First Holdco Falls as Investors Weigh Bank’s Unremediated Exposures

First Holdco Falls as Investors Weigh Bank’s Unremediated Exposures

First Holdco Plc’s market value fell by 9.56% over the last seven trading sessions in the equities market as investors exited positions. Investors reacted negatively following the Central Bank (CBN) directive that suspended dividend payments for banks under regulatory forbearance and those in breach of single obligor limits.

The Nigerian Exchange’s platform revealed that First Holdco closed at N26.95 on Friday, with trading data showing huge volume executed by investors opening and closing positions on banking stock from N29.8, its peak price in 7 days.

First Holdco opened the week at N28.2 before the sell pressures forced the financial services market value down to N1.128 trillion, according to the NGX update. Analysts said First Holdco is under regulatory forbearance and, as such, would not be allowed to pay dividends until it cures itself of this. At the same time, the group is currently in breach of its single obligor limit.

The single obligor limit forbearance allowed banks to temporarily exceed the 20% cap on single obligor exposures relative to shareholders’ funds. In an industry report, Meristem Securities Limited puts First Holdco’s exposure to oil and gas as a percentage of capital at 119.55% with a 10.29% non-performing ratio.

Analysts explained that most of these forbearance loans originated from the oil and gas sector and are typically classified as Stage 2 loans under IFRS 9—indicating a significant increase in credit risk but not yet defaulted. The group stage 2 loan percentage is noted to be heavy on the capital adequacy ratio of 16.54%.

In the tier I banking category, First Holdco Plc has the smallest shareholders fund, valued at N2.738 trillion, compared with Access Holdings (N3.687 trillion), Zenith Bank (N4.442 trillion), UBA (N3.675 trillion), and GTCO (N2.978 trillion).

First Holdco also ranked higher in terms of oil and gas exposure to capital ratio, which settled at 119.55%, compared against its immediate rivals Zenith Bank (101.89%), UBA (39.11%), Access Holdings (55.01%), and GTCO (38.23%).

Last week, First Holdco disclosed that its single obligor limit breach stems from foreign currency loans (FCY) to two obligors, which ballooned due to over 200% currency devaluation in 2023-2024. The elephant-branded financial services company expects to cure the breach with the completion of its capital raise in the second half of 2025.

First Holdco said its exposures are tied to syndicated facilities across key sectors. The syndicate is actively restructuring the terms, while the bank has committed to provisioning any unremediated exposures by year-end, according to Meristem Securities Limited.

“We estimate that First Holdco’s forbearance loans as a proportion of gross loans stand between 10.0% and 12.0%, suggesting an implied absolute forbearance exposure of about N900.0 billion to N1.1 trillion with the midpoint exposure of 11.0%”, CardinalStone Securities Limited said in an update.

The firm added that First Holdco’s track record suggests that over time, and given its robust earnings-generating capacity, the bank should be able to absorb the necessary provisions to fully exit its forbearance exposures.

“This ability to exit this position can also be supported by additional capital raises. Nonetheless, we note the relatively low non-performing loan coverage that may necessitate additional provisioning”, the firm said. First Holdco Plc has the worst non-performing loan ratio among listed banking names in the equities market, according to details from its Q1 earnings results. Naira Rallies, Spot Rate Settles at N1547 on FX Injections