Nigeria’s premier and largest non-interest bank, Jaiz Bank Plc plans to raise about N5.41 billion from its shareholders as the alternative market leader seeks to bolster its balance sheet to support rapid expansion.
Regulatory filing at the weekend indicated that Jaiz Bank plans to float a rights issue of about 5.41 billion ordinary shares of 50 kobo each at offer price of N1 per share.
The offer price represents about 40 per cent discount on the bank’s closing market price of N1.65 at the Nigerian Exchange (NGX)
The rights issue will be pre-allotted on the basis of 87 new ordinary shares for every 250 ordinary shares held as at last Friday.
Jaiz Bank, the only publicly quoted non-interest bank, has through its professional advisers, already applied to the NGX for the approval and subsequent listing of the rights shares upon completion.
Most analysts expected the rights issue to be oversubscribed citing Jaiz Bank’s impressive performance over the past decade.
Jaiz Bank had recorded appreciable growths in the top-line and bottom-line in the first half, with net profit rising by 51 per cent to N3.9 billion within the six-month period.
Key extracts of the six-month report for the period ended June 30, 2023 showed that profit after tax rose to N3.9 billion in June 2023 compared with N2.4 billion recorded in the corresponding period of June 2022.
This implied a net profit margin of 27.3 per cent, within the top-bracket of the industry margins. Gross income rose by 41.9 per cent to N20.3 billion as against N14.3 billion recorded in corresponding period of 2022. Earnings per share rose by 54.9 per cent from 7.34 kobo to 11.3 kobo.
The bank’s balance sheet also emerged stronger, rising by 19.2 per cent to N452.8 billion in first half 2023 as against N379.8 billion in first half 2022. Deposit liabilities increased by 28.8 per cent from N299.4 billion recorded as at December 2022 to N375.3 billion in June 2023.
The management of the bank had said the results showed an increase in key revenue lines and a strong performance in other financial metrics, which reinforced the bank’s growth prospects as the leading non-interest bank in Nigeria.
Jaiz Bank has projected gross earnings of N12 billion for the third quarter of 2023.
In its latest forecast, the management of the bank indicated that the bank would record considerably higher performance in the third quarter, with higher incomes and profitability.
The three-month forecast for third quarter 2023 estimated that pre and post tax profits would be N2.40 billion and N2.16 billion. Gross earnings is expected to increase to N12 billion, with financing income of N11.59 billion. Other incomes were projected at N414.69 million. Net operating income is estimated at N8.68 billion, implying net operating margin of 72.33 per cent.
At its last Annual General Meeting (AGM) recently in Kano, Jaiz Bank had increased dividend payable to shareholders by 25 per cent after the alternative bank grew net profit by 68.5 per cent.
The bank paid a dividend per share of 5.0 kobo for the 2022 business year, totaling N1.727 billion. The bank had paid a dividend per share of 4.0 kobo for the 2021 business year.
Key extracts of the audited report and accounts for the period ended December 31, 2022 had shown double-digit growths across key performance indicators, underlining improvements in incomes and profitability.
The 12-month report showed that gross earnings rose by 29.4 per cent from N25.84 billion in 2021 to N33.43 billion in 2022. Profit before tax grew by 59.5 per cent from N4.16 billion in 2021 to N6.63 billion in 2022. With tax writeback of N248.54 million in 2022, net profit, grew by 68.5 per cent from N4.08 billion in 2021 to N6.88 billion in 2022. Earnings per share increased by 39.13 per cent to 19.2 kobo in 2022 as against 13.8 kobo in 2021. The issued share capital of the bank had increased from 29.46 billion shares in 2021 to 34.54 billion shares.
The balance sheet of the bank also expanded by more than one-third with total assets rising by 35.6 per cent to N378.82 billion in 2022 as against N279.27 billion in 2021. Total equity funds also increased from N24.31 billion to N29.80 billion.
Underlying ratios had shown a generally positive outlook with the bank’s net income margin (NIM) improving from 7.86 per cent in 2021 to 8.29 per cent in 2022. Cost-to-income ratio improved from 75.49 per cent in 2022 to 70.51 per cent. Return on total assets increased from 1.49 per cent to 1.75 per cent. Return on equity also grew from 17.11 per cent in 2021 to 22.25 per cent in 2022. While capital adequacy dropped from 23.66 per cent to 19.50 per cent, liquidity improved from 29.78 per cent to 38.50 per cent.
