AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 ...
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AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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TABLE OF CONTENTS Page
1. Directors, Officers & Professional Advisors 3
2. Financial Highlights 4-5
3. Directors Responsibilities 6
4. Statutory Audit Committee Report 7
5. Advisory Committee of Expert Report 8-9
6. Report of Independent Auditor 10-14
7. Financial Statements 15
8. Statement of Financial Position 16
11. Statement of Comprehensive Income 17
12. Statement of Changes in Equity 18
13. Statement of Cash flows 19
14. Statement of Sources & Uses of Qard Funds 20
15. Statement of Sources and Uses of Charity Fund 21
16. Notes to Financial Statements 22-66
17. Other National Disclosures 67-68
18. Value Added Statements 69
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DIRECTORS, OFFICERS & PROFESSIONAL ADVISORS
Alh. (Dr.) Umar Abdul Mutallab Chairman
Prof. Tajudeen Adepemi Adebiyi Independent Director
Nafiu Baba-Ahmad Independent Director
Alh. (Dr.) Aminu Alhassan Dantata Non-Executive Director
Alh. Musbahu Mohammed Bashir Non-Executive Director
Alh. Mukhtar Danladi Hanga Sani Non-Executive Director
Alh. (Dr.) Umaru Kwairanga Non-Executive Director
Mall. Falalu Bello Non-Executive Director
Mr. Mohamed Ali Chatti Non-Executive Director
H.R.H. Engr. Bello Muhammad Sani Non-Executive Director
Alh. (Dr.) Muhammadu Indimi Non-Executive Director
Mr. Hassan Usman Managing Director
Mr. Mahe Abubakar Mahmud Deputy Managing Director
Mr. Abdulfattah O. Amoo Executive Director
Company Secretary
Rukayat A Dahiru
FRC/2014/NBA/00000009649
Registered Office;
Jaiz Bank PLC
Kano House, 73, Ralph Shodeinde Street,
Central Business District, Abuja P.M.B 31 Garki, Abuja, Nigeria
Auditors:
Ahmed Zakari & Co.
222B Oladipo Diya Crescent.
2nd Avenue,Dolphin Estate,
Ikoyi,Lagos
Registrar and Transfer Office;
Africa Prudential PLC
220B Ikorodu Road
Lagos
Tax Adviser:
Oladele Konsulting
(Chartered Tax Practitioners & Management Consultants)
Suite C11 Othni Plaza
Plot 1528, Nouakchott Street Wuse Zone 1,Abuja
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FINANCIAL HIGHLIGHTS
STATEMENT OF FINANCIAL POSITION 31-Dec-2019 31-Dec-2018 Changes
N'Million N'Million (%)
Total Assets 167,273 108,462 54%
Financing & Investment Assets 107,775 71,816 50%
Deposits 127,193 85,033 50%
Share Capital 14,732 14,732 0%
Total Equity 15,552 13,109 19%
INCOME STATEMENT 31-Dec-2019 31-Dec-2018 Changes
N'Million N'Million (%)
Gross Earnings 14,715 8,744 68%
Profit Before Taxation (PBT) 2,110 898 135%
Taxation 333 (63) 625%
Profit After Taxation (PAT) 2,443 834 193%
RATIOS 31-Dec-2019 31-Dec-2018 Changes
Cost to Income 80.21% 87.28% 8%
Return on Assets 1.26% 0.83% 52%
Return on Equity 13.57% 6.85% 98%
Capital Adequacy 16.44% 21.13% -22%
Liquidity 33.60% 27.94% 20%
OTHERS 31-Dec-2019 31-Dec-2018 Changes
Earning Per Share 8.29 kobo 2.83 kobo -
Proposed Dividend 3kobo - -
Number of Branches/Offices 38 33 15%
Number of Staff 1,054 808 30%
Number of Shares in Issue (Million) 29,464 29,464 0%
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INCOME STATEMENT
STATEMENT OF FINANCIAL POSITION
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Total Assets Financing &Investment Assets
Deposits Share Capital Total Equity
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Gross Earnings Profit BeforeTaxation (PBT)
Taxation Profit After Taxation(PAT)
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Directors Responsibilities
Statement of Directors’ Responsibilities in Relation to the Financial Statements for financial year ended December
31, 2019
The Directors accept responsibility for the preparation of the financial statements that give a true and fair view in
accordance with the requirements of the International Financial Reporting Standards, the Financial Accounting
Standards issued by AAOIFI, the Financial Reporting Council of Nigeria Act 2011, the Banks and Other Financial
Institutions Act, CAP B3, LFN 2004, and relevant Central Bank of Nigeria regulations.
The Directors further accept responsibility for maintaining adequate accounting records as required by the
Companies and Allied Matters Act of Nigeria and for such internal control as the Directors determine is necessary to
enable the preparation of financial statements that are free from material misstatement whether due to fraud or error.
Going Concern:
The Directors have made assessment of the Company’s ability to continue as a going concern and have no reason to
believe that the Bank will not remain a going concern in the years ahead.
Resulting from the above, the directors have a reasonable expectation that the company has adequate resources to
continue operations for the foreseeable future. Thus, directors continued the adoption of the going concern basis of
accounting in preparing the annual financial statements.
Signed on behalf of the Directors by:
Abdufattah O. Amoo, FCA Hassan Usman, FCA
Chief Finance Officer Managing Director/CEO
FRC/2018/ICAN/00000017779 FRC/2013/ICAN/00000003984
16th March 2020 16th March 2020
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Statutory Audit Committee Report
We have examined the Auditors’ Report for the year ended 31st December 2019 in accordance with the provisions of
section 359 of the company and Allied Matters Act Cap C20, Laws of Federation of Nigeria 2004.
In our opinion, the Auditors Report is consistent with our review of the scope and planning of Audit. The External
Auditors’ findings as stated in the Managing Letter received satisfactory responses from Management. We are also
satisfied that the Bank’s Accounting Policies are in conformity with the statutory requirement and agreed with ethical
practices
Alhaji Shehu Mohammed,FCA
FRC/2018/ICAN/000000017824
Chairman,Board Audit Committee
Abuja
13TH MARCH ,2020
Members of Audit Committee
1. Alhaji Shehu Mohammed FCA Chairman
2. Alhaji Muhammad Rabiu El-Yakub Member
3. Alhaji Mohammed Gulani Shuaibu Member
4. Alhaji(Dr.)Aminu Alhassan Dantata Con Member
5. Alhaji(Dr) Musbahu Muhammad Bashir Member
6. Alhaji (Dr.)Umaru Kwairanga Member
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Advisory Committee of Expert Report
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Financial Statements
Statement of Financial Position
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Cash flows
Statement of Sources & Uses of Qard Funds
Statement of Sources and Uses of Charity Fund
Notes to Financial Statements
Other National Disclosures
Value Added Statements
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JAIZ BANK PLC
STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2019
2019 2018
Notes N'000 N'000
Assets
Cash and balances with Central Bank of Nigeria 3 42,103,116 23,409,751
Due from banks and other financial institutions 4 11,438,274 7,408,063
Investment in sukuk 5 41,086,469 19,819,872
Murabaha receivables 6 32,168,321 25,330,697
Investment in Bai Mu'ajjal 7 1,008,613 59,186
Investment in istisna 8 1,080,389 1,865,656
Investment in ijara assets 9 21,283,416 15,264,911
Qard hassan 10 79,430 171,948
Investment properties 11 1,603,513 1,603,513
Investment in assets held for sale 12 9,464,869 7,699,830
Property, plant and equipment 13 2,547,972 2,578,588
Leasehold improvement 14 65,297 58,118
Intangible assets 15 481,366 370,748
Other assets 16 2,400,175 2,809,209
Deferred tax asset 17b 462,186 12,368
Total assets 167,273,406 108,462,458
Liabilities
Customer current deposits 18a 69,603,883 45,950,138
Other financing 19 11,963,766 2,000,000
Other liabilities 19b 12,443,964 8,229,960
Tax payable 17a 120,251 90,344
Total liabilities 94,131,864 56,270,442
Equity of investment account holders
Customers' unrestricted investment accounts 18b 57,589,595 39,082,854
Total equity of investment account holders 57,589,595 39,082,854
Owners' equity
Share capital 20 14,732,125 14,732,125
Share premium 21 627,365 627,365
Retained earnings 22 (4,081,114) (4,574,108)
Risk regulatory reserve 23 2,714,153 1,619,336
Statutory reserve 24 1,237,660 504,826 Other reserves 25 321,757 199,618
Total equity 15,551,946 13,109,162
Total equity and liabilities 167,273,406 108,462,458
Dr. Umaru A. Mutallab, FCA, CON (Chairman)
FRC/2013/ICAN/00000004391
Hassan Usman, FCA (Managing Director/CEO)
FRC/2013/ICAN/00000003984
Abdufattah O. Amoo, FCA (Chief Finance Officer)
FRC/2018/ICAN/00000017779
The accompanying notes form an integral part of these financial statements.
These financial statements were approved by the Board of Directors on 16 March, 2020 and
signed on its behalf by
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JAIZ BANK PLC
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
2019 2018
Notes N'000 N'000
Income:
Income from financing contracts 26 7,461,682 6,291,944
Income from investment activities 27 6,055,941 1,223,634
Gross income from financing transactions 13,517,623 7,515,577
Return on equity of investment account holders 28(i) (2,907,985) (1,916,804)
Bank's share as equity investor/ mudarib 10,609,638 5,598,773
Net impairment (charges)/writeback for the year 32 (1,145,876) 231,584
Net Spread after Provision 9,463,762 5,830,357
Other Income
Fees and commisssion 29 1,008,943 988,439
Other operating income 30 188,258 240,305
Total Income 10,660,962 7,059,102
Expenses:
Staff costs 32 3,863,554 2,808,766
Depreciation and amortisation 33 714,586 608,398
Operating expenses 33(i) 3,972,805 2,744,236
Total expenses 8,550,945 6,161,400
Profit before tax 2,110,017 897,701
Income tax expenses 17a 332,768 (63,336)
Profit for the year after tax 2,442,785 834,365
Other comprehensive income
Item that may be reclassified to profit or loss
Net gain on gifted property 31 - 112,313
Total comprehensive income for the year 2,442,785 946,678
Earnings per share
Basic and diluted Earnings per share (Kobo) 8.29 kobo 2.83 kobo
The accompanying notes form an integral part of these financial statements.
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JAIZ BANK PLC
STATEMENT OF CHANGES IN EQUITY
AS AT 31 DECEMBER 2019
Share
Capital
Share
Premium
Retained
Earnings
Risk
Regulatory
Reserve
CBN
(AGSMEIS)
Reserve
Other
Comprehensive
income
Statutory
Reserve Total
N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000
Opening balance 14,732,125 627,365 (4,574,108) 1,619,336 87,305 112,313 504,826 13,109,162
Transfer to risk regulatory reserve - - (1,094,817) 1,094,817 - - - -
Transfer to statutory reserve - - (732,835) - - - 732,835 -
Transfer to AGSMEIS - - (122,139) - 122,139 - - -
Profit for the year - - 2,442,785 - - - - 2,442,785
As at 31 December 2019 14,732,125 627,365 (4,081,114) 2,714,153 209,444 112,313 1,237,660 15,551,947
Share
Capital
Share
Premium
Retained
Earnings
Risk
Regulatory
Reserve
CBN
(AGSMEIS)
Reserve
Other
Comprehensive
Income
Statutory
Reserve Total
N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000
Opening balance 14,732,125 627,365 (4,244,307) 2,267,029 42,420 - 254,516 13,679,148
Adjustment on IFRS 9 initial recognition - - - (1,516,664) - - (1,516,664)
Restated 1 January 2018 14,732,125 627,365 (4,244,307) 750,365 42,420 - 254,516 12,162,484
Revaluation reserve 112,313 112,313
Transfer to Risk regulatory reserve - - (868,971) 868,971 - - - -
Transfer to Statutory reserve - - (250,310) - - - 250,310 -
Transfer to AGSMEIS - - (44,885) - 44,885 - - -
Profit for the year - - 834,366 - - - - 834,366
As at 31 December 2018 14,732,125 627,365 (4,574,108) 1,619,336 87,305 112,313 504,826 13,109,161
The accompanying notes form an integral part of these financial statements.
31 December 2019
31 December 2018
Other reserves
Other Reserves
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JAIZ BANK PLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
2019 2018
Notes N'000 N'000
Cash flow from operating activities
Total comprehensive income for the year 2,442,784 946,678
Adjustments for non -cash items:
Depreciation 13 605,893 502,007
Amortisation of intangible assets 15 81,978 64,204Amortisation of leasehold improvement 14 26,716 20,832
Provision for financing impairment 32 1,145,877 -
Amortisation of prepaid rent 33(i) - 326,041
Tax 16a (332,768) 90,345
Gifted item 28 - (112,313)
Operating profit before changes in operating asset and liabilities 3,970,480 1,837,795
Working capital adjustment:
Sukuk 5 (21,266,597) (13,431,955)
Murabaha receivables 6 (6,837,625) (5,773,997)
Investment in musharaka 6 - 1,200,000
Qard hassan 10 92,518 (26,849)
Istisna 8 785,267 (505,057)
Bai Muajjal 7B (949,429) (59,186)
Ijara rental receivables 9 (6,018,506) 321,518
Investment properties 11 0 0
Investment in trading assets 12 (1,765,039) (1,816,542)
Other assets 16 409,035 (1,112,814)
Customers' current account 18a 23,653,745 12,243,779
Other financing 19 9,963,766 2,000,000
Other liabilities 19b 3,081,899 2,854,097
Tax paid 17a (87,144) (135,677)
Net cash from/(used in) operating activities 5,032,370 (2,404,887)
Investing activities
Purchase of property, plant & equipment 13 (575,276) (656,964)
Purchase of intangible assets 15 (192,595) (87,391)
Improvement on leasehold properties 14 (33,894) (51,295)
(801,766) (795,650)
FINANCING ACTIVITIES
Distribution to charity (13,772) (6,664)
Customers investment accounts - 18,506,741 4,673,957
Net cash provided by/(used in) financing activities 18,492,969 4,667,293
Increase/(decrease) In cash and cash equivalents 22,723,573 1,466,756
Cash and cash equivalents at beginning of year 30,817,816 29,351,060
Cash and cash equivalents At 31 December 53,541,389 30,817,816
The accompanying notes form an integral part of these financial statements.
