Discourse

Proceeds from Sukuk magnify Jaiz Bank’s margin in Q1

 

Nigeria’s pioneer non-interest lender, Jaiz Bank Plc started the year with an impressive footing as proceeds from Sukuk elevated bottom-line margin by some 987 basis points in the first three months of 2019.
Proceeds from Sukuk, which accounted for 87 percent of the lender’s investment income, surged 224.82 percent year-on-year to N817.4 million in the review quarter, thereby skyrocketing total investment income by 210 percent to N936.9 million.
Jaiz Bank began the year with total Sukuk investment of N18.9 billion, and grew it to N25 billion in quarter one of 2019, owing to N4.85 billion addition during the year, N773.3 million from premium and N423.6 million from rental receivables.
The non-interest lender purchased Sukuk worth N4.85 billion through the secondary market, in which rental payment is semi-annually and principal redemption is a bullet payment on maturity.
Income from financing contracts improved by 5.6 percent to N1.65 billion, driven by 13.4 percent growth in total profit from Murabaha transactions, boosting gross income from financing transactions by 38.7 percent to N2.59 billion.
Total income of the lender, which comprises gross income from financing transactions and other income soared to N2.32 billion, representing 42.8 percent rise over N1.63 billion, driven by huge increase in proceeds from Sukuk and other operating income
Consequently, margin grew to 16.5 percent, an uptick from 6.7 percent reported in the previous comparable period.
This implies that Jaiz Bank was able to retain N167 as profit from every thousand naira earned as revenue after settling operational expenses. This equally rubbed-off on earnings per share as it skyrocketed in triple digits to 145 kobo in the quarter review, from 50 kobo a year earlier.
The non-interest lender did well in with regards to asset growth in the review quarter as total assets appreciated by about N12 billion quarter-on-quarter to N120.1 billion on the back of Sukuk investment and cash & balances with the Central Bank of Nigeria which surged 23.6 percent and 37.8 percent respectively.
Total liabilities up 7.12 percent to N60.3 billion in the first three months of 2019 on the back of customer deposits and other liabilities, which comprised manager cheque, account payable and e-banking payable among others.
Despite impressive profitability and asset growth, Jaiz Bank was unable to cut cost in the review quarter. This premised on the fact that the three component of total expenses – staff cost, depreciation & amortization and operating expenses grew 18.1 percent, 22.9 percent and 29.6 percent respectively.
This caused total expenses to accelerate by N360 million or 24.07 percent to N1.84 billion in the review quarter, a significant uptick from N1.49 billion a year earlier.
Jaiz Bank Plc is the first-fully fledged non-interest financial institution in Nigeria. It began business operations seven years ago, with three branches in two states and Federal Capital Territory.
Investors reacted positively to the attractive figures as its shares gained 8.70 percent to 50 kobo after Tuesday trading. Its current price is 25 kobo short of its year-high of 75 kobo.
Source: BusinessDay

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