In the past week, Jaiz Bank Plc witnessed a significant decrease of approximately 12% in its market valuation after the non-interest financial institution released its earnings projection for the third quarter on the Nigerian Exchange (NGX).
Investor reactions have been mixed, with consecutive days of sell-offs despite an initially positive market sentiment.
As a result, the Islamic bank experienced a reversal in its valuation as certain equity investors began to divest their holdings upon the announcement of the third quarter earnings forecast for 2023.
According to the disclosed information, Jaiz Bank Plc informed the Nigerian Exchange and local investors on June 13, 2023, that it expects to achieve a profit of N2.163 billion during the third quarter, demonstrating an anticipated improvement in its performance.
During the first quarter, the bank reported a profit of N1.593 billion, derived from a gross income of N9.434 billion. Following the release of the earnings forecast, the bank’s shares initially gained value for three consecutive days but subsequently declined.
For the same period, Jaiz Bank Plc projected a negative net cash flow of approximately N3.6 billion from its operational activities. The Islamic lender also disclosed its aspiration to generate gross earnings of N12.003 billion within the same timeframe.
Highlighting potential pressure on asset quality, Jaiz Bank Plc estimated a credit impairment charge of N1 billion in the first quarter relative to the size of its loan portfolio. However, the non-interest banking institution anticipates a net revenue contribution of N9.267 billion from its funds to its operating income.
The disclosed figures also indicate an expected operating expense of N6.278 billion, consequently impacting the projected profitability.
Despite recent market rallies, Jaiz Bank shares have been trading contrary to the overall trend, experiencing a decline of approximately 12% over the past seven trading sessions, from N1.60 per share at the time of the earnings forecast release to N1.43 on Thursday.
Yesterday, 10.819 million shares of Jaiz Bank were traded, amounting to N15.472 million. On Wednesday, a total of 20.447 million shares were exchanged as the share price fell to N1.53. On Monday, approximately 140 million shares of the Islamic bank were traded.
Jaiz Bank’s ownership structure reveals that six key insiders possess a combined stake of 67.87% in the company. The largest single shareholder, Dr. Muhammadu Indimi, controls 24.06% of the total shareholding. Dantata Investment & Securities Limited owns 11.65%, while Dr. Umaru Abdul Mutallab controls 10.13%, and Altani Investment Limited owns 7.53%.
Additionally, Islamic Development Bank (7.26%) and Dangote Industries Ltd (7.24%) are also shareholders in Jaiz Bank. These shareholders have varying levels of loan exposure to the bank, with some performing well, while a loan to Nobel Hall Limited is already categorized as doubtful, as indicated by the bank’s financial results.
As of the first quarter of 2023, Jaiz Bank has a total of 34.541 billion outstanding shares.