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JAIZ BANK PLC
STATEMENT OF SOURCES AND USES OF QARD FUND
AS AT 31 DECEMBER 2019
2019 2018
N'000 N'000
Qard Hassan
Receivables
Qard Hassan
Receivables
Opening balance 174,597 149,082
Granted to staff - -
Granted to customers 15,013 83,178
Total uses during the year 189,610 232,260
Repayments
Staff repayment 14,222 16,043
Customer repayment 17,013 41,620
Total repayment 31,236 57,663
Net qard hassan 158,375 174,597
Impairment allowance (78,945) (2,649)
Balance at 31 December 79,430 171,948
The accompanying notes form an integral part of these financial statements.
The staff portion is made up of facilities granted to employees to buy the Bank's shares under
2012 Private Placement exercise and facilities taken over by the Bank from their previous
employers. Staff under critical situations were also granted this type of facility. The amount
granted to customers during the year was N15.01million (2018: N83.2 million).
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JAIZ BANK PLC
STATEMENT OF SOURCES AND USES OF CHARITY FUND
AS AT 31 DECEMBER 2019
2019 2018
N'000 N'000
Sources of charity funds
Balance at 1 January 3,298 -
Non-permissible income during the year 11,273 9,962
Total sources Of charity funds 14,571 9,962
Uses of charity Funds
Transfer to Jaiz Foundation 13,772 6,364
Philontropic activities - 300
Total uses of charity funds 13,772 6,664
Balance at 31 December 800 3,298
The accompanying notes form an integral part of these financial statements.
This Statement discloses how the non-permissible income was utilised. During the year under review the Bank
utilised substantial balance of the non-permissible income which was largely generated in the current year.
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JAIZ BANK
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST DECEMBER, 2019
1 Reporting entity
Jaiz Bank Plc (the “Bank”) is the first fully fledged non-interest financial institution in Nigeria. The Bank was granted a
banking license to carry on the business of non interest banking and commenced operation on January 6th, 2012
with three branches in two states and the Federal Capital Territory. It was established has a Private limited liability
Company but was converted to a Public limited liability company in April 2016 and now trades its Stock on the
Nigeria Stock Exchange .
The address of the Bank's registered office is Kano House, Plot 73, Ralph Shodeinde Street, Central Business District,
and Abuja, Nigeria. These Financial Statements of the Bank as at 31st December 2019 are prepared for only the Bank
as it has no subsidiary and/or Associate Company.
The Financial Statement of the Bank as at 31 December 2019, is only for the Bank as it has no subsidiary and/or
Associate company. The Bank is Primary involved in Investment, Corporate and Retail Banking. These financial
statements were approved and authorized for issue by the Board of Directors on 16th March 2020.The Directors have
the power to amend and issue the financial statements.
2 Statement of compliance with International Financial Reporting Standards
The Bank’s financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRS) issued by the International Accounting Standards Board (IASB) and Accounting and Auditing Organization for
Islamic Financial Institutions (AAOIFI). Additional information required by national regulations is included where
appropriate.
3 Basis of Preparation
This financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs)
and interpretations issued by the IFRS Interpretations Committee (IFRSIC) applicable to companies reporting under
IFRS. For matters that are peculiar to Islamic Banking and Finance, the Bank shall rely on the Statement of Financial
Accounting (“SFA”) and Financial Accounting Standards (“FAS”) issued by the Accounting and Auditing Organization
for Islamic Financial Institutions (“AAOIFI”), Standards issued by the Islamic Financial Services Board (“IFSB”) and
Circulars issued by the Central Bank of Nigeria (“CBN”) shall also be of guidance.
The Bank’s Financial statements comprising of the Statement of Financial Position, Statement of Profit or Loss and
Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows as required in IAS I and
Statement of Sources and Uses of Qard and Statement of Sources and Uses of Funds in the Zakah and Charity fund
as required by FAS2 have been prepared in accordance with the Going Concern Principle under the Historical Cost
Convention and may be modified to include fair valuation of particular instruments to the extent required or Permitted
under IFRS as set out in the relevant Accounting Principle.
Significant Accounting Policies
"The accounting policies adopted are consistent with those of the previous financial year except as noted below.
During the year the Bank has continued to ensure that the accounting policies have been consistently applied to in the
previous and current year unless stated differently.
(a) Going Concern
The Bank's management shall be making assessment of the Bank's ability to continue as a going concern
and where satisfied that the Bank has the resources to continue in business for the foreseeable future shall
form a judgment and prepare accounting information based on that. In any situation whereby the Board of
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Directors is aware of any material uncertainties that may cast significant doubt upon the Bank's ability to
continue as a going concern such issues shall be disclosed in the annual report.
(b) Functional and Presentation Currency
The Bank presented its Financial Statements in its functional currency the Nigeria Naira. All Values is rounded to the
naira’s thousands of Naira (N'000) except where otherwise stated.
(c) Use of estimates and judgments
The preparation of the financial statements in conformity with IFRSs requires management to make judgments,
estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and core assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the year in which the estimate is revised, if the revision affects only that year, or in the
year of the revision and future years, if the revision affects both current and future years. Information about significant
areas of estimation uncertainties and critical judgments in applying accounting policies that have the most significant
effect on the amounts recognised in separate financial statements. Actual Results may differ from these estimates.
(b) New Standard and Interpretations
1. Standards and interpretations effective during the reporting period
The new reporting requirements as a result of the amendments and/or clarifications have been evaluated and their
impact or otherwise are noted below:
IFRS 16 – Leases
The standard was issued in January 2016 and sets out the principles for the recognition, measurement, presentation
and disclosure of leases. It introduces a single lessee accounting model and requires a lessee to recognize:
•Assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of
low value.
•The liability to make lease payment (i.e. the lease liability) and an asset representing the right to use the
underlying asset during the lease term (i.e. the right-of-use-asset).
•The Interest expenses on the lease liability and the depreciation expense on the right of use asset
•The lease liability that occurred due to the occurrence of certain events(e.g. a change in the lease term, a
change in future lease payment resulting from change in an index or rate used to determine those
payments). The amount that arise from the re-measurement of the lease liability will also be adjusted
against the right-of-use-asset.
For lessor accounting, it substantially carries forward the requirements in IAS 17. Accordingly, a lessor continues to
classify its leases as operating leases or finance leases, and to account for those two types of leases differently. An
entity shall apply this Standard for annual reporting periods beginning on or after 1 January 2019.
The Bank is currently assessing the impact of the standard.
The Bank has always paid for all its lease obligation in advance and report it under the statement of financial position
as prepaid rent, this left the bank with known future lease obligation to settle and no interest expenses on the lease
liability. The bank will reclassify the rental expenses to depreciation as applicable. In general there are no financial
impact of adopting the IFRS 16 on the Bank book
IFRS 15 Revenue from Contracts with Customers
"In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers, effective for periods beginning on 1
January 2018 with early adoption permitted. IFRS 15 defines principles for recognizing revenue and will be applicable
to all contracts with customers. However, interest and fee income integral to financial instruments and leases will
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continue to fall outside the scope of IFRS 15 and will be regulated by the other applicable standards (e.g. IFRS 9, and
IFRS 16 Leases).
Revenue under IFRS 15 will need to be recognised as goods and services are transferred, to the extent that the
transferor anticipates entitlement to goods and services. The following five step model in IFRS 15 is applied in
determining when to recognise revenue, and at what amount:
i) Identify the contract(s) with a customer
ii) Identify the performance obligations in the contract
iii) Determine the transaction price
iv) Allocate the transaction price to the performance obligations in the contract
v) Recognise revenue when (or as) the entity satisfies a performance obligation
The standard also specifies a comprehensive set of disclosure requirements regarding the nature, extent and timing
as well as any uncertainty of revenue and the corresponding cash flows with customers. This standard does not have
any significant impact on the Bank.
2. Standards and interpretations issued/amended but not yet effective
The following standards have been issued or amended by the IASB but are yet to become effective for annual periods
beginning on or after 1 January 2019:
Standard Content Effective Date
IFRS 3 Business Combination 1-Jan-20
IAS 1 & IAS 8 Definition of Material 1-Jan-20
IFRS 17 Insurance Contracts 1-Jan-21
Amendments to IFRS 3 (Business Combination)
IFRS 3 (Business Combinations) outlines the accounting when an acquirer obtains control of a business (e.g. An
acquisition or merger). In October 2018, after the post implementation review of IFRS 3, the IASB issued an
amendment to IFRS 3 which centres majorly on the definition of a Business. They include:
• That to be considered a business, an acquired set of activities and assets must include, at minimum, an input and a
substantive process that together significantly contribute to the ability to create outputs:
• Narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and
by removing the reference to an ability to reduce costs.
• Add guidance and illustrative examples to help entities assess whether a substantive process has been acquired.
• Remove the assessment of whether market participants are capable of replacing any missing inputs or processes
and continuing to produce outputs: and
• Add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and
assets is not a business.
The effective date is on or after 1st January 2020. This amendment does not have any impact on the Bank.
Amendment to IAS 1 and IAS 8
In October 2018, the IASB issued the definition of ‘material’. The amendments are intended to clarify, modify and
ensure that the definition of ‘material’ is consistent across all IFRS. In IAS 1 (Presentation of Financial Statements) and
IAS 8 (Accounting Policies, Changes in Accounting Estimates and Errors), the revised definition of ‘material’ is quoted
below:
“An information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions
that the primary users of general purpose financial statements make based on those financial statements, which
provide financial information about a specific reporting entity”
The amendments laid emphasis on five (5) ways material information can be obscured. These include:
• If the language regarding a material item, transaction or other event is vague or unclear;
• If information regarding a material item, transaction or other event is scattered in different places in the financial
statements;
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• If dissimilar items, transactions or other events are inappropriately aggregated;
• If similar items, transactions or other events are inappropriately disaggregated; and
• If material information is hidden by immaterial information to the extent that it becomes unclear what information is
material.
The amendments are effective for annual reporting periods beginning on or after 1st January 2020. The Bank has
taken into consideration the new definition in the preparation of its annual account.
IFRS 17 - Insurance Contracts
IFRS 17 was issued in May 2017 and applies to annual reporting periods beginning on or after 1 January 2021. The
new IFRS 17 standard establishes the principles for the recognition, measurement, presentation and disclosure of
Insurance contracts within the scope of the Standard. The objective of IFRS 17 is to ensure an entity provides relevant
information that faithfully represents those contracts.
This information gives a basis for users of financial statements to assess the effect that insurance contracts have on
the entity’s financial position, financial performance and cash flows. This standard does not impact the Bank in anyway
as the Bank and its subsidiary companies do not engage in insurance business.
(b) IFRS 9 Financial Instruments
"In July 2014, the IASB issued IFRS 9 Financial Instruments (“IFRS 9”), which replaces IAS 39 “Financial Instruments:
Recognition and Measurement”. IFRS 9 addresses all aspects of financial instruments including classification and
measurement, impairment and hedge accounting.
The adoption of IFRS 9 also significantly amends other standards dealing with financial instruments such as IFRS 7
Financial Instrument Disclosures.
The transitional provisions of IFRS 9 permitted the Bank to elect not to restate comparative figures. Adjustments to the
carrying amounts of financial assets and financial liabilities at the date of the transition were recognised in the opening
retained earnings and other reserves of the current period."
The preparation of financial statements requires the use of estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Although these
estimates are based on the management's best knowledge of current events and actions, actual results ultimately may
differ from those estimates. The most significant uses of judgments and estimates are as follows:
3.1 Other Accounting Policies
i Going Concern
The Bank's management shall be making assessment of the Bank's ability to continue as a going concern and where
satisfied that the Bank has the resources to continue in business for the foreseeable future shall form a judgment and
prepare accounting information based on that. In any situation whereby the Board of Directors is aware of any material
uncertainties that may cast significant doubt upon the Bank's ability to continue as a going concern such issues shall
be disclosed in the annual report.
ii Fair Value of Unquoted Equity Securities and Investment Properties
Fair value shall be determined for each investment individually in accordance with the valuation policies of the Bank.
Where the fair values of the Bank's unquoted equity securities cannot be derived from an active market, they shall be
derived using a variety of valuation techniques. Judgment by management is required to establish fair values through
the use of appropriate valuation models, consideration of comparable assets, discount rates and the assumptions
used to forecast cash flows. Investment properties and investments in real estate projects shall be carried at fair value
as determined by independent real estate valuation experts. The determination of the fair value for such assets
requires the use of judgment and estimates by the independent valuation experts that are based on local market
conditions existing at the date of the statement of financial position.
iii Impairment Provisions against Financing Contracts with Customers
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The Bank shall review its financing contracts at each reporting date to assess whether an impairment provision should
be recorded in the financial statements. In particular, judgment by management is required in the estimation of the
amount and timing of future cash flows when determining the level of provision required. Such estimates are based
on assumptions about factors involving varying degrees of judgment and uncertainty and actual results may differ
resulting in future changes to the provisions. In addition to specific provisions against individually significant
financing contracts, the Bank also shall make a collective impairment provision of 1% against exposures which,
although not specifically identified as requiring a specific provision, have a greater risk of default than when originally
granted. This takes into consideration, factors such as any deterioration in country risk, industry, and technological
obsolescence, as well as identified structural weaknesses or deterioration in cash flows.
iv Impairment of Investments at Fair Value through Equity
The Bank shall treat investments carried at fair value through equity as impaired when there is a significant or
prolonged decline in the fair value below their costs or where other objective evidence of impairment exists. The
determination of what is 'significant' or 'prolonged' requires judgment. The Bank would evaluate factors, such as the
historical share price volatility for comparable quoted equities and future cash flows and the discount factors for
comparable unquoted equities.
v Liquidity
The Bank shall manage its liquidity through consideration of the maturity profile of its assets and liabilities on daily
basis. This requires judgment when determining the maturity of assets and liabilities with no specific maturities.
(c) Inventory
Inventory of stationery and consumables held by the Bank are to be stated at the lower of cost and net realizable value
in line with IAS 2. When inventories become old or obsolete, an estimate is to be made of their net realizable value.
For individually significant amounts, this estimation is to be performed on an individual basis. For amounts that are
not individually significant, collective assessment shall be made and allowance applied according to the inventory type
and degree of ageing or obsolescence based on historical selling prices.
