FirstHoldco Faces Tough Earnings Outlook, Plans to Sell Shares Privately
First Holdco Plc faces a tough earnings outlook as analysts anticipate higher credit impairment charges – provisioning stemming from move to unwind forbearance exposure – to reduce the group net income in 2025.
Equity investors are advised to switch to a neutral position on First Holdco as analysts at CardinalStone Securities Limited revised target price and adjustment to estimates.
The financial services group has raised N147 billion via rights issue towards N500 billion recapitalisation requirement, analysts at CardinalStone Securities Limited revealed in their latest updates.
The marina headquartered elephant branded financial group is projected to deliver a marginal top line growth of 4.7% in 2025. Meanwhile, net profit for 2025 is projected to fall by 18.6% year on year amidst rising credit impairment charges.
Despite higher charges against the profit or loss account, provisioning to cover growing non-performing loan declined in the first half of 2025.
Analysts are of the view that this would warrant higher provisioning in the second half, and this is expected to be negative for the group’s earnings result.
In its equity note, CardinalStone Limited told investors that 12-month target price of First Holdco stock was revised upward to N35.31 from previously N28.21. This translates to potential upside of 7.5% from CardinalStone Securities reference price of N32.85.
Data obtained from the Nigerian Exchange showed the FirstHoldco share price climbed to N32.85, lost 10 kobo each per share week on week.
In the first half of 2025, First Holdco profit fell by about 21% year on year to N289.8 billion as the group’s credit impairment charges soared, plus share decline income from non-core banking operations.
In its review, analysts at CardinalStone Securities said they have revised their financial year 2025 estimates accordingly, maintaining view of diverging earnings dynamics through the year with a resilient core income line offset by softening non-core revenue.
“… Our emphasis shifts to asset quality in light of recent regulatory developments. Specifically, the directive of the Central Bank of Nigeria (CBN) requiring banks to unwind forbearance exposures and comply with the stipulated Single Obligor Limit (SOL) has been focused on.
“Guided by management’s stated commitment to fully exit these positions within 2025, we have revised our assumptions on non-performing loans (NPLs), loan loss provisioning, and overall cost of risk.
“We expect management to renegotiate tenor for some forbearance-linked facilities and stagger provisioning for the rest across the year, given the limited scope for gross earnings to absorb them in a single period”, CardinalStone Securities dropped the hint in a report.
Analysts said they foresee only a 4.7% year on year growth in gross earnings for First Holdco, saying the group’s 2025 financial performance will hinge heavily on the effective pass-through of interest income to the bottom line.
The Group remains well-positioned to sustain its strong asset yields by actively repricing its risk assets and strategically deploying capital into high-yielding investments, CardinalStone Securities Limited said.
Analysts at the investment firm forecasted First Holdco’s interest income to grow by 20.2% year on year to N2.9 trillion, an upgrade from N2.6 trillion previous forecast. In the first half of 2025, First Holdco generated N1.4 trillion as interest income.
“We, however, view the modest 0.4% year to date increase in Interest Earning Assets (IEAs) to N17.5 trillion as a key risk to the interest income outlook”, analysts said in the report.
For non-interest revenue (NIR), CardinalStone Securities Limited said the consistent growth in fee income, up by+29.7% year on year in H1-2025 and 5-year CAGR of 24.1%, affirms the Group’s strength and scalability across diverse revenue streams.
Analysts noted that fair value losses and the normalisation of exceptional fair value gains may undermine the pass-through from fee income to NIR in 2025.
The investment firm forecasted First Holdco gross earnings to increase by 4.7% year on year to N3.4 trillion, adding that interest income will account for about 86.0% of the total sum.
First Holdco is projected to report 15.2% year on year decline in pretax profit estimated to settle at N675.2 billion in 2025. The group profit after tax is forecasted to fall by 18.6% year on year to N540.2 billion, implying expected earnings per share of N13.25 for 2025.
CardinalStone said Fi disclosed that two of its forborne loan exposures were reclassified in the second quarter of 2025, driving a notable uptick in the Group’s non-performing loan -NPL.
First Holdco NPL ratio surged to 12.9% in the first half of 2025, according its unaudited financial statement submitted on the Nigerian Exchange, up from 10.2% in 2024.
“This reclassification had a significant impact on asset quality, with net impairment charges soaring by 99.4% year on year to N185.4 billion”, analysts said in the note.
The group reported N37.3 billion as net impairment charge in the first quarter, and the amount puffed up to N148.1 billion in the second quarter, translating to higher provisioning for the whole of first half.
Analysts observed that First Holdco’s NPL coverage ratio also deteriorated to 38.8% from 54.8% 2024, a highlighting the need for more provisioning.
“Management clarified that its remaining forbearance exposures continue to generate cash flows, prompting the bank’s decision to resort to re-tenoring these loans to align with the cash flow profiles of the respective obligors”, CardinalStone said.
The firm added that First Holdco emphasised that any unresolved loans would be fully provisioned for by year-end.
“In light of these developments, we have revised our FY 2025 loan loss provisioning forecast downward to N450.6 billion from a prior estimate of N656.3 billion, supported by the bank’s approach in managing the exit of its forbearance exposure.
“Consequently, we now project cost-of-risk to reach 4.7% in 2025— aligning with management’s guidance of above 3.0%”, analysts said in the report.
First Holdco is noted to have raised a total of N147.0 billion from the first phase of its capital raise program. The plan for the next phase is to raise N350.0 billion through a staggered private placement of shares, analysts revealed.
The investment expects the Group to be fully recapitalised before the stipulated deadline.
“We expect the potential inflow of the N350.0 billion raise to shore up First Holdco Plc’s Capital Adequacy Ratio (CAR) and improve prospects for dividend payments”, CardinalStone Securities Limited stated. #FirstHoldco Faces Tough Earnings Outlook, Plans to Sell Shares Privately#
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