GCR Downgrades First Bank of Nigeria Limited
GCR Ratings has downgraded First Bank of Nigeria Limited’s national scale long-term issuer rating to A(NG) from A+(NG) previously and affirmed the short-term issuer ratings of A1(NG), with the outlook maintained as Rating Watch Evolving.
Ratings analysts said First Bank of Nigeria Limited’s ratings continue to reflect the strengths and weaknesses of the consolidated First Holdings Plc group, given the bank’s status as the group’s core operating entity.
As a result, while the ratings have been assigned to the bank, the analytical assessment is centred on the group. GCR said the downgrade reflects the deterioration in the group’s asset quality and the resulting weakening of its capital strength.
Nonetheless, the ratings continue to be supported by the group’s strong business profile, underpinned by its robust domestic market position and stable funding and liquidity profile.
GCR said the Rating Watch Evolving has been assigned in view of the group’s ongoing capital-raising efforts to reinforce its capital base and restore capital adequacy.
The end of regulatory forbearance in 2025 led to a further deterioration in the group’s asset quality, driven largely by the migration of key loan exposures to Stage 3.
Consequently, the non-performing loan (NPL) ratio increased to 12.0% in FY2025 from 10.2% in FY2024, despite significant loan write-offs during the year. Asset quality pressures persisted into 2026, with additional loan migrations pushing the NPL ratio to 13.9% by H1 2026.
The higher level of impaired assets was accompanied by a further weakening in reserve coverage, which declined to 23.3% in FY2025 from 52.4% in FY2024 and 80.8% in FY2023, indicating a progressive reduction in the group’s capacity to absorb potential losses.
While obligor concentration improved, with the top 20 exposures declining to 48.9% of gross loans in FY2025 from 63.5% a year earlier, sector concentration remains elevated.
In particular, the oil and gas sector, which is inherently volatile, continues to account for more than 45.0% of the group’s loan portfolio.
Overall, the group’s credit risk profile remains weak relative to industry peers. However, management’s ongoing efforts to strengthen risk management practices and improve asset quality could support a gradual improvement in the bank’s overall risk profile.
The group’s capital position weakened significantly in 2025, primarily due to elevated impairment charges arising from the expiry of regulatory forbearance.
The bank’s capital was further pressured by loan write-offs undertaken during the year. Collectively, these factors depleted existing capital and reduced profitability for the year, limiting the group’s ability to generate capital internally.
Consequently, the GCR core capital ratio declined to 8.2% in FY2025 from 13.6% in FY2024 (FY2023: 13.3%), while the regulatory capital adequacy ratio declined to 11.0% from 17.3%, resulting in a breach of the 15.0% minimum regulatory requirement for international banks.
To restore its capital position, the group plans to raise an additional NGN253.0 billion in capital in 2026, of which NGN45.0 billion has been raised as of 30 June 2026.
Management anticipates that the proposed capital raising, together with the resolution of certain impaired exposures and continued internal capital generation, will support the restoration of the group’s capital adequacy over time.
The group’s strong domestic market position continues to underpin its overall business profile and support the bank’s ratings. FirstBank is the fourth-largest financial institution in Nigeria by assets, underscoring its importance to the domestic economy.
The group maintains a leading and well-diversified financial services franchise, supported by an operating history spanning more than a century. Its activities across banking and non-banking financial services provide revenue diversification while enhancing cross-selling opportunities and customer retention.
The group also benefits from a diversified geographic footprint, with operations across seven African countries, including Nigeria, and international offices in the United Kingdom, France, and China.
This international network, together with longstanding relationships with major global financial institutions, positions the group as a key facilitator of cross-border trade involving Nigeria.
Over the medium term, the group’s competitive positioning could be further strengthened by management’s plans to deepen diversification through expansion into selected non-bank financial services segments and targeted African markets.
The group’s funding profile remains a key strength, supported by its large and stable deposit base. Customer deposits accounted for 82.7% of total funding in FY2025, up from 79.3% in FY2024.
Meanwhile, low-cost current and savings account deposits continued to underpin the funding structure, contributing to a reduction in the cost of funds to 4.8% from 5.6% in the prior year.
Depositor concentration remained low, with the top 20 depositors accounting for 17.4% of total deposits in FY2025, reflecting a well-diversified funding base. The group’s liquidity profile also remained strong, supported by a substantial stock of liquid assets.
GCR liquid assets to customer deposits improved to 44.9% from 39.7%, while GCR liquid assets to wholesale funding remained robust at 4.8x. Overall, the group’s funding and liquidity positions remain resilient, providing a strong buffer against potential funding and liquidity stresses.
The Rating Watch Evolving outlook reflects the potential for a new capital injection over the next six months, which could support the assessment of capital at its current level.
The group’s business profile, as well as its funding and liquidity positions, are expected to remain stable over the next 12 to 18 months. However, asset quality metrics are expected to remain constrained over the outlook period. Moody’s Changes Nigeria’s Credit Rating Outlook to Positive