(d) Non-Current Assets
Non-current (fixed) assets are initially recorded at cost. They are to be subsequently stated at historical cost less
depreciation and any accumulated impairment loss. Historical cost includes expenditure that is directly attributable to
the acquisition of the assets.
Subsequent costs are included in the asset's carrying amount or are recognized as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the asset will flow to the Bank and the cost of
the asset can be measured reliably. All other repairs and maintenance are charged to the income statement during the
financial period in which they are incurred.
Construction cost in respect of offices is carried at cost as work in progress. On completion of construction, the
related amounts are transferred to the appropriate category of fixed assets. Payments in advance for items of fixed
assets are included as Prepayments in Other Assets and upon delivery are reclassified as additions in the appropriate
category of property and equipment.
Asset that do not reach a limit of N25,000 (Twenty Five Thousand Naira Only) are expensed immediately in the
income statement, but capitalized if above limit.
Depreciation is to be provided on a straight-line basis to write off the cost of asset over their estimated useful live.
The annual rate which should be applied consistently over time are as follows:
Motor vehicle (6 years) 16.67%
Furniture and fittings (5 years) 20%
Equipment (5 years) 20%
Computer Equipment- General (3 years) 33%
P a g e 27
Computer Equipment- Special (5 years) 20%
Computer software (10 years) 10%
Freehold Buildings (50 years) 2%
Leasehold building over the expected life of the lease
Leasehold improvement over the period of the lease
Property, plant and equipment is derecognised on disposal or when no future economic benefits are expected from it
use. Gain and losses are recognised in the income statement.
Depreciation is charged when the assets are available for use irrespective of whether they are put to use. Assets that
are subject to depreciation are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. The recoverable
amount is the higher of the asset's fair value less costs to sell and value in use.
Gains and losses on disposal are determined by comparing proceeds with carrying amount. These are included in the
statement of income for the year.
(e) Intangible Assets
Software licenses acquired by the Bank are stated at cost less accumulated amortization and accumulated impairment
loss (if any). Expenditure incurred on internally developed software is recognized as an asset when the Bank is able to
complete the software development and use it in such a manner that it will be able to generate economic benefit to
the Bank, and that the cost to complete the development can reliably be measured by the Bank.
Internally developed software cost that is capitalized includes cost directly attributable to developing the software, and
is amortized over the useful economic life of the software.
Amortization is recognized in the income statement on a straight line basis over the estimated useful life of the
software.
(f) Financial Instruments – Initial Recognition and Subsequent Measurement
All financial assets and liabilities are initially recognized on the trade date, i.e. the date that the Bank becomes a party
to the contractual provisions of the instrument. The classification of financial instruments at initial recognition depends
on the purpose and the management's intention for which the financial instruments were acquired and their
characteristics. All financial instruments are measured initially at their fair value plus transaction costs, except in the
case of financial assets recorded at fair value through income statement.
(g) Ijarah (Leasing)
The Bank shall comply fully with the requirements of Sharia in recognition and measurement of Ijarah financing. The
periodic lease rentals receivable are treated as rental income during the period they occur and charge thereon is
included in operating expenses while initial direct cost incurred are written off to the income statement in the period
they are incurred.
(h) Murabaha Receivables from Banks
These are interbank commodity Murabaha transactions. The Bank arranges a Murabaha transaction by buying a
commodity (which represents the object of the murabaha) and then resells this commodity to the beneficiary murabeh
(after adding a profit margin). The sale price (cost plus the profit margin) is paid either lump sum at Maturity or in
installments by the Murabeh over the agreed period. Murabaha receivables from banks are stated net of deferred
profits and provision for impairment, if any.
(i) Murabaha Receivables from Customers
Customer Murabaha receivables consist of deferred sales transaction agreements and are stated net of deferred
profits, any amounts written off and provision for impairment, if any. Promise made in the Murabaha to the purchase
P a g e 28
Orderer is obligatory upon the customer and the bank can claim damages to the exact amount of loss suffered.
(j) Musharaka
Musharaka contracts represents a partnership between the Bank and a customer whereby each party contributes to
the capital in equal or varying proportions to establish a new project or share in an existing one, and whereby each of
the parties becomes an owner of the capital on a permanent or declining basis and shall have a share of profits or
losses. These are stated at the fair value of consideration given less any amounts written off and provision for
impairment, if any.
(k) Wakalah
A contract between a Bank and a customer whereby one party (the principal: the Muwakkil) appoints the other party
(the agent: Wakil ) to invest certain funds according to the terms and conditions of the Wakalah for a fixed fee in
addition to any profit exceeding the expected profit as an incentives for the Wakil for the good performance. Any
losses as result of the misconduct or negligence or violation of the terms and conditions of the Wakalah are borne by
the Wakil for otherwise, they are by the principal.
(l) Impairment of Financial Assets
In line with IFRS 9, the Bank assesses the under listed financial instruments for impairment using Expected Credit
Loss (ECL) approach:
• Amortized cost financial assets;
• Debt securities classified as at FVOCI;
• Off-balance sheet loan commitments; and
• Financial guarantee contracts.
Equity instruments and financial assets measured at FVTL are not subjected to impairment under the standard.
Expected Credit Loss Impairment Model
The Bank’s allowance for credit losses calculations are outputs of models with a number of underlying assumptions
regarding the choice of variable inputs and their interdependencies. The expected credit loss impairment model
reflects the present value of all cash shortfalls related to default events either over the following twelve months or over
the expected life of a financial instrument depending on credit deterioration from inception. The allowance for credit
losses reflects an unbiased, probability-weighted outcome which considers multiple scenarios based on reasonable
and supportable forecasts.
The Bank adopts a three-stage approach for impairment assessment based on changes in credit quality since initial
recognition.
Stage 1 – Where there has not been a significant increase in credit risk (SICR) since initial recognition of a
financial instrument, an amount equal to 12 months expected credit loss is recorded. The expected credit
loss is computed using a probability of default occurring over the next 12 months. For those instruments
with a remaining maturity of less than12 months, a probability of default corresponding to remaining term
to maturity is used.
Stage 2 – When a financial instrument experiences a SICR subsequent to origination but is not considered
to be in default, it is included in Stage 2. This requires the computation of expected credit loss based on
the probability of default over the remaining estimated life of the financial instrument.
Stage 3 – Financial instruments that are considered to be in default are included in this stage. Similar to
Stage 2, the allowance for credit losses captures the lifetime expected credit losses. The guiding principle
for ECL model is to reflect the general pattern of deterioration or improvement in the credit quality of
financial instruments since initial recognition. The ECL allowance is based on credit losses expected to
arise over the life of the asset (life time expected credit loss), unless there has been no significant increase
in credit risk since origination.
Measurement of Expected Credit Losses
The probability of default (PD), exposure at default (EAD), and loss given default (LGD) inputs used to estimate
expected credit losses are modelled based on macroeconomic variables that are most closely related with credit
losses in the relevant portfolio.
Details of these statistical parameters/inputs are as follows:
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PD – The probability of default is an estimate of the likelihood of default over a given time horizon. A default may only
happen at a certain time over the remaining estimated life, if the facility has not been previously derecognized and is
still in the portfolio.
o 12-month PDs – This is the estimated probability of default occurring within the next 12 months (or over
the remaining life of the financial instrument if that is less than 12 months). This is used to calculate 12-
month ECLs. The Bank obtains the constant and relevant coefficients for the various independent variables
and computes the outcome by incorporating forward looking macroeconomic variables and computing the
forward probability of default.
o Lifetime PDs – This is the estimated probability of default occurring over the remaining life of the financial
instrument. This is used to calculate lifetime ECLs for ‘stage 2’ and ‘stage 3’ exposures. PDs are limited to
the maximum period of exposure required by IFRS 9. The Bank obtains 3 years forecast for the relevant
macroeconomic variables and adopts exponentiation method to compute cumulative PD for future time
periods for each obligor.
EAD – The exposure at default is an estimate of the exposure at a future default date, taking into account expected
changes in the exposure after the reporting date, including repayments of principal and interest, whether scheduled
by contract or otherwise, expected drawdowns on committed facilities, and accrued interest from missed payments.
LGD – The loss given default is an estimate of the loss arising in the case where a default occurs at a given time. It is
based on the difference between the contractual cash flows due and those that the lender would expect to receive,
including from the realization of any collateral. It is usually expressed as a percentage of the EAD.
To estimate expected credit loss for off balance sheet exposures, credit conversion factor (CCF) is usually computed.
CCF is a modelled assumption which represents the proportion of any undrawn exposure that is expected to be
drawn prior to a default event occurring. It is a factor that converts an off balance sheet exposure to its credit
exposure equivalent. In modelling CCF, the Bank considers its account monitoring and payment processing policies
including its ability to prevent further drawings during periods of increased credit risk. CCF is applied on the off
balance sheet exposures to determine the EAD and the ECL impairment model for financial assets is applied on the
EAD to determine the ECL on the off balance sheet exposures.
Forward-looking information
The measurement of expected credit losses for each stage and the assessment of significant increases in credit risk
considers information about past events and current conditions as well as reasonable and supportable forecasts of
future events and economic conditions. The estimation and application of forward-looking information requires
significant judgement. The measurement of expected credit losses for each stage and the assessment of significant
increases in credit risk considers information about past events and current conditions as well as reasonable and
supportable forecasts of future events and economic conditions. The estimation and application of forward-looking
information requires that:
The Bank uses internal subject matter experts from Risk, Treasury and Business Divisions to
consider a range of relevant forward looking data, including macro-economic forecasts and
assumptions, for the determination of unbiased general economic adjustments in order to
support the calculation of ECLs.
Macro-economic variables taken into consideration include, but are not limited to,
unemployment, interest rates, gross domestic product, inflation, crude-oil prices and exchange
rate, and requires an evaluation of both the current and forecast direction of the macro-economic
cycle.
Macro-economic variables considered have strong statistical relationships with the risk
parameters (LGD, EAD, CCF and PD) used in the estimation of the ECLs, and are capable of
predicting future conditions that are not captured within the base ECL calculations.
Forward looking adjustments for both general macro-economic adjustments and more targeted at
portfolio / industry levels. The methodologies and assumptions, including any forecasts of future
economic conditions, are reviewed regularly.
Macroeconomic factors
The Bank relies on a broad range of forward looking information as economic inputs, such as: GDP growth,
unemployment rates, central bank base rates, crude oil prices, inflation rates and foreign exchange rates. The inputs
and models used for calculating expected credit losses may not always capture all characteristics of the market at the
P a g e 30
date of the financial statements. To reflect this, qualitative adjustments or overlays may be made as temporary
adjustments using expert credit judgement.
The macroeconomic variables and economic forecasts as well as other key inputs are reviewed and approved by
management before incorporated in the ECL model. Any subsequent changes to the forward looking information are
also approved before such are inputted in the ECL model.
The macro economic variables are obtained for 3 years in the future and are reassessed every months to ensure that
they reflect prevalent circumstances and are up to date. Where there is a non-linear relationships, one forward-
looking scenario is never sufficient as it may result in the estimation of a worst-case scenario or a best-case scenario.
The Bank’s ECL methodology considers weighted average of multiple economic scenarios for the risk parameters
(Basically the forecast macroeconomic variables) in arriving at impairment figure for a particular reporting period.
The model is structured in a manner that the final outcome, which is a probability cannot be negative.
SICR is assessed once there is an objective indicator of a deterioration in credit risk of customer.
In addition, the Bank as part of its routine credit processes perform an assessment on a quarterly basis to identify
instances of SICR.
Multiple forward-looking scenarios
The Bank determines allowance for credit losses using three probability-weighted forward-looking scenarios. The
Bank considers both internal and external sources of information in order to achieve an unbiased measure of the
scenarios used. The Bank prepares the scenarios using forecasts generated by credible sources such as Business
Monitor International (BMI), International Monetary Fund (IMF), Nigeria Bureau of Statistics (NBS), World Bank,
Central Bank of Nigeria (CBN), Financial Markets Dealers Quotation (FMDQ), and Trading Economics.
The Bank estimates three scenarios for each risk parameter (LGD, EAD, CCF and PD) – Normal, Upturn and
Downturn, which in turn is used in the estimation of the multiple scenario ECLs. The ‘normal case’ represents the
most likely outcome and is aligned with information used by the Bank for other purposes such as strategic planning
and budgeting. The other scenarios represent more optimistic and more pessimistic outcomes. The Bank has
identified and documented key drivers of credit risk and credit losses for each portfolio of financial instruments and,
using an analysis of historical data, has estimated relationships between macro-economic variables, credit risk and
credit losses.
Assessment of significant increase in credit risk (SICR)
At each reporting date, the Bank assesses whether there has been a significant increase in credit risk for exposures
since initial recognition by comparing the risk of default occurring over the remaining expected life from the reporting
date and the date of initial recognition. The assessment considers borrower-specific quantitative and qualitative
information without consideration of collateral, and the impact of forward-looking macroeconomic factors. The
common assessments for SICR on retail and non-retail portfolios include macroeconomic outlook, management
judgement, and delinquency and monitoring. Forward looking macroeconomic factors are a key component of the
macroeconomic outlook.
The importance and relevance of each specific macroeconomic factor depends on the type of product, characteristics
of the financial instruments and the borrower and the geographical region. The Bank adopts a multi factor approach in
assessing changes in credit risk. This approach Considers: Quantitative (primary), Qualitative (secondary) and Back
stop indicators which are critical in allocating financial assets into stages.
The quantitative models considers deterioration in the credit rating of obligor/counterparty based on the Bank’s
internal rating system or External Credit Assessment Institutions (ECAI) while qualitative factors considers information
such as expected forbearance, restructuring, exposure classification by licensed credit bureau, etc.
A backstop is typically used to ensure that in the (unlikely) event that the primary (quantitative) indicators do not
change and there is no trigger from the secondary (qualitative) indicators, an account that has breached the 30 days
past due criteria for SICR and 90 days past due criteria for default is transferred to stage 2 or stage 3 as the case may
be except there is a reasonable and supportable evidence available without undue cost to rebut the presumption.
