8.25 per cent, to 7.34 kobo from 6.78 kobo in H1 2021 and expanded the balance sheet further; growing by 12.11 per cent to N313.101 billion as at June 30, 2022, from N279.275 billion at year-end 2021.

However, shareholders’ fund dipped moderately to N24.235 billion due to a decline in other reserves from N24.305 billion six months ago.

Reacting to the earnings beat in the first six months result, equities investors took a higher position which saw the share price repricing.

As a result, Jaiz Bank’s stock market valuation inched higher by 20.27 per cent to about N30.74 billion on Friday, August 19, 2022. The bank has a better YtD gain. It started the year with a share price of N0.56 and thus has since gained 58.9 per cent, ranking it 16th on the NGX in terms of year-to-date performance.

Earlier, in July 2022, Fitch Ratings had affirmed Jaiz Bank Plc.’s Long-Term Issuer Default Rating (IDR) at ‘B-‘with a stable outlook and Viability Rating (VR) at ‘b-.’

The global rating firm also upgraded the Bank’s National Long-Term Rating to ‘BBB+ (nga)’ from ‘BBB (nga)’. The rating agency explained that Jaiz Bank’s IDRs are driven by its standalone creditworthiness, as expressed by its VR of ‘b-,’ which reflects the concentration of the bank’s operations within Nigeria’s challenging operating environment, small but evolving franchise.

Similarly, the bank was awarded the most-improved Islamic Bank in the world by the United Kingdom-based GIFA for the second year in a row.

Fitch’s rating underscores Jaiz Bank’s high credit concentrations, aggressive financing and balance sheet growth that are expected to continue over the medium term and financing quality weaknesses. It also reflects healthy profitability, reasonable capitalisation and comfortable liquidity coverage.

Following its strong performance over the years, the bank believes and is optimistic that it will continue to make progress in the coming years.

“The future looks bright; the macroeconomic indices are projected to have an uptick as most of the economies have rebounded except some few.

“As for the bank, we will remain resolute in providing our customers better services in an efficient and delightful manner. Our digital roadmap will be judiciously executed in order to simplify our processes and engender employees’ productivity while optimizing shareholders’ return,” the Chairman said.

The bank’s expansion strategy is coming at the right time, especially with fresh moves by competing banks to increase their market share as rival peer TAJ Bank has indicated interest in a national banking licence, Lotus and Sterling Banks are developing their non-interest banking offerings.

More so, the bank’s market share remains small relative to the wider banking system, representing just 0.5% of banking system assets in 2021.

There is a need for expansion, but the method of funding is paramount. According to Fitch, “A downgrade of the VR and Long-Term IDR would result from the impaired loans ratio exceeding 15% and aggressive growth that led to weakened profitability and significant erosion of capital buffers to levels close to the bank’s 10% regulatory requirement,” while, “An upgrade of Jaiz Bank’s VR and Long-Term IDR would require a sovereign upgrade and improvement in operating environment conditions, a strengthening of the bank’s franchise, as indicated by increased market shares, combined with a moderation of financing growth and impaired financing generation.”

The Bank has proposed a mixture of Equity and issuance of Sukuk to fund its business expansion. It is pertinent that a comparative cost-benefit analysis is done. The bank’s total equity as of June 30, 2022, is low compared to the total asset, which is just 7.74%.

Related Topics:Holding Company Jaiz bank

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capital market

Stock market recovery short-lived as investors lose N199bn

Published

3 days ago

April 24, 2024

NewsDirect

Investors in the Nigerian equities market lost N199 billion at the close of trading on Tuesday.

Before Monday’s N70 billion gain, investors had endured over two weeks of consecutive bearish trading sessions.

Yesterday’s loss followed the dip in the value of stocks like Honey Well Flour, FBNH, Oando and FTN Cocoa Processors, amongst others on the trading floor today.

After five hours of trading at the capital market, the equity capitalisation decreased to N56.1 trillion from N56.3 trillion posted by the bourse on Monday.

Similarly, the All-Share Index (ASI) decreased to 99,311.54 from 99,665.05 achieved by the bourse the previous day.

The market breadth was negative as 16 stocks advanced, 24 declined, while 75 others remained unchanged in 7,324 deals.

Sunu Assurances Nigeria led other gainers with 10 percent growth in share price to close at N1.10 from its previous N1.00 per share.

Japaul Gold and Ventures, CAP, and Omatek Ventures also raised their share prices by 9.58 percent, 9.38 percent, and 9.21 percent respectively.

On the flip side, Honeywell Flour Mills led other price decliners as it shed 9.89 percent off its share price to close at N3.19 from its previous N3.54 per share.

First Bank of Nigeria Holdings (FBNH), Oando, and FTN Cocoa Processors equally shed their share prices by 9.88 percent, 9.82 percent, and 9.40 percent respectively.

On the volume index, Transcorp traded 125.700 million shares valued at N1.8 billion in 467 deals followed by United Bank for Africa (UBA) which traded 55.486 million shares worth N1.27 billion in 685 deals.

Access Holdings traded 51.473 million shares valued at N883.2 million in 958 deals.

