Jaiz Bank: Non-interest banking services not for Muslims only

Mahe Abubakar is the Deputy Managing Director   of Jaiz Bank Plc. He joined Jaiz from Zenith Bank in 2014.In this interview with finance reporters in Abuja recently, he explained the bank’s performance in the last financial year. FINANCIAL WATCH monitored the interview.

Exerpts:

Central Bank of Nigeria recently issued a national licence to Jaiz. What does this mean to you and the bank?

The licence means a lot to us. We have worked tirelessly for it, and we appreciate the apex bank’s support. We are grateful to Almighty Allah. It is, indeed, a milestone achievement. It is also an opportunity for us to extend our unique brand of banking to all Nigerians. We have commenced the first phase of our rollout with branches in Lagos, Port Harcourt, Ibadan and Ilorin and very shortly, we will be in all the states of the Federation.

A National Licence requires huge investment. Have you made adequate provisions in this direction?

As a specialised, non-Interest bank, you only need a capital of N10b to be a National Bank and Jaiz Bank has had this as far back as 2012, when we commenced operations. However, there are certain requirements that we were not able to meet then. We are grateful that this is now behind us.

Recently, we had cause to do a Rights Issue, which is raising our capital to N15b. I am happy to say that the exercise was concluded successfully, as we were oversubscribed by about three per cent.Our target is to raise the capital base of N25b before the year runs out. This will be unveiled, as soon as we have the nod of the regulatory authorities. I believe this will position us to compete efficiently in this highly competitive sub-sector of the economy.

As a new platform offering Islamic non-interest bank, do you foresee challenges in terms of penetrating some southern states, where there is limited enlightenment on how you operate?

Well, there could be challenges due to lack of enlightenment as you mentioned. But Jaiz Bank is already a national bank in character, because most of our customers are from all over the country. Our staff cut across all the geo-political zones of the country and from all tribes and religions. So also are our shareholders. It is really not very difficult, only that there are some people that misunderstand the concept of non-interest banking. It is an alternative form of banking based on a principle of non-interest, sharing of risk and rewards, equity, fairness and justice. Some people believe that because it is called Islamic Banking, we are into Islamic propagation. It is a business that is mainly guided by Islamic jurisprudence. It is open to all Nigerians, irrespective of their religions.

We acknowledge the fact that these challenges exist due to lack of knowledge, but we have equally mapped out a detailed communication strategy to address it. Only recently, we launched an advertising campaign in print, electronic and outdoor. We intend maintaining the momentum.

Are the products you offer enough to convince new clients that they would get value for their investment?

I am sure you know that we are only four years in operations. In our third year, we broke even and made a modest profit of N126 million. The following year, we made a profit of over N800 million. That tells you that we are a very profitable venture and I know Nigerians are highly analytical. They would analyse and see our value proposition.

The challenges we have are that of liquidity management. If you have some deposit and you don’t invest, you don’t also earn income. This is different from conventional mode, where the reverse is the case. Be that as it may, we have arrays of products to cater for all segments of the society.

Some conventional banks also operate some kind of non-interest services. What differentiates them from you?

Actually, what those conventional banks have is Islamic Banking window. They get licence from the central bank to open Islamic non-interest banking window at par with their conventional banking activities. The difference is that ours is a full-fledged non-interest bank. We don’t mingle. We are strictly sharia compliant.

Many banks are having difficulties in managing forex. How do you tackle the issue?

Managing forex in Nigeria is all about prioritisation. It is about knowing those things that are important and doing them, while discarding those that are not needed. That is what we do at Jaiz Bank and I believe that is what other banks are also doing. Nigerians are used to spending without control, especially when abroad. The crash in oil price should be an eye-opener to all Nigerians that life is not as easy as we think it is and that we really need to look inwards. The situation, where weare completely import-dependent is not good for the country and our future.

Does Jaiz Bank have SMEs products for customers?

The Bank has robust SMEs products. In fact, in our third year of operations, the bank decided to do a pilot SMEs project and N500m was earmarked for that. Aside that, we also made attempt to partner SMEDAN so that we could bring in more people to access SMEs products. A lot of people have done so and we still have a lot of opportunities for other people in that direction. We are stepping up our enlightenment so people can take advantage of this opportunity.

There are some intervention funds such as SMEs and Agricultural Funds from CBN. Can people access them through Jaiz Bank?

Not at the moment, because these funds are interest based. However, we are discussing with the CBN Advisory Committee on non-interest banking, on how we can participate. We are hoping that this will be resolved soon.

Considering the hard economic situation in the country, how would you describe patronage, especially in the area of mobilising deposit?

I would say we have managed very well. I mentioned earlier that in the last six months, we were able to raise deposit by over 30 per cent, which means that we could double our deposit in one year. That showsthere are a lot of potentials for mobilising liquidity. A lot of Nigerians are financially excluded and our bank is better placed to encourage them to bank. Besides, the Federal Government is also moving in the right direction in terms of its economic policies.

I believe that very shortly, we will begin to reap the benefits of democracy and good governance.