P a g e 31
Definition of Default and Credit Impaired Financial Assets
At each reporting date, the Bank assesses whether financial assets carried at amortised cost and debt financial assets
carried at FVOCI are credit-impaired. A financial asset is ‘credit impaired’ when one or more events that have a
detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
Significant financial difficulty of the borrower or issuer;
A breach of contract such as a default or past due event;
The lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty,
having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;
It is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
The disappearance of an active market for a security because of financial difficulties.
The purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses.
Others include death, insolvency, breach of covenants, etc.
A loan that has been renegotiated due to a deterioration in the borrower’s condition is usually considered to be credit-
impaired unless there is evidence that the risk of not receiving contractual cash flows has reduced significantly and there
are no other indicators of impairment.
In addition, loans that are more than 90 days past due are considered impaired. More information around rebuttal is
presented under Financial Risk Management on page 135.
In making an assessment of whether an investment in sovereign debt is credit-impaired, the Bank considers the following
factors.
The market’s assessment of creditworthiness as reflected in the bond yields.
The rating agencies’ assessments of creditworthiness.
The country’s ability to access the capital markets for new debt issuance.
The probability of debt being restructured, resulting in holders suffering losses through voluntary or mandatory
debt forgiveness.
The international support mechanisms in place to provide the necessary support as ‘lender of last resort’ to that
country, as well as the intention, reflected in public statements, of governments and agencies to use those
mechanisms. This includes an assessment of the depth of those mechanisms and, irrespective of the political
intent, whether there is the capacity to fulfil the required criteria.
Presentation of allowance for ECL in the statement of financial position
Loan allowances for ECL are presented in the statement of financial position as follows:
Financial assets measured at amortised cost: as a deduction from the gross carrying amount of the assets;
Loan commitments and financial guarantee contracts: generally, as a provision;
Where a financial instrument includes both a drawn and an undrawn component, and the Bank cannot
identify the ECL on the loan commitment component separately from those on the drawn component: the
Bank presents a combined loss allowance for both components. The combined amount is presented as a
deduction from the gross carrying amount of the drawn component. Any excess of the loss allowance over
the gross amount of the drawn component is presented as a provision; and
Debt instruments measured at FVOCI: no loss allowance is recognised in the statement of financial position
because the carrying amount of these assets is their fair value. However, the loss allowance is disclosed
and is recognised in the fair value reserve.
(m) Income Recognition
i Murabaha
Where the income is quantifiable and contractually determined at the commencement of the contract, income is
recognized on a time-apportioned basis over the period of the contract based on the principal amounts outstanding.
Accrual of income is suspended when the bank believes that the recovery of these amounts may be doubtful.
Where the income is quantifiable and contractually determined at the commencement of the contract, income is
recognized on a time-apportioned basis over the period of the contract based on the principal amounts outstanding.
Accrual of income is suspended when the bank believes that the recovery of these amounts may be doubtful.
P a g e 32
ii Ijarah Muntahia Bittamleek
Ijarah income is recognized on a time-apportioned basis, over the lease term. Accrual of income is suspended when
the bank believes that the recovery of these amounts may be doubtful.
iii Musharaka
Income on Musharaka Contracts is recognized when the right to receive payment is established or on distribution by
the Musharek.
iv Dividends
Dividends from investments in equity securities are recognized when the right to receive the payment is established.
This is usually when the dividend has been declared.
v Fees and Commission Income
The Bank earns fee and commission income from a diverse range of services it provides to its customers.
vi Sale of Property under Development
Where property is under development and agreement has been reached to sell such property when construction is
complete, the bank considers whether the contract comprises:
Contract to construct a property; or
Contract for the sale of completed property
Where a contract is judged to be for the construction of a property, revenue is recognized using the percentage of
completion method, as construction progresses. The percentage of work completed is measured based on the costs
incurred up until the end of the reporting period as a proportion of total costs expected to be incurred.
Where the contract is judged to be for the sale of a completed property, revenue is recognized when the significant
risks, rewards and control of ownership of the property are transferred to the buyer.
vii Non-Credit Related Fee Income
This is recognized at the time the services have been performed and delivered or the transaction has been completed.
viii Foreign Income
a) Commission on negotiation of various letters of credit and overdue Profit on delayed foreign payments are
accounted for on receipt.
b) Other Profit and income earned on the Bank's own funds held outside Nigeria are accounted for on receipt.
ix Earnings Prohibited by Shari 'a
The bank is committed to avoid recognizing any income generated from non-Islamic sources. Accordingly, all non-
permissible income is transferred to charity.
x Service Income
Revenue from rendering of services is recognized when the services are rendered.
xi Revenue from Sale of Goods
Revenue from sales of goods is recognized when the significant risks, rewards and control of ownership of the goods
have passed to the buyer and the amount of revenue can be measured reliably.
xii Bank's Share as a Mudarib
The Bank's share as a mudarib for managing the equity of investment account holders is accrued based on the terms
and conditions of the related mudaraba agreements whereas, for off balance sheet equity of investment accounts,
P a g e 33
mudarib share is recognized when distributed.
xiii Expense Recognition
a) Profit on mudaraba payable (banks and non-banks)
Profit on these is accrued on a time-apportioned basis over the period of the contract based on the principal amounts
outstanding.
b) Return on Equity of Investment Account Holders
Return on equity of investment account holders is based on the income generated from jointly financed assets after
deducting Mudarib share and is accrued based on the terms and conditions of the underlying Mudaraba agreement.
Investors' share of income represents income generated from assets financed by investment account holders net off
allocated administrative expenses and provisions. The bank's share of profit is deducted from the investors' share of
income before distribution to investors.
(n) Transactions in Foreign Currencies
i The financial statements are presented in Nigerian Naira, which is the reporting currency in line with IAS21 (Effects of
foreign exchange)
ii Transactions in foreign currencies are recorded in the books at the rate of exchange ruling on the date of the
transactions.
iii Monetary assets and liabilities denominated in foreign currencies are converted into Naira at the rate of exchange
ruling at the balance sheet date. All differences are taken to the statement of income.
iv Non-monetary items that are measured in terms of historical cost in a foreign currency are translated into Naira using
the exchange rates as at the dates of the initial recognition. Non-monetary items measured at fair value in a foreign
currency are translated into Naira using the exchange rates at the date when the fair value is determined. Exchange
gains and losses on non-monetary items classified as “fair value through statement of income” are taken to the
income statement and for items classified at “fair value through equity” such differences are taken to the statement of
comprehensive income.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts
of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operations and
translated at closing rate.
(o) Taxation
i Current Income Taxation
Income tax is the amount of income tax payable on the taxable profit for the period determined in accordance with
current statutory rate. Income tax payable on profits, based on the applicable tax law, is recognized as an expense in
the period in which the related profits arise. All taxes related issues including deferred tax are treated in accordance
with IAS 12 (Income taxes).
ii Deffered Taxation
Provision for deferred taxation is made by the liability method and calculated at the current rate of taxation on the
temporary differences between the net book value of qualifying fixed assets and their corresponding tax written down
value in accordance with IAS 12 (Income taxes). The principal temporary differences arise from depreciation of
property, plant and equipment, provisions for pensions and other post-retirement benefits, provisions for Investment
losses and tax losses carried forward. The rates enacted or substantively enacted at the balance sheet date are used to
determine deferred income tax.
P a g e 34
Deferred tax assets are recognized where it is probable that future taxable profit will be available against which the
timing differences can be utilized.
(p) Investments
i Investment Securities
Investment securities are initially recognized at cost and management determines the classification at initial
investment. Investments in securities are classified, measured and recognize in accordance with IAS 39 (Financial
Instruments measurement and recognition).
ii Investments at Fair Value through Statement of Income
Investments at fair value through statement of income include investments designated upon initial recognition as
investments at fair value through statement of income. Financial assets carried at fair value through statement of
income are recognised at fair value, with transaction costs recognised in the consolidated statement of income.
Investments classified as 'at fair value through statement of income’ are subsequently measured at fair value. The
unrealized gains and losses arising from the remeasurement to fair value are included in the consolidated statement of
income.
iii Investments at Fair Value through Equity
Investments at fair value through equity are those which are designated as such or are not classified as carried at fair
value through statement of income. These include investments in equity securities and managed funds.
After initial measurement, investments at fair value through equity are subsequently measured at fair value. Unrealised
gains and losses are recognised in statement of comprehensive income and then transferred to the available for sale
reserve in the consolidated statement of changes in equity. When the investment is disposed of or determined to be
impaired, the cumulative gain or loss, previously transferred to the available for sale, reserve is recognised in the
consolidated statement of income. Where the Bank holds more than one investment in the same security they are
deemed to be disposed off on a weighted average basis. Profit earned whilst holding investments at fair value through
equity is reported as Income from investment activities' using the effective profit rate method. Long-term investments
are investments held over a long period of time to earn income. Long-term investments may include debt and equity
securities.
iv Investments in Subsidiaries
Investments in subsidiaries are carried in the company's balance sheet at cost less provisions for impairment losses.
Where, in the opinion of the Directors, there has been impairment in the value of an investment, the loss is
recognized as an expense in the period in which the impairment is identified.
On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged
or credited to the statement of income.
(q) Retirement Benefits
Retirement benefits to employees are provided under a defined contribution scheme, which is funded by contribution
from the bank and employees. Funding under the new scheme is 8.0% by staff and 10% by the Bank based on annual
basic salary, housing and transport allowances in line with the new Pension Reform Act, 2014. Membership of the
scheme is automatic upon resumption of duty with the Bank. The Bank has no further payment obligations once the
contributions have been paid.
The Bank's liabilities in respect of the defined contribution are to be charged against the profit of the year in which
they become payable. Payments are made to Pension Fund Administration companies, who are financially
independent of the bank.
(r.) Provisions, Contingent Assets and Contingent Liabilities
P a g e 35
Provision is recognized when the Bank has a present obligation whether legal or constructive as a result of a past
event for which it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and the amount can be reliably measured, in accordance with the International Financial Reporting
Standards (IAS 37).
Transactions that are not currently recognized as assets or liabilities in the balance sheet, but which nonetheless give
rise to credit risks, contingencies and commitments are reported off balance sheet. Such transactions included letters
of credit, bonds, guarantees, acceptances, trade related contingencies such as documentary credits etc.
Outstanding and unexpired commitments at year end in respect of these transactions are to be shown by way of note
to the financial statements.
Income on off-balance sheet engagement is in form of commission and fees.
Commission and fees are recognized when transactions are executed.
(s) Borrowings
i Murabaha and Due to Banks
This represents funds received from banks on the principles of murabaha contracts and are stated at fair value of
consideration received less amounts settled.
ii Murabaha and due to non-banks
These are stated at fair value of consideration received less amounts settled. Profit paid on borrowings is recognized
in the statement of income for the year.
(t) Fiduciary Activities
The Bank acts as trustee in its capacity as a Mudarib when managing the equity of investment account holders. Equity
of investment account holders is invested in murabaha and due from banks, sukuk and financing contracts with
customers. Equity of investment account holders is carried at fair value of consideration received less amounts
settled. Expenses are allocated to investment accounts in proportion of average equity of investment account holders
to total average assets of the Bank.
Income is allocated proportionately between equity of investment account holders and owners' equity on the basis of
the average balances outstanding during the year and share of the funds invested. Equity and assets of restricted
investment account holders are carried off-balance sheet as they are not assets and liabilities of the Bank.
(u) Segment Reporting
The Bank prepares its segment information based on geographical and business segments as primary and secondary
reporting segments, respectively in accordance with IFRS 8 (Operating segments).
A business segment is a Bank of assets and operations engaged in providing products or services that are subject to
risks and returns that are different from those of other business segments. A geographical segment is engaged in
providing products or services within a particular economic environment that are subject to risks and returns different
from those of segments operating in other economic environments.
The Bank has appointed the Management committee charged with the responsibility of allocating resources and
assessing performance as the Chief Operating Decision Maker as required under IFRS 8. The CODM is reviewed and
advised by the Board for decisions on significant transactions and or events.
P a g e 36
(v) Offsetting
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally
enforceable right or shariah requirement to set off the recognized amounts and there is an intention to settle on a net
basis, or realize the asset and settle the liability simultaneously.
(w) Cash and Cash Equivalent
Cash comprises:
i Cash in hand
ii Balance held with Central Bank of Nigeria
iii Balance with banks in Nigeria and outside Nigeria
iv Demand deposit denominated in Naira and other foreign currencies
Cash equivalent are short term, highly liquid instruments which are:
a readily convertible into cash, whether in local and foreign currencies; and
b so near to their maturity dates as to present insignificant risk of changes in value as a result of changes in
profits rates.
(x) Ordinary Share Capital
i Share Issue Costs
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds.
ii Dividend on Ordinary Shares
Dividends on ordinary shares are appropriated from revenue reserve in the period they are approved by the Bank's
shareholders. Dividends for the year that are approved by the shareholders after the balance sheet date are dealt with
in the subsequent events note.
Dividends proposed by the Directors but not yet approved by members are disclosed in the financial statements in
accordance with the requirements of the Company and Allied Matters Act 1990.
(L) Gifted Assets
The recording of the gift would be based on nature, lifetime and materiality of the gift. If the gift is usable or has a material value
addition to the business like Property, plant and equipment, it would be recognized in an asset of appropriate category, In terms
of credit several approaches are acceptable recognizing it to Owners equity via Profit or Loss Account or Other Comprehensive
Income. The Bank adapted recognition through other comprehensive income to the owners’ equity.
(M) Investment property
An Investment Property is an investment in land or buildings held primarily for generating income or capital appreciation and
not occupied substantially for use in the operations of the Bank. A piece of property is treated as an investment property if it is
not occupied substantially for use in the operations of the Bank, an occupation of more than 15% of the property is considered
substantial.
The initial Recognition is to be at its cost price while for subsequent measurement the Bank adapted the fair value model which
carry the investment properties in the balance sheet at their market value and revalued periodically on a systematic basis at least
once in every three years in accordance with (IAS 40). Investment properties are not subject to periodic charge for depreciation.
When there is a decline in value of an investment property, the carrying amount of the property is written down to recognize the
loss. Such a reduction is charged to the statement of income. Reductions in carrying amount are reversed when there is an
increase, following a revaluation in accordance with the Bank’s policy, in the value of the investment property, or if the reasons
for the reduction no longer exist.
