Jaiz Bank Breaks New Grounds

• Attracts IIRA’s Investment Rating

BY COBHAM NSA, ABUJA – It is all smiles and backslapping at Nigeria’s foremost non-interest financial institution, Jaiz Bank Plc, as it celebrates positive rating by the Islamic International Rating Agency (IIRA).

This is the first rating for Jaiz Bank as the premier Sharia-compliant bank in the country.

As an External Credit Assessment Institution (ECAI), the Bahrain-based IIRA is the global leader in rating Non-Interest (Islamic) Financial Institutions and Instruments.

According to the rating, Jaiz bagged an investment grade rating of BBB (Triple B) for the medium to long-term and A2 in the short-term (A Two) on the national scale.

With the IIRA concluding its most recent assessment, Jaiz was also assigned a foreign currency rating of B-/B (Single B Minus/B) and local currency rating of B/B (Single B/B) on the international scale with a ‘Stable’ outlook. The international scale ratings also take into account the sovereign risk profile.

The IIRA’s documentation showed the positive rating gotten by the bank was based on its rapid growth that rates far above the country’s high inflation rates of recent years.

“Liquidity so generated is reflected in a burgeoning portfolio of Sharia compliant treasury securities… As a result, the bank’s liquidity risk profile is superior in the context of the local banking sector as well as in relation to IIRA’s benchmark for assigned medium to long-term ratings, warranting a higher rating on the short-term scale”, the rating agency said.

Furthermore, it affirmed that in comparison with other market competitors, Jaiz Bank did well in terms of risk exposure with its gross non-performance falling below 10 per cent.

It also gave kudos to Jaiz Bank’s profitability indicators, noting that “they are improving rapidly with business growth, as efficiency benefits of higher scale in operations begin to materialize as reflected in the interim results of 2019.”

Similarly, the rating Agency noted that with a burgeoning investment portfolio and further accruing efficiencies, Jaiz Bank’s net returns are likely to achieve optimal levels, going forward, adding; “IIRA’s assessment for expected profitability and hence internal capital generation, in addition to gradually ameliorating indicators for non-performance in financings, underlies the assigned ‘Positive’ outlook.”

The IIRA equally assigned a fiduciary rating score of 65-70 to the Bank, saying; “The Bank is viewed to be in compliance with CBN’s guidelines for corporate governance, however, it may be strengthened to align better with international best practice.”

“Overall control framework has improved in recent periods with implementation of IFRS-9 in 2018 and CBN’s proactive oversight,” the Agency said.