audited financial statements for the year ended 31

P a g e 1

AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

P a g e 2

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

P a g e 3

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

P a g e 4

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%

P a g e 5

INCOME STATEMENT

STATEMENT OF FINANCIAL POSITION

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

Total Assets Financing &Investment Assets

Deposits Share Capital Total Equity

Mil

lio

ns

-2000

0

2000

4000

6000

8000

10000

12000

14000

16000

Gross Earnings Profit BeforeTaxation (PBT)

Taxation Profit After Taxation(PAT)

Mil

lio

ns

P a g e 6

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

P a g e 7

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

P a g e 8

Advisory Committee of Expert Report

P a g e 9

P a g e 10

P a g e 11

P a g e 12

P a g e 13

P a g e 14

P a g e 15

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

P a g e 16

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

P a g e 17

JAIZ BANK PLC

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME


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


P a g e 18

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


31 December 2019

31 December 2018

Other reserves

Other Reserves

P a g e 19

JAIZ BANK PLC

STATEMENT OF CASH FLOWS


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


P a g e 20

JAIZ BANK PLC

STATEMENT OF SOURCES AND USES OF QARD FUND


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 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).

P a g e 21

JAIZ BANK PLC

STATEMENT OF SOURCES AND USES OF CHARITY FUND


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


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.

P a g e 22

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

P a g e 23

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

P a g e 24

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;

P a g e 25

• 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

P a g e 26

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:

P a g e 29

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


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


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


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



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


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



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)


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)


P a g e 40

JAIZ BANK PLC



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



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


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


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) -


(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



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



14 Leasehold improvement 2019 2018

Cost N'000 N'000


Adjustments - -

Addition 29,695 37,639

As at 31 December 878,153 848,458

Amortisation and impairment losses


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


Addition 192,596 94,666 Disposal - -

As at 31 December 880,494 687,898

Amortisation and impairment losses


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



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


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)


As at 31 December 2,400,175 2,809,209

17a Tax payable

(i) Statement of financial position 2019 2018

N'000 N'000


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



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



18a Customers' current account 2019 2018

N'000 N'000

Analysis by type of account

Current account 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


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


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 -


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



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


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



20 Owners' equity

A Share capital

(i) Authorised 2019 2018

N'000 N'000

25,000,000 25,000,000


(ii) Issued and fully paid share capital 2019 2018

N'000 N'000


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


Movement during the year - -


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


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



24 Statutory reserve 2019 2018

N'000 N'000


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



(b) Agricultural /small and medium enterprises investment scheme 2019 2018

N'000 N'000


Provision for the year 122,139 44,886


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



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



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


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


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


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


P a g e 51

JAIZ BANK PLC



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



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



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



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


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



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


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



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



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



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



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



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


(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



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)


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


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


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%

audited financial statements for the year ended 31

Documents