An increase in carrying amount arising from the revaluation of investment property is credited to owners' equity as revaluation
surplus. To the extent that a decrease in carrying amount offsets a previous increase, for the same property that has been
P a g e 37
credited to revaluation surplus and not subsequently reversed or utilized, it is charged against that revaluation surplus rather
than the statement of income.
An increase on revaluation which is directly related to a previous decrease in carrying amount for the same property that was
charged to the income statement is credited to income statement to the extent that it offsets the previously recorded decrease.
Investment properties are disclosed separate from the property and equipment used for the purposes of the business in line
with IAS 40 (Investment Properties)
(N) Earning per share
The Bank presents basic earnings per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Bank by the weighted average number of ordinary shares outstanding during the
period. Diluted EPS is determined by adjusting the profit or loss that is attributable to ordinary shareholders and the weighted-
average number of ordinary shares outstanding for effects of all dilutive potential ordinary shares.
P a g e 38
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2019
3 Cash and balances with Central Bank of Nigeria2019 2018
N '000 N '000
Cash 5,062,591 3,969,149
Current account with CBN 9,455,427 8,593,192
Deposit with CBN 27,500,960 10,804,990
CBN AGSMEIS Balance 84,138 42,420
Balance as at 31 December 42,103,116 23,409,751
4 Due from banks and other financial institutions2019 2018
N'000 N'000
Balances with banks within Nigeria:
First Bank Plc 95,117 236,096
95,117 236,096
Balances with banks outside Nigeria:
First Bank UK 5,955,940 6,320,529 Habib Bank UK -
Banco De Sabadel 23,920 200,980
Standard Chartered 3,904,834 153,932
Bank Al-Bilad 214,350 189,307
Zenith Bank UK 1,173,123 307,218
FCMB UK 4,519 -
Aktif Bank 43,769 -
Bank of Beirut 22,701 -
11,343,157 7,171,967
Balance as at 31 December 11,438,274 7,408,063
5 Investment in sukuk 2019 2018
N'000 N'000
Opening Balance 18,965,012 6,068,953
Addition during the year 21,486,000 13,325,033
Disposal/Redemption (2,584,188) (428,974)
Gross investment in Sukuk 37,866,824 18,965,012
Premium 2,367,231 473,967
Rental Receivable 852,414 380,894
Balance as at 31 December 41,086,469 19,819,872
Cash on hand constitutes the aggregate cash balances in the vaults of the
Bank branches while Deposits with the Central Bank of Nigeria
represent Mandatory Reserve Deposits(as prescribed by the CBN) and
are not available for use in the bank’s day to day operations.
The balances held with Banks outside Nigeria substantially represent the
naira equivalent of foreign currency balances held on behalf of customers
in respect of letters of credit transactions. The corresponding liability is
included in LC margin deposits under "Other Liabilities" (see note 19b).
The amount is not available for the day to day operations of the Bank.
P a g e 39
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2019
The total sukuk investment is broken down into i and ii below:
i Osun State Sukuk 2019 2018
N'000 N'000
Opening Balance 1,039,527 902,648
Addition during the year - 565,853
Disposal/Redemption (482,188) (428,974)
Gross investment in Sukuk 557,339 1,039,527
Premium 12,205 52,930
Rental Receivable 20,552 38,334
Balance as at 31 December 590,096 1,130,791
ii FGN Sovereign Sukuk 2019 2018
N'000 N'000
Opening Balance 17,925,485 5,166,305
Addition during the year 21,486,000 12,759,180
Disposal/Redemption (2,102,000) -
Gross investment in Sukuk 37,309,485 17,925,485
Premium 2,355,025 421,037
Rental Receivable 831,863 342,560
Balance as at 31 December 40,496,373 18,689,082
6 Murabaha receivables 2019 2018
N'000 N'000
Murabaha retail 13,987,773 7,030,831
Murabaha corporate 14,765,178 20,147,236
Commercial Agric. Credit Scheme 625,305 1,495,584
Paddy Aggregation scheme 4,659,529 -
Murabaha staff 647 1,125
Murabaha SME 3,231,340 44,425
Gross recievables 37,269,772 28,719,200
Allowance for impairment (1,904,071) (1,724,308)
Deffered profit (3,197,380) (1,664,196)
Balance as at 31 December 32,168,321 25,330,697
7 Investment in Bai Mu'ajjal 2019 2018
N'000 N'000
Bai Mu'ajjal corporate 1,305,501 79,968
Gross receivables 1,305,501 79,968
Allowance for impairment
Deffered Profit (296,888) (20,782)
Balance as at 31 December 1,008,613 59,186
8 Investment in istisna 2019 2018
N'000 N'000
Istisna recievable 1,146,745 2,024,325
Allowance for impairment (16,576) (11,827)
Deffered Profit (49,780) (146,841)
Balance as at 31 December 1,080,389 1,865,656
P a g e 40
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2019
9 Investment in ijara assets 2019 2018
N'000 N'000
Ijara wa iqtina 15,980,326 12,102,569
Ijara home finance 19,227 22,475
Ijara auto & others 2,738,898 741,353
Gross investment in ijara 18,738,450 12,866,397
Ijara accrued profit 2,714,707 2,454,197
Impairment allowance (169,740) (55,683)
Balance as at 31 December 21,283,416 15,264,911
10 Qard hassan 2019 2018N'000 N'000
Opening Balance 174,597 149,082
Granted to staff - -
Granted to customers 15,013 83,178
Gross qard hassan 189,610 232,260
Repayments
Staff repayment 14,222 16,043
Customer repayment 17,013 41,620
Total repayment during the year 31,235 57,663
Gross receviables 158,375 174,597
Impairment allowance (78,945) (2,649)
Balance as at 31 December 79,430 171,948
11 Investment properties 2019 2018
N'000 N'000
Investment properties 1,603,513 1,603,513
Balance as at 31 December 1,603,513 1,603,513
12 Investment in assets held for sale 2019 2018
N'000 N'000
Advances for LC murabaha 1,355,993 3,045,817
Inventory for sale - (note 12 (i)) 8,478,819 4,654,012
Impairment allowance (369,943) -
Balance as at 31 December 9,464,869 7,699,829
(i) Schedules of inventory for sale 2019 2018
Repossessed property 2,159,524 831,513
Inventory - other properties 698,909 1,444,221 Oil & Gas - -
Special murabaha inventory 5,126,802 1,310,000
Inventory purchase-fertilizer - 749,417 Inventory Hajj mat & chemical - 174,000
Inventory hide & skin 493,584 144,861
Total inventory for sale 8,478,819 4,654,012
P a g e 41
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2019
13 Property, plant and equipment
Freehold
Land
Building
Freehold
Office
Equipment
Motor
Vehicle
Furnitures
& Fixtures
Computer
Equipment
Fixed
Assets WIPTotal
Cost N' 000 N' 000 N' 000 N' 000 N' 000 N' 000 N' 000 N' 000
1-January-2019 57,086 559,211 842,730 475,431 214,490 2,027,518 442,763 4,619,231
Additions/Reclassification - 115,279 154,784 122,068 34,161 359,128 (220,140) 565,279
Disposals - - - - - - - -
31 December 2019 57,086 674,490 997,514 597,499 248,651 2,386,646 222,623 5,184,510
Accumulated depreciation
1-January-2019 - 26,735 429,220 238,253 139,362 1,207,073 - 2,040,642
Depreciation - 12,918 156,991 59,016 29,377 337,594 - 595,896
Adjustment - - - - - - - -
31 December 2019 - 39,653 586,211 297,269 168,739 1,544,667 - 2,636,539
Cost
1-January-2018 3,086 495,327 676,346 405,207 181,608 1,608,113 276,101 3,645,788
Additions/ Reclassification 54,000 63,884 166,384 70,224 32,882 419,405 166,662 973,443
31 December 2018 57,086 559,211 842,730 475,431 214,490 2,027,518 442,763 4,619,231
Accumulated depreciation
1-January-2018 - 16,710 302,785 178,359 113,087 910,851 - 1,521,791
Depreciation - 10,025 126,481 64,083 26,550 296,222 - 523,362
Adjustment - - (46) (4,189) - 276 - (4,511)
31 December 2018 - 26,735 429,220 238,253 139,362 1,207,073 - 2,040,642
Net book value
31 December 2019 57,086 634,836 411,303 300,230 79,912 841,979 222,623 2,547,972
31 December 2018 57,086 532,476 413,510 237,179 75,128 820,446 442,763 2,578,588
31 December 2018
P a g e 42
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2019
14 Leasehold improvement 2019 2018
Cost N'000 N'000
Opening balance 848,458 810,819
Adjustments - -
Addition 29,695 37,639
As at 31 December 878,153 848,458
Amortisation and impairment losses
Opening balance 790,340 775,888
Adjustments - (6,380)
Amortisation for the year 22,515 20,832
As at 31 December 812,855 790,340
Carrying amount
As at 31 December 65,297 58,118
15 Intangible assets 2019 2018
N'000 N'000
Cost
Computer
software
Computer
software
Opening balance 687,898 593,232
Addition 192,596 94,666 Disposal - -
As at 31 December 880,494 687,898
Amortisation and impairment losses
Opening balance 317,150 252,946
Amortisation for the year 81,978 64,204
Reclassification - -
As at 31 December 399,128 317,150
Carrying amount
As at 31 December 481,366 370,748
P a g e 43
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
16 Other assets 2019 2018
N'000 N'000
Sundry debtors 29,619 360,498
Right of use asset 403,944 450,255
Other prepayments 17,246 307,256
Prepaid staff 110,715 106,658
Inventory and other security items 75,819 48,590
Branch development expenditure 29,614 308,905
Account receivables 626,307 319,005
Settlement suspense 1,257,471 948,276
Investment in financial inclusion centre 20,154 -
Interbranch 6,213 717
Total 2,577,102 2,850,159
Impairment allowance (176,927) (40,950)
As at 31 December 2,400,175 2,809,209
Movement in other assets:
2019 2018
N'000 N'000
Opening balance 2,809,209 7,034,672
Changes in the year (232,106) (4,184,513)
Impairment allowance (176,927) (40,950)
As at 31 December 2,400,175 2,809,209
17a Tax payable
(i) Statement of financial position 2019 2018
N'000 N'000
Opening balance 90,345 135,677
Charge for the year 117,050 90,345
207,395 226,022
Less payment during the year (87,144) (135,677)
As at 31 December 120,251 90,345
(ii) Income statement 2019 2018
N'000 N'000
Company income tax (minimum tax) 96,159 82,301
Education tax - 2,599
Information technology levy 20,891 5,445
117,050 90,345
Deferred tax expenses ( note 17 b)
Deferred tax expenses (origination/(reversal) of temporary differences) (449,818) (27,009)
Balance at 31 December (332,768) 63,336
The total tax expenses of N-333 million for the current year comprises of the Company income tax and
Information Technology tax of N117 million while the N-450 million is a deferred tax credit arising from
the reversal of temporary differences in the year.
P a g e 44
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2019
17b Deferred tax asset 2019 2018
N'000 N'000
Opening balance 12,368 -
Deferred tax expenses(origination/(reversal) ) note 17 a (ii) 449,818 12,368
Transfer to deferred lability - -
Balance at 31 December 462,186 12,368
(i) Reconciliation of tax expense and the accounting profit 2019 2018
N'000 N'000
Accounting profit before tax 2,110,017 897,702
Add non-deductible expenses for tax purpose
Depreciation of ppe, collective impairment & others 1,531,233 661,234
3,641,251 1,558,936
Less:
Exempted income on Sukuk 4,728,155 1,163,084
Collective impairment write-back - 231,584
Capital allowances - 330,428
Technology levy 20,891 5,445
Adjusted profit (1,107,797) (171,605)
Company income tax at 30% of adjusted profit - -
Minimum tax 96,159 82,301
Education tax - 2,599
Technology levy 20,891 5,445
Total tax payable 117,050 90,345
Deferred tax (origination)/reversal (449,818) (27,009)
Income tax expense (332,768) 63,336
(ii) Deferred tax movement 2019 2018
N'000 N'000
Property, plant & equipment 30,460 173,516
Collective impairment (211,480) 15,834
Unabsorbed capital allowance (268,798) (216,359)
Deferred tax (origination)/reversal (449,818) (27,009)
The movement in the deferred tax account during the year by various
components was as follows:
P a g e 45
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2019
18a Customers' current account 2019 2018
N'000 N'000
Analysis by type of account
Current account 69,603,883 45,950,138
Balance as at 31 December 69,603,883 45,950,138
18b Unrestricted investment account
Savings account 35,099,480 36,716,950
JAPSA term deposit (note 18 d) 22,490,115 2,365,904
Balance as at 31 December 57,589,595 39,082,854
18c Analysis by type of customer 2019 2018
N'000 N'000
Government 13,845,100 7,871,523
Corporate 40,422,583 24,243,312
Individual 72,925,795 52,918,157
Balance as at 31 December 127,193,478 85,032,992
18d Analysis of JAPSA maturity by product 2019 2018
N'000 N'000
JTD 30 days 14,934,600 278,592
JTD 60 days 967,381 185,347
JTD 90 days 3,938,349 864,114
JTD 180 days 1,324,536 721,334
JTD above 360 days 1,325,249 316,516
Balance as at 31 Dec 2019 22,490,115 2,365,904
19 Other financing 2019 2018
N'000 N'000
i Central Bank of Nigeria 7,298,545 2,000,000
ii Bank of Agriculture 1,009,342 -
iii Bank of Industry 2,700,000 -
iv Islamic Corporation for Development for the Private Sector(ICD) 946,456 -
v Islamic Trade Finance Corporation 9,423 -
11,963,766 2,000,000
Movement in other financing during the year
Opening balance 2,000,000 -
Additions 9,887,052 2,000,000
Profit payment (544,263) -
Repayment 620,977 -
Balance as at 31 December 11,963,766 2,000,000
The Bank has different JAPSA tenored deposits which give customers the opportunity to choose from a basket of
return available for different tenors.
