Jaiz Bank Valuation Slumps to N30bn Ahead of Dividend Payment
Jaiz Bank Plc

Jaiz Bank Valuation Slumps to N30bn Ahead of Dividend Payment

Nigeria’s premier Non-interest lender, Jaiz Bank Plc, a closely held share saw a price decline of 3.3% in the stock market amidst renewed profit-taking activities in the Nigerian Exchange.

Traded at 88 kobo per share, year to date, data from the local bourse show that Jaiz Bank has lost 5.38% of its market capitalisation in 2023.

At the close of trading session on Friday, the Islamic lender’s market valuation declined to about N30.4 billion, trading strongly above its #10 billion capital base requirement.

According to the bank’s audited statement, there was a steep growth in topline as gross earnings rose to N33.429 billion in the financial year 2022, from N25.843 billion.

Helped by a healthy increase in revenue, the bank’s annual profit inched upward by 68.49% to N6.881 billion from N4.084 billion in the comparable year 2021.

Based on expectations, this triggered the board of directors to declare financial dividend payments, but analysts think Jaiz Bank is actually low on cash flow.

The closely held company valuation could face further pressures following a signal that a fresh bearish trend is forming in the Nigerian stock market. Investors trading highs and lows are spotting value in the fixed income market.

For Jaiz Bank Plc, analysts feel there’s potential for upside amidst healthy performance in the first quarter of 2023 earnings release, which may drive momentum in the stock market.

In its financial statement for 2022, the Islamic lender reported that it earned ₦0.20 on each share outstanding, a strong increase from ₦0.14 in 2021.

In the period, Jaiz Bank revenue spiked significantly to ₦22.5 billion, representing a 31%.jump above 2021 record.

Similarly, the bank reported that its Net income rose to ₦6.88 billion in 2022, up 60% from the financial year 2021. Profit margin also spiked by 31% year on year, driven by higher revenue posted in the period.

Over the last 3 years on average, earnings per share has increased by 25% per year and the company’s share price has also increased by 25% per year, according to analysts.

A steep level of bad loans which may increase as Nigeria’s economic growth is projected to taper remains a Key issue facing Jaiz Bank. There is probably a need to shore up its capital position as it expands its balance sheet.

The board of directors announced a 4 kobo dividend payment to shareholders in 2022. The payout ratio is a comfortable 29% but the company is not cash flow positive, according to analysts.

When compared with 25% of dividend aristocrats on the Nigerian Exchange, Jaiz Bank’s dividend payment is considered to be low. Broadstreet analysts are hoping to see fresh capital injection in 2023 as the bank deepens its footprint in the market, aggressively building loan books amidst changing money dynamics.

In September 2022, MarketForces Africa reported that GCR Rating accorded the bank a positive outlook on expectations that Jaiz Bank could raise additional capital to support its expansion plans and market deepening strategy in the near term.

Dr. Sirajo Salisu, Ph D., serves as Managing Director and Chief Executive Officer since October 15, 2022, and also serves as Director at Jaiz Bank Plc and served as its Executive Director of Business Development since January 01, 2021.

He served as Acting Chief Risk Officer of Jaiz Bank Plc since July 2018 and served as its Chief Risk Officer since March 2019 and served as its Regional Manager of South until July 2018.

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