First HoldCo: Weak Earnings, No Dividend Make Uncomfortable Shareholders
First HoldCo Plc delivered a deeply mixed but strategically revealing audited FY2025 performance, reflecting the harsh realities of Nigeria’s elevated interest rate regime, regulatory tightening, asset repricing pressures, and post-FX reform adjustments within the banking industry.
Despite the sharp collapse in profitability metrics, the group’s numbers still reveal an institution preserving systemic relevance, liquidity strength, balance sheet expansion, and long-term capital survival capacity, all of which remain critical valuation anchors for investors assessing the future book value trajectory of the ivory tower lender.
The group’s gross earnings advanced strongly to N3.435 trillion from N3.212 trillion, reinforcing the bank’s enduring revenue-generation capacity across interest and non-interest income lines.
This topline expansion underscores the franchise’s resilience despite one of the most difficult economic environments in Nigeria’s modern banking history. A closer look at earnings quality, however, reveals substantial pressure beneath the surface.
Net interest income moderated to N1.09 trillion from N1.40 trillion, reflecting margin compression, elevated funding costs, tighter liquidity conditions, and the adverse impact of the Central Bank of Nigeria’s aggressive monetary tightening.
Nevertheless, net interest income after impairment charges improved to N1.09 trillion from N975 billion, suggesting improved asset quality management and stronger recoverability positioning despite macroeconomic volatility.
The most striking deterioration occurred in profitability. Operating profit plunged dramatically to N234.3 billion from N795.9 billion, while profit before tax equally declined to N234.3 billion from N796.5 billion.
Profit after tax weakened sharply to N139.5 billion from N677.0 billion, reflecting severe earnings compression largely attributable to regulatory adjustments, elevated provisioning burdens, capital restructuring effects, and the lingering impact of prudential risk management measures.
Earnings per share consequently collapsed from 1,859 kobo to 317 kobo, significantly weakening immediate shareholder return expectations and market sentiment around distributable profitability. Yet, within the earnings weakness lies an important stabilisation narrative.
Foreign exchange gains rebounded materially from a negative N64.9 billion loss position to a positive N93.4 billion gain, indicating improved treasury positioning and stronger adaptation to Nigeria’s volatile foreign exchange market architecture.
This recovery provides evidence that the group is gradually recalibrating its balance sheet in response to currency-induced shocks that severely disrupted prior-year earnings. From a balance sheet perspective, the institution still demonstrated systemic strength.
Cash and balances with the Central Bank of Nigeria expanded to N5.074 trillion from N4.415 trillion, reinforcing liquidity adequacy and regulatory compliance buffers.
Customer deposits equally grew strongly to N18.883 trillion from N17.170 trillion, confirming sustained depositor confidence and the enduring strength of the FirstBank franchise across retail, commercial, and public sector segments.
Loans and advances to customers rose moderately to N8.966 trillion from N8.767 trillion, suggesting cautious risk asset expansion amid elevated default concerns and macroeconomic uncertainty.
Investment securities also appreciated to N6.970 trillion from N6.536 trillion, indicating increased positioning in sovereign and low-risk instruments as management prioritised capital preservation over aggressive credit expansion.
Total assets rose further to N27.250 trillion from N26.524 trillion, preserving the group’s status as one of Nigeria’s systemically important financial institutions. However, the deeper concern for equity investors remains the deterioration in capital quality beneath the broader balance sheet growth.
Retained earnings declined aggressively to N401.8 billion from N1.116 trillion, highlighting the significant erosion of internally generated capital buffers.
While shareholders’ funds improved to N3.30 trillion from N2.70 trillion, the quality of that growth appears increasingly supported by reserves and regulatory adjustments rather than sustainable earnings accretion.
Fair value reserves strengthened to N512.5 billion from N356.7 billion, while regulatory risk reserves surged remarkably to N851.9 billion from N22.7 billion. A development that reflects heightened prudential caution and increased provisioning sensitivity across the banking sector.
Equally notable is the rise in borrowings to N1.943 trillion from N1.599 trillion, suggesting elevated funding pressures and greater dependence on external liabilities to sustain operational flexibility and capital adequacy positioning.
The board’s recommendation to pay no dividend for FY2025 may disappoint income-focused shareholders, but, strategically, the decision aligns with regulatory realities under the Central Bank of Nigeria’s capital forbearance framework and the urgent need to strengthen capital adequacy ratios before shareholder distributions.
From a market analyst’s standpoint, the absence of dividends should not necessarily be interpreted as institutional weakness alone; rather, it reflects a deliberate capital conservation strategy during a transitional regulatory cycle for Nigerian banks.
Looking ahead, First HoldCo’s medium-term investment thesis will largely depend on five strategic variables with successful resolution of CBN capital forbearance exposures, restoration of profitability momentum, improvement in retained earnings quality, optimisation of funding costs, and disciplined expansion of high-yield risk assets without materially worsening impairment levels.
The franchise itself remains fundamentally powerful. Its deposit base, nationwide banking infrastructure, liquidity profile, and systemic market relevance continue to provide strong long-term intrinsic value support. However, near-term shareholder returns may remain subdued until profitability normalisation and capital restructuring are fully stabilised.
In valuation terms, the stock increasingly appears to be transitioning from a high-yield dividend play to a long-duration balance sheet recovery and book-value-expansion story.
Should management successfully navigate regulatory recapitalisation pressures while rebuilding earnings efficiency, First HoldCo possesses the structural scale to re-rate meaningfully over the medium-to-long term within Nigeria’s evolving banking landscape.
For institutional investors, the current weakness may represent a cautious accumulation phase, more tied to future capital appreciation potential than to immediate income generation. Naira Gains 4.42% in 4 Months as FX Reforms Hold