P a g e 46
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2019
19(i)
19(ii)
19(iii)
19(iv)
19(v)
19b Other liabilities 2019 2018
N'000 N'000
Managers' cheque 279,316 798,008
Letter of credit margin deposits 4,844,556 5,754,137
Accounts payable 82,680 80,010
Vendors payable 243,995 284,144
Other tax liabilities 93,414 33,896
Profit payable to investment accountholder 144,706 63,853
E-banking payables 1,422,237 357,102
Due to charity 800 3,298
Sundry payables 1,821,463 644,436
Accrued audit fee and expense 17,500 13,263
Sundry deposit 3,348,011 29,076
Impairment allowance on Off Balance sheet items 49,317 11,914
Unearned income 50,031 72,171
Other payables 45,938 84,652
Balance as at 31 December 12,443,964 8,229,960
This represents the amount granted under the USD 20 million line of financing provided by Islamic Corporation
for the Development of private sector (ICD) for onward financing to eligible SME’s in Nigeria. The facility has a
maximum tenor of 3 years inclusive of 6 months moratorium with quarterly repayment at a financing rate of 6.5%
p.a.
This represents the amount of USD 10 million Trade Financing facility granted by International Islamic Trade
Finance Corporation (ITFC). The facility is for a tenor of one year (revolving) and is to be used solely for financing
trade finance transactions. Financing rate on the facility is applicable USD LIBOR plus 385 basis points.
This represents the balance on the on-lending facilities granted by the Central Bank of Nigeria in collaboration
with the Federal Government of Nigeria (FGN) under the Commercial Agriculture Credit Scheme (CACS). The
Federal Government of Nigeria is represented by the Federal Ministry of Agriculture and Rural Development) who
has the aim of providing concessionary funding for agriculture so as to promote commercial agricultural enterprises
in Nigeria.The profit rate on the facility is 9% per annum inclusive of all related charges associated with the
financing and the profit distribution ratio between the CBN as Capital Provider and the NIFI as the Implementing
Party is in the ratio of 2:7. The exit date of the scheme is September 2025
This represents the amount granted under a N1billion facility in June 2016. The facility is for a tenored and rolled
over which is solely for financing agricultural related transaction. The profit rate of the facility is 12% payable
yearly.
This represents an intervention credit granted to the Bank by the Bank of Industry (BOI) for the purpose of
refinancing/restructuring existing loans to Small and Medium Scale Enterprises (SMEs), manufacturing companies
and companies in the power and aviation industries. The maximum tenor of facility under this programme is 15
years while the tenor for working capital is one year, renewable annually subject to a maximum tenor of years.
The Bank under this intervention programme pays BOI quarterly based on the structure of the finance at 12% and
the Bank is under obligation to on-lend to customers at a profit rate of 20% per annum. The Bank is the primary
obligor to CBN/BOI and assumes the risk of default.
P a g e 47
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2019
20 Owners' equity
A Share capital
(i) Authorised 2019 2018
N'000 N'000
25,000,000 25,000,000
Balance as at 31 December 25,000,000 25,000,000
(ii) Issued and fully paid share capital 2019 2018
N'000 N'000
Balance as at 31 December 14,732,125 14,732,125
The movement on the issued and fully paid up share capital account during the year was
as follows:
2017 2016
21 Share premium 2019 2018
N'000 N'000
Opening balance 627,365 627,365
Movement during the year - -
Balance as at 31 December 627,365 627,365
22 Retained earnings 2019 2018
N'000 N'000
Opening balance (4,574,108) (4,244,308)
Net profit for the year 2,442,785 834,366
Statutory regulatory reserve (732,835) (250,310)
AGSMEIS (122,139) (44,885)
Risk regulatory reserve (1,094,817) (868,971)
Balance as at 31 December (4,081,114) (4,574,108)
23 Risk regulatory reserve 2019 2018
N'000 N'000
Opening balance 1,619,336 2,267,029
Impact of adopting IFRS 9 - (1,516,664)
Restated opening balance under IFRS 9 1,619,336 750,365
Adjustment against retained earnings 1,094,817 868,971
Balance as at 31 December 2,714,153 1,619,336
50,000,000,000 ordinary shares of N0.50 each
29,464,249,300 ordinary shares of N0.50 each at 1 January 14,732,125 14,732,125
Share premium is the excess paid by shareholders over the nominal value for their shares. There was no movement in share
premium account during the year.
There was no movement in the share capital account during the year. The holders of ordinary shares are entitled to receive
dividends and each shareholder is entitled to a vote at the meetings of the Bank. All ordinary shares rank equally.
P a g e 48
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2019
24 Statutory reserve 2019 2018
N'000 N'000
Opening balance 504,826 504,826
Adjustment against retained earnings 732,835 -
Balance as at 31 December 1,237,662 504,826
25 Other reserves
(a) Other comprehensive income 2019 2018
N'000 N'000
Opening balance 112,313 112,313
Balance as at 31 December 112,313 112,313
(b) Agricultural /small and medium enterprises investment scheme 2019 2018
N'000 N'000
Opening balance 87,305 42,420
Provision for the year 122,139 44,886
Balance as at 31 December 209,445 87,305
Total 321,757 199,618
In April 2017, the Central Bank of Nigeria issued guidelines to govern the operations of the Agricultural/Small and Medium
Enterprises Scheme (AGSMEIS). All Deposit Money Banks(DMBs) are required to set aside 5% of their annual Profit After Tax
(PAT). The amount of N122 million (2018: N45 million) represents 5% provision made for the year ended 31 December 2019.
P a g e 49
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
26 Income from financing contracts 2019 2018
Murabaha transactions N'000 N'000
Murabaha profit - corporate 3,279,907 2,557,299
Murabaha profit - retail 1,007,198 817,141
Murabaha income - LC 7,574 2,931
Bai Mu'ajjal 86,219 2,066
Total profit from murabaha transactions 4,380,898 3,379,436
Ijara transactions
Ijara wa iqtina 2,598,460 2,278,018
Ijara finance lease 309,474 81,851
Ijara home finance 2,163 1,194
Ijara others 752 545
Total profit from Ijara transactions 2,910,849 2,361,609
Others
Istisna 169,935 313,975
Salam Profit - -
Musharaka - 200,198
Interbank murabaha - 36,726
Total profit from other financing/investment contracts 169,935 550,899
7,461,682 6,291,944
27 Income from investment activities 2019 2018N'000 N'000
Trading assets 1,224,273 32,342
Sukuk 4,728,156 1,163,084
Rental 103,513 28,207
Total income from investing activities 6,055,941 1,223,634
28 (i). Return on equity investment account holders 2019 2018
N'000 N'000
828,381 4,120,913
Fees paid /(charge) as mudarib 2,079,604 (2,204,109)
Profit from financing investments paid to mudarabah account holders 2,907,985 1,916,804
(ii) Bank's shares on financing and investment activites
Total income from financing 7,461,682 6,291,944
Less: profit paid to investment account holders (828,381) (4,120,913)
6,633,301 2,171,031
Total income from investment 6,055,941 1,223,634
(Less)/add: share of fee (paid)/charged to investment account holders (2,079,604) 2,204,109
3,976,337 3,427,743
Bank's share as equity investor/mudarib 10,609,638 5,598,773
29 Fees and commisssion 2019 2018
N'000 N'000
Banking services 215,038 264,739
Net income from E-Business 406,652 322,532
LC/ trade finance income 387,252 401,168
1,008,943 988,439
30 Other operating income 2019 2018
N'000 N'000
Wakala income 174,670 240,305
Miscellaneous income 13,588 -
Foreign Exchange Gain/Losses - -
188,258 240,305
31 Other comprehensive income
2019 2018
N'000 N'000
Gifted assets income - 112,313
- 112,313
Total income from financing contracts
Profit paid to mudarabah account holders
P a g e 50
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
32 Staff costs 2019 2018
N'000 N'000
Salaries 3,417,081 2,444,419
Staff pension 168,749 156,469
Training and seminar expenses 162,815 111,800
Other staff expenses 114,909 96,077
Balance as at 31 December 3,863,554 2,808,766
33 Depreciation and amortisation 2019 2018
N'000 N'000
Depreciation of property, plant & equipment 605,893 523362
Amortisation of leasehold improvement 26,716 20832
Amortisation of intangible assets 81,978 64204
Balance as at 31 December 714,586 608,398
33(i) Operating expenses 2019 2018
N'000 N'000
Advertising and marketing 284,607 99,291
Administrative - note 33 (ii) 1,579,503 1,093,298
Subscription and professional fees 158,727 122,246
Provision of Banking Sector Resolution Cost Trust Fund -
ACE's Expense 36,937 40,038
Right-of-use assets amortisation 341,564 326,041
Licences 546,723 322,129
Bank charges 63,514 56,974
Audit fee & other expenses 31,552 27,400
NDIC premium 391,855 271,709
Bandwith and connectivity 280,912 161,173
Directors expenses 256,912 223,937
Balance as at 31 December 3,972,805 2,744,236
31(ii)Right-of-use amortisation/ rental charges 2019 2018
N'000 N'000
Right-of-use assets amortisation 341,564 -
Balance as at 31 December 341,564 -
Rental charges/occupacy cost - 326,041
Balance as at 31 December - 326,041
33(ii)Administrative 2019 2018
N'000 N'000
Telephone expenses 4,268 6,097
SWIFT/NIBBS charges 23,970 16,466
Courier charges 14,788 16,843
Service contract (HR and Admin) 483,709 377,900
Local and foreign travels 96,574 51,957
Printing & Stationaries 114,677 67,770
Repairs and maintenance 342,610 202,837
Security related expenses 80,365 68,139
Money and other Insurance 41,613 23,486
Fuel expense 110,888 81,223
Data recovery & IT related expenses 1,155 6,790
Newspaper, magazine & periodicals 1,831 5,100
Entertainment 16,465 5,966
Regulatory expenses 50,538 8,715
Sundry expenses 160,839 84,093
Cash shortage w/o 3,035 1,585
Listing expenses 4,072 55,670
Industry certification 28,105 12,660
Balance as at 31 December 1,579,503 1,093,298
P a g e 51
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2019
34. Impairment Provisions
34 (a) Statement of prudential adjustment
Prudential Adjustment for the year ended 2019
In compliance with the provisions under the revised Prudential Guidelines issued by the Central Bank of Nigeria,
which became effective 1 July, 2010. Which addresses the variance between the impairment allowance under
prudential guidelines and the expected credit loss model required by IFRS 9.
Paragraph 12.4 of the revised Prudential Guidelines for Deposit Money Banks in Nigeria stipulates that Banks would
be required to make provisions for loans as prescribed in the relevant IFRS Standards when IFRS is adopted.
However, Banks would be required to comply with the following:
Provisions for loans recognized in the profit and loss account should be determined based on the requirements of
IFRS. However, the IFRS provision should be compared with provisions determined under prudential guidelines and
the expected impact/changes in general reserves should be treated as follows:
• Prudential Provisions is greater than IFRS provisions; the excess provision resulting therefrom should be
transferred from the general reserve account to a "regulatory risk reserve". As at 31 December 2019, the difference
between the Prudential provision and IFRS impairment was N536 million for the Bank (December 2018: N869
million). This requires transfer of N536 million from retained earnings to regulatory risk reserves for Bank as
disclosed in the statement of changes in equity. These amounts represent the difference between provisions for
credit and other known losses as determined under the prudential guidelines issued by the Central Bank of Nigeria
(CBN) and impairment reserve as determined in line with IFRS 9 as at the year end.
Provision on Risk Assets
2019 2018 Total
N'000 N'000 N'000
Total impairment allowance per IFRS 9 2,765,520 1,847,331 918,189
Total impairment per Prudential Guidelines 5,493,537 3,466,666 2,026,872
Risk regulatory reserves balance as at 31 December 2,728,018 1,619,335 1,108,683
P a g e 52
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2019
34 (b) Carrying value of financing and investment
RISK ASSETS SUMMARY - 31 DEC 2019 IMPAIRMENT SUMMARY Carrying Amount
Stage 1 Stage 2 Stage 3 TOTAL Stage 1 Stage 2 Stage 3 TOTAL TOTAL
N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000
Bai-Muajjal 1,224,405 - 81,097 1,305,501 3,594 - 1,622 5,216 1,300,285
Murabaha finance 33,677,163 196,017 3,396,592 37,269,772 853,773 12,995 1,032,087 1,898,855 35,370,917
Ijara finance 17,681,792 89,903 966,755 18,738,450 68,269 9 101,463 169,740 18,568,710
Istisna 642,792 133,887 370,066 1,146,745 8,272 137 8,166 16,576 1,130,169
Qard hassan 158,374 - - 158,374 113 - 78,831 78,944 79,430
53,384,526 419,807 4,814,509 58,618,843 934,021 13,141 1,222,169 2,169,332 56,449,511
Other financing assets 9,055,666 - 80,237 9,135,903 368,287 - 1,656 369,943 8,765,960
Off balance sheeet 27,719,808 4,395,051 - 32,114,859 38,338 10,979 - 49,317 32,065,542
- - -
TOTAL 90,160,001 4,814,858 4,894,746 99,869,605 1,340,647 24,120 1,223,825 2,588,592 97,281,013
2019
RISK ASSETS SUMMARY - 31 DEC 2018 IMPAIRMENT SUMMARY 31 DEC 2018 Carrying Amount
Stage 1 Stage 2 Stage 3 TOTAL Stage 1 Stage 2 Stage 3 TOTAL TOTAL
N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000
Bai-Muajjal 79,968 - - 79,968 526 - - 526 79,442
Murabaha finance 25,775,951 - 2,943,249 28,719,200 586,066 75,092 1,062,623 1,723,781 26,995,419
Ijara finance 8,583,377 1,957,314 2,325,706 12,866,397 6,128 3,041 46,514 55,683 12,810,714
Istisna 1,530,512 - 493,813 1,717 - 10,111 11,828 (11,828)
Qard hassan 174,597 - - 174,597 2,649 - - 2,649 171,948
36,144,405 1,957,314 5,762,768 41,840,162 597,086 78,133 1,119,248 1,794,467 40,045,694
Off balance sheet 11,861,152 - 11,861,152 11,914 - - 11,914 11,849,238
TOTAL 48,005,557 1,957,314 5,762,768 53,701,314 609,000 78,133 1,119,248 1,806,381 51,894,933
2018
P a g e 53
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2019
34 (c) Reconciliation of impairment provision balance from IAS 39 to IFRS 9
The following table reconciles the closing impairment loss allowance for financial assets in
accordance with IAS 39 and provisions for financing commitments and financial guarantee contracts
in accordance with
IAS 37 Provisions, Contingent Liabilities and Contingent Assets as at December 31 2017 to the
opening ECL allowance determined in accordance with IFRS 9 as at January 1, 2018.
