JAIZ Bank, one of Nigeria’s non-interest or Islamic banks, has classified two tranches of loan granted to one of its directors, Abdulmutallab Muhammad Hadi of Noble Hall Limited, as doubtful and subtandard.

According to the Central Bank of Nigeria (CBN) Prudential Guidelines, a loan is said to be doubtful if it is non-performing and is overdue by 180 days and 360 days. Similarly, a non-performing loan is classified as substandard if it is overdue by over 90 days.

Investopedia defines a doubtful loan as “one for which full repayment is questionable and uncertain, although not so improbable as to necessitate writing off the loan entirely.”

According to Jaiz Bank’s half-year 2025 financial statement seen by Economy Post, Abdulmutallab Muhammad Hadi of Noble Hall Limited had an outstanding loan of 49.701 million classified as doubtful and another N902.331 million categorised as substandard by the end of June 2025. Hadi is a non-executive director of Jaiz Bank and founder of two firms – Farm To You Ltd and Dattaku Global Investment Ltd.

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The bank did not specify at what interest rate the loans were granted. However, another loan of N78.97 million granted to Hadi of Noble Hall Limited is performing, according to the bank.

Other fundamentals

Jaix Bank’s gross revenue rose by 25 percent to N45.192 billion from N36.158 billion reported in the corresponding period of 2024. Its total assets stood at N964.086 billion over the period as against liabilities which totalled N892.620 billion. If a company’s assets are worth more than its liabilities, the result is positive net equity., Investopedia says. On the other hand, if liabilities are larger than total net assets, then shareholders’ equity will be negative.

The bank’s profit stood at N14.447 billion, reprsenting a 28 percent increase from N11.284 billion in the corresponding period of 2024. Income from Sukuk made up the majority at N22.3 billion, followed by Interbank Mudarabah at N15.9 billion. Investments in trading assets contributed to the remaining N6 billion. Commission income stood at N2.44 billion, with total operating income reaching N33.20 billion.

“We expanded our deposit base by 94 percent, and maintained sound capital and liquidity metrics. These results reflect the strength of our ethical banking model and the trust of our stakeholders,” said Managing Director and CEO of Jaiz Bank, Mr Haruna Musa, at the Annual Genersl Meeting (AGM) of the bank last month.

“We are building an institution not only rooted in Islamic finance principles but also capable of competing at the highest level of profitability and governance,” Musa said.

Chairman of Jaiz Bank, Mr Mohammed Mustapha Bintube, said 2024 was a watershed moment for the financial institution, noting that the performance redefined industry expectations for ethical banking institutions.

Banks on real economy

Loans are critical for business, but it is also risky. Bank generally charge above 27.5 percent monetary policy rate (MPR),which is today the benchmark interest rate. As a result of the high MPR, banks charge between 30 percent and 45 percent interest rate on loans.

According to data obtained from the CBN, First City Monument Bank (FCMB), for instance, had the highest lending rate to manufacturers at 45 percent as of February 2025. In fact, the bank raised its interest rate to manufacturers from 30 percent in February 2021 to 45 percent in February 2025, indicating an increase of 15 percentage over the four-year period.

FCMB was followed by Rand Merchant Bank which, incidentally, raised its lending rate to the group to a whopping 45 percent in February this year from 30 percent in 2021. With 45 percent interest on loans, a manufacturer who borrows N1 billion from FCMB must return N1.450 million in 12 months.

Similarly, Rand Merchant Bank increased its lending rate to manufacturers to 44.5 percent as of February 2025 from 17.5 percet four years ago. By implication, a manufacturer who borrows N100 million from Rand Merchant Bank will repay N144.5 million in 12 months.

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Zenith Bank increased its interest rate for manufacturing loans from 30 percent in 2021 to 38.5 percent in 2025. This is despite that that the bank’s managers get credit at an average rate of 4 percent, Economy Post earlier reported.

First Bank of Nigeria raised its lending rate to manufacturers to 36 percent from 24 percent, while Eco Bank increased its rate to 35 percent from 25 percent four years ago. Hence, a small-scale manufacturer who borrows N1 million from First Bank will repay N1.36 million in 12 months. If the producer borrows the same amount from Eco Bank, they will repay N1.35 million within the same period of time.

Banks’ directors often get loans at far cheaper interest rates irrespective of what the MPR is. Zenith Bank directors, for instance, secure loans at an average rate of 4 percent. It is 8 percent for Access Bank directors, Economy Post found.

Jaiz Bank did not comment

Economy Post sent several messages to Jaiz Bank’s Head of Corporate Communications, Ms Halima Ishaq, to provide clarity on the current status of the loans but they were not replied to. An email was sent to the bank’s official email address provided by the bank but it was not replied to.