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Jaiz Bank earnings rise on expansion of Islamic financing operations

04 Apr 2017, 07:20 pm
Financial Nigeria
Jaiz Bank earnings rise on expansion of Islamic financing operations

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The bank said gross earnings rose 12 percent to N5.99 billion in 2016 compared to N5.37 billion in the previous year.


Jaiz Bank, Nigeria’s leading non-interest bank, has reported that its 2016 earnings rose markedly owing to the expansion of its Islamic financing transactions. The bank said gross earnings rose 12 percent to N5.99 billion compared to N5.37 billion in the previous year.

The increase in the bank’s revenue was driven mainly by the strong growth in Murabaha and Ijara transactions. In Islamic finance, Murabaha is a sales contract in which a bank buys an item from a client for a predetermined profit over the cost of the item, then sells the item back to the client in installments. It is similar in structure to a rent-to-own arrangement.

On the other hand, Ijara is a leasing agreement that permits one party (the lessee) to use an asset or property owned by another party (the lessor) for an agreed-upon price over a fixed period of time, according to Investopedia.

Notwithstanding the revenue growth, Jaiz Bank said after-tax profit fell by 65 percent to N311.27 million as against N910.2 million in 2015. The decline in profit was due mainly to the growth in expenses given the bank’s branch expansion programme across several states.

“Our underlying profit . . . is the culmination of our performance over the past twelve months and the customer loyalty that we have formed over preceding years within our short period of existence,” said Hassan Usman, Jaiz Bank’s Managing Director/CEO. “We stood by our customers’ financing needs through the difficult business environment occasioned by the recession experienced by the nation’s economy in 2016.”

Jaiz Bank said total assets rose 28 percent to N67.62 billion from N52.64 billion in the previous year due mainly to an increase in Murabaha receivables and investments in Ijara assets.

Basic earnings per share fell to 2 kobo in 2016 from 7 kobo a year earlier. The bank did not declare a dividend.

Founded in 2003, Jaiz Bank is the only full-fledged non-interest bank in Nigeria with 26 branches in 14 states in the country. The bank has been awarded a national licence by the Central Bank of Nigeria to operate across all 36 states, including the Federal Capital Territory, Abuja.


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