Stage 1 Stage 2 Stage 3 Trading assets OKL TOTAL
N'000 N'000 N'000 N'000 N'000 N'000
Balance as at 1 January 609,000 78,133 1,119,249 - 40,950 1,847,331
Impairment charged during the year 731,647 (54,013) 152,577 179,688 135,977 1,145,876
Write offs - - (48,000) (179,688) 0 (227,688)
Balance as at 31 December 1,340,647 24,120 1,223,825 0 176,927 2,765,520
Stage 1 Stage 2 Stage 3 OKL TOTAL
N'000 N'000 N'000 N'000 N'000
Balance as at 1 January - - - 521,301
Re-measurment under IFRS 9 - - - - 1,516,664
Balance as at 1 January - restated 1,181,189 254,817 601,960 2,037,965
Other known losses 40,950 40,950
Write back/recoveries during the year (572,189) (176,684) 517,289 - (231,584)
Balance as at 31 December 609,000 78,133 1,119,249 40,950 1,847,331
2019
2018
P a g e 54
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2019
34 (d) Impairment allowance charged
The following table reconciles the impairment loss allowance charged on financing assets and
financing commitments and guarantee contracts determined in accordance with IFRS 9 as at 31
December, 2019.
IMPAIRMENT LOSS ALLOWANCE - 31 DEC 2019
Stage 1 Stage 2 Stage 3 Trading assets OKL TOTAL
N'000 N'000 N'000 N'000 N'000 N'000
Bai-Muajjal 3,068 - 1,622 - - 4,690
Murabaha finance 267,707 (62,097) (30,536) - - 175,074
Ijara finance 62,141 (3,032) 54,948 - - 114,057
Istisna 6,556 137 46,055 - - 52,748
Qard hassan (2,535) - 78,831 - - 76,295
336,936 (64,992) 150,921 0 0 422,864
Other financing assets 368,287 - 1,656 179,688 135,977 685,608
Off Balance sheeet 26,425 10,979 - - 37,404
- - - -
TOTAL 731,648 (54,013) 152,576 179,688 135,977 1,145,876
IMPAIRMENT LOSS ALLOWANCE (IFRS 9 ) - 31 DEC 2019
PERFORMINGNON- PERFORMING OKL TOTAL
N'000 N'000 N'000 N'000
Bai-Muajjal 3,068 1,622 - 4,690
Murabaha finance 267,707 (92,633) - 175,074
Ijara finance 62,141 51,916 - 114,057
Istisna 6,556 46,192 - 52,748
Qard hassan (2,535) 78,831 - 76,295
336,936 85,929 - 422,864
Other financing assets 368,287 1,656 315,665 685,608
Off Balance sheeet 26,425 10,979 0 37,404
TOTAL 731,648 98,563 315,665 1,145,876
P a g e 55
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST DECEMBER, 2019
35 Related parties
(i)
(ii)
2019
N'000 N'000
RELATED PARTY RELATIONSHIP WITH THE BANK LIMIT
AMOUNT
RECEIVABLE CLASSIFICATION
FURSA FOODS LTD ALIKO DANGOTE DIRECTOR REPSRESENTED BY MUKHTAR DH SANI 1,220,066 1,158,464 PERFORMING
BELLMARI ENERGY LIMITED ALIKO DANGOTE DIRECTOR REPSRESENTED BY MUKHTAR DH SANI 381,483 355,940 PERFORMING
AHMAD RUFA'I SANI AHMAD RUFA'I SANI NON-EXECUTIVE DIRECTOR 510,000 279,972 PERFORMING
NOBLE HALL LIMITED DR. UMARU ABDULMUTALLAB CHAIRMAN 279,995 265,736 PERFORMING
MBS MERCHANTS LTD MBS MERCHANTS LTD NON-EXECUTIVE DIRECTOR 604,646 122,359 PERFORMING
BELLO MUHAMMAD SANI BELLO MUHAMMAD SANI NON-EXECUTIVE DIRECTOR 80,250 80,250 PERFORMING
ABDULFATTAH OLANREWAJU AMOO ABDULFATTAH OLANREWAJU AMOO EXECUTIVE DIRECTOR 59,400 55,076 PERFORMING
MAHE MAHMUD ABUBAKAR MAHE MAHMUD ABUBAKAR DEPUTY MANAGING DIRECTOR 66,350 35,903 PERFORMING
MUKHTAR DANLADI HANGA SANI MUKHTAR DANLADI HANGA SANI DIRECTOR REPSRESENTED BY MUKHTAR DH SANI 54,000 32,909 PERFORMING
HASSAN USMAN HASSAN USMAN MANAGING DIRECTOR 30,000 18,000 PERFORMING
AT 31ST DECEMBER 3,286,190 2,404,610
OFF BALANCE SHEET
INCAR PETROLEUM DR. UMARU ABDULMUTALLAB CHAIRMAN 480,516 PERFORMING
Jaiz Bank Plc has some exposures that are related to its Directors. The Bank however follows a strict process before granting such credits to its Directors. The requirements for creating and managing this category of risk
assets include the following amongst others:
Related parties: Parties are considered to be related if one party has the ability to control the other party or exercise influence over the other party in making financial and operational decisions, or one other party controls
Transaction with key management personnel: The Bank's key management personnel, and persons connected with them, are also considered related parties. The definition of key management includes the close members
family of key personnel and any entity over which key management exercise control. Close family members are those who may be expected to influence, or be influenced by that individual in their dealings with Jaiz Bank plc
and its related entities/parties.
P a g e 56
2018
N'000 N'000
RELATED PARTY RELATIONSHIP WITH THE BANK LIMIT
AMOUNT
RECEIVABLE CLASSIFICATION
NOBLE HALL LIMITED DR. UMARU ABDULMUTALLAB CHAIRMAN 329,995 296,749 PERFORMING
UMARU ABDUL MUTALLAB DR. UMARU ABDULMUTALLAB CHAIRMAN 810,000 169,116 PERFORMING
HASSAN USMAN HASSAN USMAN MANAGING DIRECTOR 30,000 31,153 PERFORMING
MAHE MAHMUD ABUBAKAR MAHE ABUBAKAR DEPUTY MANAGING DIRECTOR 67,950 49,925 PERFORMING
ABDULFATTAH OLANREWAJU AMOO ABDULFATTAH OLANREWAJU AMOO EXECUTIVE DIRECTOR 59,400 59,400 PERFORMING
MBS MERCHANTS LTD FALALU BELLO DIRECTOR & CHAIRMAN, BOARD INVESTMENT COMMITTEE1,073,648 1,162,427 WATCHLIST
BELLMARI ENERGY LIMITED ALIKO DANGOTE DIRECTOR REPSRESENTED BY MUKHTAR DH SANI 707,176 629,229 PERFORMING
FURSA FOODS LTD ALIKO DANGOTE DIRECTOR REPSRESENTED BY MUKHTAR DH SANI 118,400 119,236 PERFORMING
MUKHTAR DANLADI HANGA SANI MUKHTAR DANLADI HANGA SANI DIRECTOR REPSRESENTED BY MUKHTAR DH SANI 54,000 32,909 PERFORMING
DARUL HUDA FOUNDATION AMINU DANTATA DIRECTOR REPSRESENTED BY TAJUDDIN DANTATA 29,391 9,172 PERFORMING
TAMIDAN NIGERIA LIMITED AMINU DANTATA DIRECTOR REPSRESENTED BY TAJUDDIN DANTATA 630,000 630,000 SUBSTANDARD
BAZE UNIVERSITY LIMITED NAFIU BABA-AHMAD INDEPENDENT NON-EXECUTIVE DIRECTOR 40,000 27,601 PERFORMING
AHMAD RUFA'I SANI HRH ENGR. SANI BELLO NON-EXECUTIVE DIRECTOR 510,000 343,516 PERFORMING
BELLO MUHAMMAD SANI HRH ENGR. SANI BELLO NON-EXECUTIVE DIRECTOR 80,250 80,250 PERFORMING
RUFAI POULTRY LIMITED HRH ENGR. SANI BELLO NON-EXECUTIVE DIRECTOR 226,600 42,272 PERFORMING
AT 31ST DECEMBER 2018 4,766,810 3,682,955
OFF BALANCE SHEET
INCAR PETROLEUM DR. UMARU ABDULMUTALLAB CHAIRMAN 386,281 PERFORMING
AT 31ST DECEMBER 2018 386,281
P a g e 57
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2019
36 SIGNIFICANT SHAREHOLDING (5% & ABOVE) 2019 2018
Holdings % Holdings %
Dr. Umaru Abdul Mutallab 4,000,000,000 13.58 4,000,000,000 13.58
Dantata Investment & Securities Limited 3,904,369,327 13.25 3,904,369,327 13.25
Dr.Muhammadu Indimi 3,233,813,044 10.98 2,733,813,044 9.28
Islamic Development Bank 2,506,666,588 8.51 2,506,666,588 8.51
Dangote Indutries Ltd 2,500,000,000 8.48 2,500,000,000 8.48
Altani Investment Limited 2,200,000,000 7.47 2,200,000,000 7.47
Dr. Aminu Alhassan Dantata 1,565,210,516 5.31 1,565,210,516 5.31
Balance as at 31 December 19,910,059,475 67.58 19,410,059,475 65.88
37 Earnings per share
Basic earnings per share
Profit attributable to ordinary shareholders 2019 2018
N'000 N'000
Profit for the period 2,442,785 834,365
Profit attributable to ordinary shareholders 2,442,785 834,365
Weighted average number of ordinary shares 2019 2018
In Thousand In Thousand
Issued ordinary shares at 1 January 29,464,250 29,464,249
Weighted average number of ordinary shares at 31 December 29,464,250 29,464,249
Basic and diluted earnings per share (Kobo) 8.29 kobo 2.83 kobo
There have been no transactions during the year which caused dilution of the earnings per share.
Basic earnings per share of 8.39 kobo (2018:2.83 kobo) is based on the profit of N2,472 billion (31 December 2018: N834million) attributable to
shareholders with ordinary shares of 29,464,249,300 (2018:-29,464,249,300)
P a g e 58
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST DECEMBER 2019
38a Information regarding Directors 2019 2018
N'000 N'000
Emoluments
Fees:
Chairman 10,000 5,000
Other directors 80,000 44,000
Emolument as executives 135,615 87,778
Highest paid director 48,577 42,326
N N 2019 2018
Number Number
5,000,000 - 10,000,000 - -
10,000,001 - 15,000,000 - -
15,000,001 - above 3 2
38b Information regarding Employees
N N 2019 2018
Number Number
Below - 400,000 502 334
400,001 - 500,000 5 74
500,000 - 600,000 178 71
600,000 - 700,000 74 72
700,000 - 800,000 15 10
800,000 - 900,000 - -
900,000 - 1,000,000 - 36
1,000,000 - 5,000,000 277 211
5,000,000 - 10,000,000 3 -
Above - 10,000,000 - -
1,054 808
No. of Directors excluding the Chairman with gross emoluments within the following ranges were:
The number of employees excluding Directors in receipt of emoluments excluding allowances in the
following ranges were:
P a g e 59
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST DECEMBER 2019
38a Information regarding Directors 2019 2018
N'000 N'000
Emoluments
Fees:
Chairman 10,000 5,000
Other directors 80,000 44,000
Emolument as executives 135,615 87,778
Highest paid director 48,577 42,326
N N 2019 2018
Number Number
5,000,000 - 10,000,000 - -
10,000,001 - 15,000,000 - -
15,000,001 - above 3 2
38b Information regarding Employees
N N 2019 2018
Number Number
Below - 400,000 502 334
400,001 - 500,000 5 74
500,000 - 600,000 178 71
600,000 - 700,000 74 72
700,000 - 800,000 15 10
800,000 - 900,000 - -
900,000 - 1,000,000 - 36
1,000,000 - 5,000,000 277 211
5,000,000 - 10,000,000 3 -
Above - 10,000,000 - -
1,054 808
Number of persons employed as at the end of the year were:
2019 2018
Number Number
Managerial 10 6
Senior 83 75
Junior 961 727
1,054 808
39 Events after reporting period
No. of Directors excluding the Chairman with gross emoluments within the following ranges were:
The number of employees excluding Directors in receipt of emoluments excluding allowances in the
following ranges were:
There were no events after the reporting date which could have had a material effect on the financial
statements as at 31 December 2019.
