JAIZ BANK’S N23.2 BILLION PROFIT IS A SHRINKING BANK IN DISGUISE

Jaiz Bank posted N23.28 billion profit for nine months to September 2026, up 1.79 percent from N22.87 billion a year earlier, and called it growth. The statement of financial position signed October 29 2026 says otherwise. Total assets fell N406.87 billion, from N1.694 trillion in full year 2025 to N1.287 trillion in September 2026, down 24.02 percent. Total liabilities fell N411.78 billion, from N1.600 trillion to N1.188 trillion, down 25.72 percent. Only owners equity rose, N93.59 billion to N98.50 billion, up 5.24 percent. A bank that loses one quarter of its balance sheet in nine months while profit is flat is not growing, it is shrinking and holding cash.

Where is it shrinking? It is shrinking in seven of eleven asset lines and in both deposit lines, and the numbers are specific. The biggest hole is liquidity. Due from banks and other financial institutions fell from N509.90 billion to N174.56 billion, down N335.33 billion or 65.77 percent. Cash and balances with Central Bank of Nigeria fell from N343.14 billion to N214.53 billion, down N128.60 billion or 37.48 percent. Combined liquidity loss is N463.93 billion. Investment in sukuk fell from N490.56 billion to N337.47 billion, down N153.08 billion or 31.20 percent, the sukuk portfolio was liquidated with redemption of only N52.4 million against purchase of N9.99 billion. Financing assets net, the core Islamic financing book, fell from N305.25 billion to N246.76 billion, down N58.48 billion or 19.15 percent, and working capital movement shows negative N59.75 billion, meaning repayments exceeded new financing. Inventory financing net fell from N92.45 billion to N61.78 billion, down N30.67 billion or 33.17 percent. Total interest earning assets, due plus sukuk plus interbank plus financing plus inventory, collapsed from N1.438 trillion to N730.57 billion, down 49.2 percent.

The liability side mirrors it. Customer current deposits fell from N943.47 billion to N724.05 billion, down N219.42 billion or 23.25 percent. Other funding and customers unrestricted investment accounts fell from N573.72 billion to N394.27 billion, down N179.44 billion or 31.27 percent. Total customer funds lost is N398.86 billion. Leasehold improvement net fell from N36.96 billion to N17.84 billion, down 51.72 percent, intangible assets net fell from N717.09 million to N57.83 million, down 91.93 percent, other assets fell from N753.70 million to N615.19 million, down 18.37 percent. The only asset lines that grew were property, plant and equipment net from N8.00 billion to N27.67 billion, up 245.63 percent, and interbank investment from N50.11 billion to N56.75 billion, up 13.23 percent.

The second weakness is profitless growth. Gross earnings rose 16.16 percent to N88.16 billion from N75.90 billion, gross income from financing and investment transactions rose 16.4 percent to N84.01 billion from N72.17 billion, income from financing contracts rose 47.29 percent to N45.86 billion from N31.14 billion despite financing assets falling 19.15 percent, showing yield improvement, total income rose 13.57 percent to N63.15 billion from N55.60 billion, bank share as mudarib rose 13.72 percent to N59.00 billion from N51.88 billion, net fees and commission rose 30.94 percent to N3.66 billion from N2.79 billion, yet profit before tax rose only 1.71 percent to N23.69 billion from N23.29 billion and profit for the period rose only 1.79 percent to N23.28 billion. In Q3 alone profit fell, profit before tax N8.267 billion in Q3 2026 versus N8.534 billion in Q3 2025 down 3.12 percent, profit after tax N8.155 billion versus N8.432 billion down 3.28 percent, gross earnings Q3 N30.35 billion versus N30.21 billion flat at 0.47 percent, total income Q3 N21.08 billion. The cause is cost. Total expenses jumped 22.11 percent to N39.45 billion from N32.31 billion, staff costs jumped 36.45 percent to N17.20 billion from N12.60 billion, other operating expenses up 10.96 percent to N19.86 billion from N17.90 billion, depreciation and amortisation up 33.13 percent to N2.389 billion from N1.794 billion. Cost to income ratio deteriorated to 62.48 percent from 58.11 percent, incremental income N7.54 billion but incremental expenses N7.14 billion, 94.7 percent of new income was consumed. Impairment charges rose 21.03 percent to N1.275 billion from N1.053 billion, impairment to gross income 1.51 percent versus 1.45 percent.

