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Jaiz Bank mulls Holdco structure after 10 years of banking

Jaiz Bank projects N4.3bn profit in Q1

After ten years of consistent profitable Islamic banking, Jaiz Bank is in the process of adopting a holding company (holdco) structure, which would help it diversify its revenue base and remain competitive in the Nigerian financial market.

Jaiz bank chairman, Umaru Mutallab, disclosed this on Tuesday in Abuja at the bank’s 10th Annual General Meeting (AGM). He was responding to an issue raised by Farouk Umar, President, Association for the Advancement of the Rights of Nigerian Shareholders, on why the Jaiz bank should consider creating a holding structure, as being adopted by many banks.

Responding, Mutallab said the board was considering the process and that a committee has been set up in this regard.

“We are considering the process of entering into Holdco. We are in the process of securing necessary regulatory approvals, we’ve set up a committee for this. We are hoping to start with three or four companies, and there are some others that will come later. But the first ones we would like to start with is of course the bank, the Insurance company – Takaful, which are already there. The next one is Jaiz capital and then fintech.

“So these are the initial three of four that we want to start with,” Mutallab stated.

He further announced the bank’s plans to raise up to N150billion through sukuk or any other forms, which would be done in series.

“The new capital is important to help us implement the new holdco structure,” he stated.

A holding company structure which appears to be a new trend in the Nigerian banking sector dates back to 2011 when the Lamido Sanusi-led Central Bank of Nigeria (CBN) forced banks to give up their non-banking businesses or restructure into a holding structure.

The CBN hoped it would help banks manage risks, in terms of discouraging them from entangling with other financial services like insurance or investments. The structure would also help the banks to not only protect assets but also reduce risks.

At the AGM, Mutallab assured the shareholders that when finally adopted, the holdco structure would, in addition to these benefits, also allow opportunities for more women representation in the board and management of the bank.

Presenting the financial statement, he said the bank in 2021 recorded 32% growth in gross earnings from NI9.6 billion in 2020 to N25.84 billion.

According to him, Profit Before Tax (PBT) also grew by 43% from N3.07 billion in 2020 to N4.37billion in 2021 while Profit After Tax also grew from N2.903billion to N4.3billion. Total assets increased from N233.60billion in 2020 to N279.30 billion in 2021, representing a 20% increase Year-on-Year.

Shareholders Fund grew by 36% as financing and investments also went up by 19% from 66.00billion in 2020 to NI97.50billion by December 2021.

Total Deposits, he announced, increased to N209.08billion from Nl75.5 I billion in December 2020, indicating a 19% growth. The bank approved 4 Kobo dividend payout against 2020 dividend of 3 Kobo.

“During the year 2021, the market perception of our brand has equally continued to improve with the bank being awarded the most-improved Islamic bank in the world by the United Kingdom based- GIFA for second year in a row.

“Over the course of the first ten years of our existence, we have consistently aligned our operations with our vision of making life better. By virtue of our mode of banking and as a financial intermediary, we have supported the real sector of the Nigerian economy in numerous ways from the inception of our operations to December 2021”.

Read also: Jaiz Bank grows balance sheet to 300bn in 10yrs

“These include: Provided financing to 4,198 Corporates, 5,384 MSME clients, and21,277 individuals,” Mutallab stressed, adding that the bank provided aggregate funding to the tune of N75.0 billion to agriculture.

He further told the shareholders that the bank was instrumental in the provision of housing to 3,696 families, and facilitated development of over 7,000 shops and warehouses for small and medium business Owners.

Also, the bank paid about NI.6I billion in taxes, trained more than 2005 Smallholder Farmers and provided them with total financing of N609Million to support their livelihood and boost food security in the country.