P a g e 60
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST DECEMBER 2019
40 Card issuance and usage in Nigeria
CARD TYPE
TRANSACTIO
N
VOLUMES
TRANSACTIO
N VALUE
N'000
VERVE DEBIT CARD 5,692,193 70,360,579 MASTERCARD CARD 1,549,514 21,915,766
Total 7,241,707 92,276,345
(i) ATM complaints data- 31 December 2019
Number
AMOUNT
N'000
Unresolved as at 1 January 219 262
Number of complaints 72,156 113,098
Number of complaints resolved 72,086 112,990
Unresolved as at 31 December 289 370
(ii) ATM complaints data- 31 December 2018
Number
AMOUNT
N'000
Unresolved as at 1 January 114 262
Number of complaints 33,898 42,644
Number of complaints resolved 33,793 42,300
Unresolved as at 31 December 219 262
In line with Sec.11 of the CBN' Circular on The Guidance for issance and usage of cards in Nigeria,
below is the Bank's information on it's Card
In line with CBN circular Ref FPR/DIR/CIR/GEN/01/020, below are the customer complaints data
for the year:
P a g e 61
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST DECEMBER 2019
41a FINANCING ANALYSIS
(i) By Security 2019 2018
N'000 N'000
Legal mortgage 28,597,817 31,149,047
Total asset debenture 880,045 1,849,837
Cash and deposits 10,327,398 147,945
Equitable mortgage 1,785,861 -
Equity 158,374 17,147
Assets - Other 16,869,347 10,700,512
Total 58,618,843 43,864,488
(ii) By product 2019 2018
N'000 N'000
Murabaha finance 31,984,938 27,223,619
Bai Muajjal 1,305,501 79,968
Ijara Finance 14,570,891 11,858,064
Paddy aggregation Mu 4,659,529 -
CACS 625,305 1,495,584
Istisna 1,146,745 2,024,324
Ijara service 4,167,559 1,008,333
Qard 158,374 174,596
Total 58,618,843 43,864,488
2019 2018(iii) By sector N'000 N'000
General 9,799,615 8,704,025
Oil & gas 9,874,132 8,508,618
Real estate activities 12,174,357 7,193,616
General commerce 12,122,055 6,686,380
Agriculture 8,163,108 5,432,503
Construction 2,612,383 2,918,065
Manufacturing 1,686,821 2,548,291
Education 1,383,619 1,285,783
Information and communication 387,269 570,386
Recreation 5,278 8,442
Human health and social work activities 171,167 8,379
Transportation and storage 239,040 -
Total 58,618,843 43,864,488
2019 2018
(iii) By Business Unit N'000 N'000
Corporate 40,550,821 35,394,682
Retail 18,068,022 8,469,806
Total 58,618,843 43,864,488
2019 2018
(v) By tenor N'000 N'000
0 - 60 days 233,449 811,524
61 - 90 days 1,419,801 4,421,642
91 - 180 days 6,263,984 7,559,193
180 - 360 days 12,581,924 5,281,827
Over 360 days 38,119,685 25,790,302
Total 58,618,843 43,864,488
P a g e 62
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
41c Capital Adequacy Ratio
2019 2018
Regulatory capital N'000 N'000
Tier 1 capital
Share capital 14,732,125 14,732,125
Share premium 627,365 627,365
Retained earnings (4,081,114) (4,574,108)
Statutory reserves 1,237,660 504,826
Other reserves 209,444 87,305
12,725,480 11,377,513
Less: Deferred tax assets 462,186 12,368
Intangible assets 481,366 370,748
Total qualifying Tier 1 capital 11,781,929 10,994,397
Tier 2 capital
Qualifying other reserves - -
Other comprehensive income 112,313 112,313
Total qualifying Tier 2 capital (100% of total qualifying Tier I capital) 112,313 112,313
Total qualifying capital 11,894,242 11,106,710
Risk - weighted assets:
Credit risk 42,375,487 41,785,629
Operational risk 15,010,602 10,537,145
Market risk 14,966,436 246,545
Total risk-weighted assets 72,352,525 52,569,319
Risk-weighted capital adequacy ratio 16.44% 21.13%
.
The Bank presents details of its regulatory capital resources in line with the Central Bank of Nigeria's
guidance on Pillar I capital requirments.
P a g e 63
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2019
42 Contingencies and commitments
(i) Litigation and claims
(ii) Other contingent liabilities
2019 2018
N'000 N'000
Advanced payment guarantees 3,112,696 7,303,629
Letters of credit 13,444,634 210,437
Bonds and guarantees 1,710,055 4,456,898
Wakala guarantee 12,651,847 11,648,416
Undrawn commitment 1,195,627 5,491,038
Balance as at 31 December 32,114,859 29,110,417
(iii) Capital commitments
(iv) Guarantees and other financial commitments
43 Contravention of CBN/NDIC guidelines
31 December 2019
N'000
i Penalty for non-compliance with FCTP limit 2,000
ii Fines for non-compliance with anti-money laundering procedures 32,000
34,000
31 December 2018 N'000
In 2018 financial year, the Bank did not contravene any CBN guidelines Nil
44 Dividend
Litigation is a common occurrence in the banking industry due to the nature of the business undertaken.
The Bank has proper controls and policies for managing legal claims. Once professional advice has been
obtained and the amount of loss reasonably estimated, the Bank makes adjustments to account for any
adverse effects which the claims may have on its financial standing.
The Bank, in its ordinary course of business, is presently involved in 21 (31 December, 2018: 29)
litigation suits: 16 (31 December, 2018: 12) cases instituted against the Bank, 4 (31 December,2018: 13)
cases instituted by the Bank, Nil (31 December, 2019: 3) judgement in favour of the Bank awaiting
execution and 1 (31 December, 2019: 1) civil appeal against the Bank.
The Directors are of the opinion that none of the aforementioned cases is likely to have a material
adverse effect on the Bank and are not aware of any other pending or threatened claims and litigations.
There were no capital commitments at the end of the reporting period of 31 December 2019.
The Directors are of the opinion that all known liabilities and commitments which are relevant in
assessing the company's financial position, financial performance and cash flows have been taken into
account in the preparation of these financial statements.
In the normal course of business, the Bank enters into various types of transactions that involve
undertaking certain commitements such as letter of credit, guarantees and undrawn financial
commitments.
During the year, the Bank incurred the following penalty due to contraventions and/or infractions of
CBN regulations and guidelines.
The Board of Directors, pursuant to the powers vested in it by the provisions of Section 379 of the
Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004, proposed a dividend of 3 kobo per
share from retained earnings as at December 31, 2019. This is subject to approval by shareholders at the
next Annual General Meeting.
Dividends are paid to shareholders net of withholding tax at the rate of 10% in compliance with extant tax
laws.
The number of shares in issue and ranking for dividend represents the outstanding number of shares as at
31 December 2019.
P a g e 64
P a g e 65
JAIZ BANK PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER, 2019
45 Operating segments
Corporate
Banking
Retail
Banking Total
As at 31 December 2019 N'000 N'000 N'000
Investment in sukuk 41,086,469 - 41,086,469
Murabaha finance 20,050,012 17,219,760 37,269,772
Bai Muajjal - 1,305,501 1,305,501
Ijara finance 8,220,991 7,778,822 15,999,813
Ijara service 35,136 2,703,501 2,738,637
Istisna 538,324 608,421 1,146,745
Qard - 158,375 158,375
Intervention fund 5,284,834 3,126,350 8,411,184
Investment properties 1,603,513 - 1,603,513
Investment in assets held for sale - - -
Total assets 76,819,278 32,900,729 109,720,008
Corporate
Banking
Retail
Banking
Total
As at 31 December 2018 N'000 N'000 N'000
Investment in sukuk 19,819,872 - 19,819,872
Murabaha Finance 26,268,814 2,602,746 28,871,560
Ijara finance 6,822,573 5,025,808 11,848,381
Ijara service 888,970 119,363 1,008,333
Istisna 1,499,527 547,292 2,046,820
Qard - 174,597 174,597
Investment properties 1,603,513 - 1,603,513
Investment in assets held for sale - - -
Total assets 56,903,269 8,469,806 65,373,075
46 Comparatives figures
47 Employee benefit plans 2019 2018
N'000 N'000
Opening defined contribution obligation 26,154 22,115
Charge for the year 168,749 156,470
Payment to fund administrator (160,703) (152,431)
Balance as at 31 December 34,200 26,154
Certain comparative figures have been restated where necessary for a more meaningful comparison.
A defined contribution plan is a pension plan under which the Bank pays contributions at a fixed rate. The
Bank does not have any legal obligation to pay further contributions over and above the fixed rate as
determined by the Penison Act, 2004 as amended. The total expense charged to income for the year was
N168.7 million (2018: N156.5 million).
For reporting purposes, the Bank is organised into business segments and has reportable operating
segments as follows:
Resources are allocated based on the business segments and Management reviews the segments on
periodic basis to assess their performance. The Management Committee reviews and allocates the
necessary resources for the achievement of the Bank's objectives.
In line with the requirements of theAccounting and Auditing Organization for Islamic Financial Institutions
(“AAOIFI”), the investments in islamic finance are shown here as gross, while on the face of statement of
financial position they are shown net of impairment and deferred profit. This accounts for the difference
between the balance sheet size in the notes to the financial statements and what is disclosed on the face
of the statement of financial position.
P a g e 66
JAIZ BANK PLC
OTHER NATIONAL DISCLOSURES
5 YEARS FINANCIAL SUMMARY
2019 2018 2017 2016 2015
N`000 N`000 N`000 N`000 N`000
Assets
Cash and Balances with Central Bank of Nigeria 3 42,103,116 23,409,751 23,909,987 21,506,853 18,168,226
Due from banks and financial institution 4 11,438,274 7,408,063 5,441,073 1,478,026 1,886,533
InterBank Murabaha 5a - - - 1,000,000 -
Total Sukuk Investment 5b 41,086,469 19,819,872 6,387,918 1,060,252 1,242,396
Investment in Musharaka 6 - - 1,200,000 1,191,704 637,000
Murabaha Receivables 7A 32,168,321 25,330,697 22,677,161 16,451,245 10,595,013
Investment in Bai Mu'ajjal 1,008,613 59,186 -
Investment in Istisna 8 1,080,389 1,865,656 1,335,361 754,448 638,722
Investment in Ijara asset 9 21,283,416 15,264,911 13,153,201 14,251,232 11,812,999
Qard hassan 10 79,430 171,948 149,082 127,674 147,242
Investment properties 1,603,513 1,603,513 -
Investment in Assets Held for sale 11i 9,464,869 7,699,830 5,883,288 488,942 27,111
Property, plant and equipment 12 2,547,972 2,578,588 2,123,997 1,892,970 1,383,189
Leasehold Improvement 13 65,297 58,118 34,932 42,435 82,506
Intangible assets 14 481,366 370,748 340,286 368,089 307,880
Other Assets 15 2,400,175 2,809,209 4,676,323 5,233,384 3,983,853
Deferred taxation asset 16b 462,186 12,368 - 206,573 1,726,574
Total Assets 167,273,406 108,462,458 87,312,608 66,053,824 52,639,243
Liabilities
Customer Current Deposits (17a) 69,603,883 45,950,138 33,706,359 24,415,544 15,475,620
Other Financing 18a 11,963,766 2,000,000 - 996,635 1,000,000
Other Liabilities 18b 12,443,964 8,229,960 5,367,886 1,552,659 1,463,675
Tax payable 16a 120,251 90,344 135,677 77,087 43,897
Deferred tax 16b - - 14,641 - -
Total liabilities 94,131,864 56,270,442 39,224,563 27,041,925 17,983,192
Equity of Investment Account Holders
Customers' Unrestricted Investment Accounts (17b) 57,589,595 39,082,854 32,054,392 24,924,792 23,247,923
Mudaraba Term Deposit (17c) - - 2,354,505 943,323 721
57,589,595 39,082,854 34,408,897 25,868,115 23,248,644
Owners' Equity
Share Capital 19 14,732,125 14,732,125 14,732,125 14,732,125 11,829,700
Share Premium 20 627,365 627,365 627,365 627,365 549,886
Retained Earnings 21 (4,081,114) (4,574,108) (4,244,308) (3,669,861) (1,714,073)
Risk Regulatory reserve 22 2,714,153 1,619,336 2,267,029 1,360,774 741,894
Statutory Reserve 22i 1,237,660 504,826 254,517 93,381 -
Other Reserves 22ii 321,757 199,618 42,420 - -
Total Equity 15,551,946 13,109,163 13,679,147 13,143,784 11,407,407
- -
Total Equity and Liabilities 167,273,406 108,462,458 87,312,608 66,053,824 52,639,243
P a g e 67
JAIZ BANK PLC
OTHER NATIONAL DISCLOSURES
5 YEARS FINANCIAL SUMMARY
2019 2018 2017 2016 2015
N'000 N'000 N'000 N'000 N'000
Income:
Income from Financing Contracts 23 7,461,682 6,291,944 6,239,803 5,289,075 4,006,736
Income from Investment Activities 24 6,055,941 1,223,634 684,854 188,967 883,009
Gross Income from financing transactions - 13,517,623 7,515,577 6,924,657 5,478,042 4,889,745 - - -
-
Return on Equity of Investment Account Holders 25(i) (2,907,985) (1,916,804) (1,397,009) (1,181,787) (948,913)
Bank's share as a Mudarib/Equity investor 25(ii) 10,609,638 5,598,773 5,527,648 4,296,255 3,940,832
Impairment write Back of non-performing Financing and Investment 32 (1,145,876) 231,584 (161,459) - 94,790 122,493
Net Spread after Provision 9,463,762 5,830,357 5,689,108 4,391,045 3,818,339
Other Income
Fee and commisssion 26 1,008,943 988,439 748,709 364,171 380,509
Other Operating Income 27 188,258 240,305 182,003 122,440 100,000
Total Income 10,660,962 7,059,102 6,296,901 4,877,656 4,298,848
Expenses:
Staff costs 29 3,863,554 2,808,766 2,374,457 1,944,405 1,704,927
Depreciation and Amortisation 30 714,586 608,398 522,187 531,054 414,259
Operating Expenses 31(i) 3,972,805 2,744,236 2,506,250 2,059,180 1,385,468
Total Expenses 8,550,945 6,161,400 5,402,894 4,534,639 3,504,654
Operating Profit/(Loss) Before Tax 2,110,017 897,701 894,006 343,017 794,194
Income Tax Expenses 16a 332,768 (63,336) (356,891) - 31,745 116,013
Profit/(Loss) for the Year after Tax 2,442,785 834,365 537,117 311,272 910,207
Other Comprehensive Income
Item that may be reclassified to profit or loss
Net gain on gifted property 28 - 112,313 - - -
Total comprehensive income for the year 2,442,785 946,678 537,117 311,272 910,207
Basic and diluted Earnings per share (Kobo) 8.29 kobo 2.83 kobo 1.82 kobo 1.16 kobo 0.07kobo
P a g e 68
JAIZ BANK PLC
OTHER NATIONAL DISCLOSURES
VALUE ADDED STATEMENT
31 Dec. 2019 31 Dec. 2019 31 Dec. 2018 31 Dec. 2018
N`000 % N`000 %
Gross Income from financing transactions 14,714,822 220% 8,744,322 203%
Return on Equity of Investment Account Holders (2,907,985) -43% (1,916,804) -44%
Bank's share as a Mudarib/Equity investor 11,806,837 177% 6,827,518 158%
Impairment Charges against non-performing Financing
and Investment (1,145,876) -17% 231,584 5%
10,660,961 159% 7,059,102 164%
Bought in Goods and Services (3,972,805) -59% (2,744,236) -64%
Value Added 6,688,157 100% 4,314,864 100%
Distribution
Employees
Salaries and Benefits 3,863,554 58% 2,808,766 84%
Government
Taxation (332,768) -5% 63,336 0%
Retained in the Bank
Re-invested in non-current asset & development of operation 714,586 11% 608,398 0%
Profit for the year (inclusive of all Statutory Reserves) 2,442,785 37% 834,365 16%
Total Value Added 6,688,157 100% 4,314,865 100%