The threats are immediate and measurable. Threat one is deposit flight, N398.86 billion outflow in nine months annualizes to N531 billion, if Q4 continues at Q3 pace another N133 billion leaves, pushing deposits to N590 billion, confidence risk despite low concentration where single largest depositor is 4.0 percent and twenty largest 13.5 percent. Threat two is earnings reversal, Q3 PBT down 3.12 percent despite cost control where Q3 total expenses N12.81 billion versus N13.87 billion prior Q3, means revenue decline is faster than cost cut, full year 2026 will close flat at N30.1 billion versus N30.15 billion in 2025 despite 16 percent income growth. Threat three is asset liability mismatch, other liabilities up 148.2 percent to N22.33 billion from N8.99 billion while other assets down 18.37 percent, tax payable down 36.3 percent to N47.02 billion from N73.86 billion, and PPE up 245.63 percent while financing down 19 to 33 percent, capex heavy while intermediation shrinks.

Jaiz neutralized these weaknesses by converting shrinkage into cash and preserving capital. While assets fell N406.87 billion, equity rose N4.90 billion to N98.50 billion because retained earnings rose 20.5 percent to N28.80 billion from N23.89 billion and dividend was cut to N3.12 billion from N4.90 billion, share capital N22.29 billion, share premium N6.37 billion, risk regulatory reserve N11.97 billion, statutory reserve N24.80 billion, other reserves N4.24 billion all intact. Capital adequacy is 26.89 percent in 2025 versus 10 percent regulatory minimum, up from 23.87 percent, GCR upgraded from BBB- to BBB positive, core capital ratio 23.6 percent December 2023. That capital absorbs NPL ratio of 8.9 percent and 8.3 percent previously reported above 5 percent maximum with coverage only 58.7 percent. Liquidity neutralization is stark, cash and cash equivalents jumped from N389.10 billion in September 2025 to N853.04 billion in September 2026, up N463.93 billion or 119.25 percent, representing 66.26 percent of total assets N1.287 trillion versus 22.5 percent in full year 2025. Net cash flows before working capital rose 35.6 percent to N38.47 billion from N28.36 billion, net cash provided by operating activities rose 116.2 percent to N334.85 billion from N154.85 billion, cash from operations N335.85 billion versus N153.44 billion, investing cash turned positive N133.98 billion versus negative N140.07 billion due to interbank mudarabah inflow N1.407 trillion and proceeds from disposal of PPE N312.29 billion. The bank deliberately unwound N335.33 billion due from banks and N153.08 billion sukuk to build N853 billion cash. Funding cost remains 2.4 percent lowest in industry, so even after losing N398 billion deposits it still pays return to equity investment account holders N23.73 billion versus N19.24 billion up 23.34 percent and still keeps spread with bank share N59.00 billion.

Having neutralized, it now has the clearest opportunity to exploit the same cash it hoarded. Income from financing contracts N45.86 billion on average financing N275.9 billion is 16.62 percent for nine months or 22.16 percent annualized, income from investment activities N38.14 billion on average sukuk N414 billion is 12.28 percent nine months or 16.37 percent annualized. With N853 billion cash earning near zero at CBN, redeploying N300 billion to financing at 22.16 percent creates N66.5 billion extra annual income, enough to double PBT from N23.69 billion to over N47 billion. Redeploying N150 billion to sukuk at 16.37 percent creates N24.5 billion extra income, restoring investment income which fell 7.03 percent to N38.14 billion from N41.03 billion because sukuk fell 31.2 percent. Interbank investment up 13.23 percent to N56.75 billion from N50.11 billion is early sign of redeployment. Cost rationalization opportunity is N3.3 billion, if staff cost growth cut from 36.45 percent to 10 percent, save N3.3 billion equals 14 percent PBT uplift, and intangible down 91.93 percent to N57 million and other assets down 18.37 percent shows cost cutting already happening. With N150 billion capital raise approved, branch network planned from 55 to 65, and non interest market share 66.3 percent of assets, 75.1 percent of financing and 91.7 percent of profit before tax of non interest segment, Jaiz can use N853 billion cash to win back N398 billion deposits lost and rebuild N89 billion financing contraction.

The critical indices summarize it, asset growth -24.02 percent, deposit growth -23.25 percent current and -31.27 percent investment, due from banks -65.77 percent, cash with CBN -37.48 percent, sukuk -31.20 percent, financing -19.15 percent, inventory -33.17 percent, interest earning assets -49.2 percent, cash to assets 66.26 percent versus 22.5 percent, gross earnings growth +16.16 percent but PBT growth +1.71 percent, PAT +1.79 percent, cost to income 62.48 percent versus 58.11 percent, staff cost +36.45 percent, Q3 PBT -3.12 percent, impairment +21.03 percent, equity +5.24 percent, cash +119.25 percent, ROE annualized 31.51 percent versus 32.58 percent, ROA 2.41 percent versus 1.80 percent only because assets shrank. Jaiz is not a growth bank in nine months 2026, it is a shrinking bank that preserved N98.5 billion equity and hoarded N853 billion cash from N463.9 billion liquidity unwind and N398.8 billion deposit outflow, and now has the firepower to buy back the exact N89 billion financing and N153 billion sukuk it sold if it cuts cost from 62.48 percent back to 58 percent.