On the value index, Transcorp also recorded the highest value for the day trading stocks worth N1.89 billion followed by UBA which traded equities worth N1.27 billion in 685 deals.

Access Corp traded stocks worth N833 million in 958 deals.

capital market

MRS Oil Nigeria seeks shareholders’ approval to delist from NGX

Published

3 days ago

April 24, 2024

NewsDirect

The Board of MRS Oil Nigeria Plc will, at the company’s Extraordinary General Meeting (EGM), request shareholders’ endorsement to voluntarily delist from the Nigerian Exchange Limited (NGX).

The decision to exit from the NGX was contained in the notice of an Extraordinary General Meeting to be held in Lagos on May 21, 2024.

The company will also seek shareholders’ approval for its Memorandum and Articles of Association (MemArts) to be modified to allow for a share buyback and share capital reduction.

This will be carried out in accordance with applicable laws and regulations at the discretion of the board.

It will also seek an understanding that following the conclusion of voluntary delisting and while the company remains public, the board is empowered to facilitate the admission of its shares on the NASD OTC Securities Exchange.

This action ensures compliance with the Securities and Exchange Commission (SEC)’s rules on trading in unlisted securities.

According to the statement signed by O.M Jafojo, Company Secretary, as part of special business, the company will request the shareholders to consider, and if thought fit, pass, with or without modification, the following sub-joined resolutions as special resolutions:

“That the voluntary delisting of all the Company’s issued shares from the daily official list of Nigerian Exchange Limited (the ‘Voluntary Delisting’) be and is hereby approved, on such terms and conditions (including but not limited to timing of implementation, arrangements for dissenting shareholders (if any) and the fulfilment of specific conditions precedent to effectiveness (if any)), that the Board of Directors of the Company (the ‘Board’) deems appropriate in connection with the Voluntary Delisting; and subject to obtaining all requisite regulatory approvals.

“That the Memorandum and Articles of Association (‘MemArts’) of the Company be and are hereby amended to authorize the Company to undertake a share buyback and share capital reduction.

“That the Company be and is hereby authorised to undertake a share buyback and share capital reduction in connection with any of its issued shares which may be purchased from dissenting shareholders where necessary as a consequence of the Voluntary Delisting; on such terms and conditions, in such volumes and at such times as the Board deems fit; subject to, and in accordance with, applicable laws and regulations.

“That the MemArts of the Company be amended upon completion of the share buyback and share capital reduction, to reflect the Company’s updated share capital.

“That upon conclusion of the Voluntary Delisting, and whilst the Company remains a public limited liability company, the Board be and is hereby authorised to take all such action as may be required, to admit the Company’s shares on the NASD OTC Securities Exchange in order to ensure that dealings in the Company’s shares are implemented in accordance with the Securities and Exchange Commission’s Rules on Trading in Unlisted Securities.”

The company will also seek approval to authorise the board to take all such lawful actions and steps (including but not limited to entering into/executing such agreements and documents, appointing professional advisers and other parties, complying with directives of any regulatory authority) deemed necessary to give full effect to the above-referenced resolutions.

capital market

Bearish trend halted as investors gain N70.87bn

Published

4 days ago

April 23, 2024

NewsDirect

Investors in the Nigerian equities heaved a sigh of relief as the losing streak on the bourse was halted on Monday, April 22, 2024 as investors recorded a profit of N70bn at the end of trading.

This followed the boom in the share value of stocks like Japaul Gold, GTCO, FTN Cocoa, Universal Insurance Company and RT Briscoe amongst others on the trading floor today.

After five hours of trading at the capital market, the equity capitalization increased to N56.367 trillion from N56.296 trillion posted by the bourse on Friday, last week.

Similarly, the All-Share Index (ASI) grew to 99,665.05 from 99,539.75 achieved by the bourse the previous day.

The market breadth was negative 16 stocks advanced, 18 stocks declined, while 85 stocks remained unchanged in 8, 298 deals.

Japaul Gold and Ventures Plc led other gainers with 9.58 percent growth to close at N1.83 from its previous price of N1.67, Guaranty Trust Holding Company (GTCO), FTN Cocoa Processors, and Universal Insurance Plc are amongst other gainers that also grew their share prices by 9.55 percent, 8.76 percent, and 8.57 percent respectively.

On the flip side, The Initiate Plc led other price decliners as it shed 10% off its share price to close at N1.80 from its previous close of N2.00. Prestige Assurance, Omatek Ventures, and VitaFoam Nigeria Plc are amongst other losers that also shed their share prices by 9.84 percent, 9.52 percent, and 9.26 percent respectively.

On the volume index, Guaranty Trust Holding Company (GTCO) Plc traded 50.158 million units of its shares in 630 deals, valued at N1.1774 billion followed by Access Holdings Plc which traded 48.067 million units of its shares in 951 deals, valued at N815.925 million and United Bank for Africa (UBA) Plc which traded 41.746 million units of its shares in 776 deals, valued at N956.455 million.

On the value index, GTCO recorded the highest value for the day trading stocks worth N1.773bn in 630 deals followed by UBA which traded equities worth N956bn in 776 deals and ACCESSCORP which traded equities worth N815m in 951 deals.