Nigeria’s Jaiz Bank reports drop in H1 profit

Jaiz Bank, Nigeria’s first fully fledged non-interest financial institution in Nigeria has reported a 54.98 percent drop in profit after tax for the six months ended June 30, 2018. The Bank which had already made a profit of more than N459 million this time last year was only able to N206.7 million in the first half of the year. Income, however, grew by 4.60 percent from N2.953 billion in 2017 to N3,089 billion in 2018.

The bank had started well, attaining a break even position in the third year of operation (2014) despite, riding on the novelty of its offering. The bank had since remain profitable, growing deposit by 211 percent from N21.9 billion in 2013 to N68.1 billion in 2017. It also grew finance and investment assets by 320 percent from N11.5 billion in 2013 to N48.3 billion in 2017.

“We shall continue to internally develop new customers, new markets and new product for both our physical and virtual channels. We remain committed to continuous up-scaling of our governance mechanism to meet the highest operating standards. Cost efficiency is at the heart of our value creation model. We shall strive to be a low cost operator,” Hassan Usman, managing director/chief executive officer of Jaiz Bank said recently while addressing the investment community on the floor of the Nigerian Stock Exchange (NSE).

The NSE-listed company aims to grow profit after tax by 2022, with a strategic focus on retail banking, a market reported to be worth $30 billion. The Bank maintains that its retail focus will enable it to service the majority of Nigerians who wish to do away with Riba (Usury) in their daily activities regardless of their religious beliefs.

Conventional Banking Non-interest Banking
Money is a commodity besides being a medium of exchange and store of value. Money is not a commodity; though it is used as a medium of exchange and store of value.
Time value of money is the basis for charging interest on capital. Profit on trade of goods or rent charged for asset use is the main basis for earning profit.
Interest is charged on loans typically with a security taken by the bank and no further risk is assumed. Bank takes asset risk by acquiring the asset before renting, selling or sharing in its returns.
With asset financing (e.g. car, home financing), the bank lends you money on interest and you purchase the asset. Non-interest banks must first take ownership of the asset and then either rent the asset or sell it on to the customer (on a cost plus basis with deferred payment).
Conventional banking recognises and applies the principle of compounding interest.


Profit charged or rent charged do not compound.