…As Jaiz Bank gets CBN’s nod to go national
By Isaac Anumihe, and Blaise Udunze
Experts in the financial industry have called for the re-engineering of the mortgage banking, housing finance sector, lamenting that limitations of Nigeria’s mortgage financing model that entail high equity contributions, leading to shallowness of the secondary refinancing market are obviously evidenced by the low contribution of mortgage loans and advances to Gross Domestic Product (GDP) at 0.5 per cent, compared to other developing countries such as South Africa and Malaysia with an average rate of 40 per cent.
The call was made by retiring President of Council of CIBN, Otunba Debola Osibogun, in her valedictory address titled “rethinking Nigeria’s Mortgage Finance Polices for Sustainable Development and Global Compititveness” where she stated the need to encourage commercial banks to get more involved in housing delivery.
She emphasised the need to expunge the Land Use Act from the constitution as it would in turn create an enabling environment for improved housing delivery projects.
“There is also need for an efficient mortgage insurance process in the country. This would guarantee that lenders and investors are compensated for losses due to the default on a mortgage loan.
“In order to shore up the confidence of Nigerians in mortgage financing, it is recommended that all institutional stakeholders must promote awareness on the benefits of mortgage financing while regulatory establishment must be known and seen to sanction infractions bank player in the, or tagged service delivery chain” she stated.
In his opening remarks, Group Chairman, FBN Holdings Plc, Dr. Oba Otudeko said mortgage financing is a critical aspect achieving financial inclusiveness for sustainable growth and development.
He noted that newer mortgage financing models would provide DMBs “greater access to the underserved lower to lower-middle income segments and reduce financial exclusion.
He, however, commended the National Pension Commission (PENCOM) for deepening the mortgage financing options through access to part of the N6trillion pension assets currently available.
Meanwhile, Chairman, Board of Directors of Jaiz Bank, Alhaji Umaru Abdul Mutallab, yesterday said that Central Bank of Nigeria (CBN) has issued the bank with a national licence that would enable it operate nationwide, including in the Federal Capital Territory (FCT).
Mutallab disclosed this in Abuja when he led board members of the bank on a courtesy visit on the Sultan of Sokoto, His Eminence, Muhammadu Sa’ad Abubakar to brief him on the activities of the bank.
Recall that Jaiz Bank which started operation three years ago, could not expand beyond the northern region because its licence limited its operation to the northern part of Nigeria.
“Your eminence we are here to brief you on the activities of Jaiz Bank which started operation some three years ago as a regional bank, and to inform you that just last Thursday, Central Bank of Nigeria (CBN), granted it a national licence authorising it to operate from any part of the country”, he said.
He disclosed that Jaiz Bank has three other subsidiaries within the group, which include, Jaiz Takaful( insurance) and Jaiz Charity Foundation and Development.
The chairman, also, solicited the support of Sultan of Sokoto in the bank’s quest to attain its maximum banking height.
“Jaiz Bank is a non- interest bank that caters for all Nigerians both the Christians and Muslims,” he said.
On Jaiz Takaful insurance ( an Islamic insurance firm), he said unlike the conventional insurance company that pays claims on risk maturity, the islamic Takaful insurance will treat all policy holders as shareholders of the firm in addtion to paying claims.
In his remarks, Abubakar congratulated the board for achieving its set target.
“I can remember some years back I challenged the Muslim Ummah to come together to ensure this bank takes off. This is a special type of bank that operates with ethics and morality. The challenge of getting a national licence is over. The real problem starts now,” he said.
Q1: Unity Bank’s profit shrinks to N972.3m
By Omodele Adigun
This may not be the best of times for Nigerian banks as the impacts of Nigeria’s harsh operating environment have continued to contract their profit. Just last week, the management of Unity Bank Plc released its first quarter result for 2016 showing a net income drop of over 73 per cent to N972.3 million from N3.63 billion recorded same period last year.
In the unaudited first quarter 2016 results made available to the Nigerian Stock Exchange (NSE) last week, the bank’s net income margins, a measure of profitability and efficiency, also tumbled by more than 13 percentage points from 21.92 per cent in 2015 to 8.10 per cent in 2016. Similarly, its gross revenue fell from about N16.5 billion to N12.4 billion, representing about 24.89 per cent decline while interest on loans and related income declined by 31.78 per cent to N7.97 billion.
Unity Bank’s cost to income ratio (CIR), another measure of efficiency, also reduced to 96.75 per cent as against 64.23 per cent in 2015. The CIR mirrors the efficiency of the bank as the lower it is, the more profitable a bank is. Further analysis of the bank’s financial statement shows lending component of its activities declined too because loans to deposit ratios fell to 95.49 per cent in 2016 from 106.35 per cent in 2015.
Recall that its former Managing Director, Mr. Henry Semenitari, who resigned in August last year, successfully pulled the bank from a financial loss of N33 billion as at December 2013, which it inherited from the legacy institutions that made up the bank at inception, to a profit before tax of N13.6 billion as at December 2014 financial year. Then he revealed that his target for the institution was to be the retail bank of choice by 2020.
“With over 150 branches along Nigeria’s agrarian belt, Unity Bank is significantly contributing to the development of the agricultural sector. The bank also has a large geographical spread to lead the implementation of the Central Bank of Nigeria’s (CBN)’s financial inclusion policy,” he said. But it appears to be having challenges with cost management probably because of the various headwinds buffeting the economy.
As a further commitment to the growth of the nation’s economy, we are also a committed supporter of Small and Medium Enterprises (SMEs), offering a range of specialised products and financial advisory services that will ensure that they achieve stability and profitability,” he said.
During his tenure, the bank’s active customer base increased from less than 100,000 to over 800,000.
By the end of June 2015 financial year, the bank’s gross earnings rose to N33.56 billion against N30.85 billion in 2014 while profit was at N7.89 billion in 2015 compared with N7.10 billion the same period of the corresponding year 2014.