GCR Upgrades Jaiz Bank’s Rating, Outlook Revised to Stable
GCR Ratings upgrades Jaiz Bank Plc’s national scale long term issuer rating to BBB(NG) from BBB-(NG) and affirmed the short-term issuer rating of A3(NG). The Islamic lender rating outlook was also revised to stable from positive, according to the rating note.
The rating upgrade reflects Jaiz Bank Plc’s strengthened capitalisation, driven by equity injection and its improved earnings generation and retention, GCR said in its update.
It added that Jaiz Bank ratings also balance the bank’s stable funding structure, and adequate liquidity profile against a concentrated customer deposit book and weakening asset quality metrics.
Ratings analysts explained that Jaiz Bank’s competitive position is primarily driven by its pioneer status in Nigeria’s non-interest banking (NIB) segment, which continues to reinforce its market leadership.
GCR said this is demonstrated by an 86.3% growth in balance sheet size to NGN1.1 trillion as of 31 December 2024. Operating revenue also rose by 70.3% to NGN61.4 billion in 2024, with stable financing income contributing 89.7% to operating revenue.
However, the bank’s market share remains less than 1% of the Nigerian banking sector’s total resources similar to peers within the NIB segment and this continues to be a constraint on its competitive position assessment.
Ratings analysts said looking ahead, Jaiz Bank’s expansion strategy, increased technology deployment, and planned capital injection could further enhance its operational scale and earnings generation capacity over the next 12 to 18 months.
The bank’s capitalisation assessment improved during the review period and is a positive rating factor, according to details from the rating note.
Ratings analysts stated that the improvement stems from a NGN10 billion equity injection, alongside strong earnings generation and retention in 2024.
Consequently, the GCR core capital ratio rose to 29.7% as of 31 December 2024 from 23.6% in the comparable period in 2023.
“To support future expansion, the bank plans to further strengthen its capital base through a series of initiatives, including a public offer, rights issue, private placement, and additional tier 1 sukuk bond issuance.
“If successful, these could sustain the GCR core capital ratio above 25% over the next 12-18 months, despite the planned growth in the financing portfolio”, GCR revealed.
Ratings analysts expressed that rhe bank’s risk position continues to be a negative rating factor, reflecting continued pressure on its credit risk profile.
Although the non-performing financing (NPF) ratio improved to 4.4% as of 31 December 2024 from 7.7% in December 2023, this gain was reversed by June 2025, with the NPF ratio rising to 8.4% due to increased credit migrations during the period.
GCR hinted that rhe bank’s remedial actions and recovery efforts could support its plans to significantly reduce the NPF ratio below the regulatory minimum of 5% by 31 December 2025.
However, this could be partly constrained by the sustained asset quality vulnerability to the challenges in the macroeconomic environment, ratings analysts added.
The financing portfolio remains diversified, with the single and top twenty obligors accounting for 9.3% and 39.2% of the portfolio, respectively, as of 31 December 2024 versus 12.3% in 2023.
Notably, one obligor exceeded the regulatory single obligor limit of 20% of shareholders’ funds in 2024, although regulatory forbearance has been obtained in this regard.
GCR expects the bank’s risk position to remain a constraint over the next 12 to 18 months, considering the challenging operating environment.
“We assess funding and liquidity as a positive ratings factor, driven by a stable funding structure and adequate liquidity levels. Jaiz Bank is largely funded by customer deposits, which constituted 96.9% of the funding base as of 31 December 2024 from 91.8% in 2023.”
Jaiz Bank customer deposits grew by 93.9% to NGN904.8 billion as of 31 December 2024, supported by the bank’s growing franchise strength, the ratings note stated.
The bank’s cost of funds remains competitive at 3.0% as of 31 December 2024 from 2.7% in 2023 and compares well with the industry average. The deposit composition indicates elevated liquidity risk due to significant concentration, with the single largest depositor accounting for 20.6% of total deposits as of 31 December 2024 up from 1.9% in 2023.
Ratings analysts explained that Jaiz bank’s balance sheet has rising liquidity risk from a local and foreign currency perspective, given the single largest depositor exposure, whilst total deposit liquidity risk is partly mitigated from a deposit notice perspective.
This notwithstanding, GCR liquid assets covering 66.4% of customer deposits as of 31 December 2024 versus 46.3% in 2023. However, the bank’s funding and liquidity profile is expected to remain adequate over the outlook period, hinged on effective liquidity management practices, ratings note highlighted.
“The stable outlook is premised on our expectations that the GCR core capital ratio will remain above 25% over the next 12-18 months, underpinned by the planned equity injection and good internal capital generation.
“We also expect the bank’s funding structure to remain sound, whilst liquidity is expected to improve. However, the asset quality metrics could remain constrained due to the challenging operating environment”, GCR said in the rating note. UBA Grows Profit by 6.1%, Declares 25k Interim Dividend
