First HoldCo Plc rebuilds balance sheet as FY 2025 profit slumps on heavy loan provisions

By Josiah Nkemakolam

First HoldCo Plc has reported a sharp decline in profitability for the 2025 financial year despite recording stronger core banking revenues, as the group undertook aggressive balance sheet clean-up measures and increased provisioning for impaired loans linked largely to the oil and gas sector. The financial services group posted gross earnings of ₦3.4 trillion for the year ended December 31, 2025, representing a 6.9 per cent increase over the ₦3.21 trillion recorded in 2024.

Audited results released by the group showed that profit before tax fell significantly by 70.5 per cent to ₦235 billion from ₦796.5 billion in the previous year, while profit after tax declined by 79.4 per cent to ₦139.5 billion.

The weaker bottom-line performance was primarily driven by a 93.8 per cent rise in impairment charges for losses, which climbed to ₦826.3 billion, reflecting the group’s deliberate decision to de-risk its loan portfolio and comply with the post-forbearance regulatory environment.

However, the lender maintained strong momentum in core banking operations as interest income rose by 24.9 per cent to ₦2.99 trillion, while net interest income increased by 36.8 per cent to ₦1.92 trillion. Net interest margin improved to 11.1 per cent from 9.9 per cent in 2024, supported by asset repricing and improved yields across interest-earning assets. Operating income also rose by 6.4 per cent to ₦2.29 trillion.

The group’s non-interest income, however, declined sharply by 50 per cent to ₦377.4 billion, largely due to the normalisation of foreign exchange gains recorded in previous years. Nevertheless, fee and commission income remained resilient, rising by 20.2 per cent to ₦294.5 billion, driven by stronger digital transaction volumes, transfer fees and trade-related commissions.

Commenting on the results, Group Managing Director, Wale Oyedeji, described 2025 as a defining year for the institution, marked by decisive restructuring actions and strengthened capital positioning. “2025 was a defining year for FirstHoldCo, characterised by disciplined execution, resilient core earnings and a comprehensive reset of our balance sheet for sustainable performance and high-quality growth,” he stated.

Oyedeji said the group had taken deliberate steps to strengthen transparency and position the business for long-term stability. “Importantly, we comprehensively de-risked the Group’s balance sheet by adequately providing for systemic impaired and non-performing exposures. This decisive action enhances transparency and positions the Group on a far stronger foundation for future growth, improved asset quality and higher-quality earnings,” he added.

Analysis of the balance sheet showed that total assets grew modestly by 2.7 per cent to ₦27.25 trillion, while customer deposits increased by 10 per cent to ₦18.88 trillion, underpinned by a strong low-cost CASA deposit mix of 93.1 per cent. Loans and advances rose marginally by 2.3 per cent to ₦8.97 trillion, reflecting what management described as a disciplined and risk-conscious lending strategy amid macroeconomic uncertainties.

Asset quality indicators, however, remained under pressure during the year. The non-performing loan ratio rose to 12 per cent from 10.2 per cent in 2024 due to increased exposure to stressed oil and gas obligors. Nonetheless, the group improved its NPL coverage ratio significantly to 98.7 per cent from 54.8 per cent, suggesting stronger provisioning buffers and enhanced resilience against potential credit losses.

Operating expenses climbed by 32.1 per cent to ₦1.23 trillion, driven largely by inflationary pressures, foreign exchange volatility, increased personnel costs and higher regulatory expenses. Consequently, the cost-to-income ratio worsened to 53.8 per cent from 43.3 per cent recorded in the previous year, underscoring the difficult operating environment faced by financial institutions in Nigeria during the period.

The commercial banking business remained the dominant contributor to earnings, generating ₦3.36 trillion in gross earnings, while the investment banking and asset management subsidiary posted ₦72.8 billion in gross earnings. Profitability across both segments weakened significantly as elevated impairment charges and cost pressures eroded margins. Commercial banking profit before tax fell by 72.1 per cent to ₦201.2 billion, while the investment banking unit recorded a 43.6 per cent decline in profit before tax to ₦31.9 billion.

Despite the challenging earnings outcome, FirstHoldCo strengthened its capital base during the year through ongoing recapitalisation efforts. Share premium rose to ₦458.4 billion following a successful capital raise, while shareholders’ funds increased to ₦3.3 trillion from ₦2.8 trillion. Management disclosed that the group had already secured ₦128.7 billion under its ₦350 billion capital raise programme aimed at ensuring compliance with the Central Bank of Nigeria’s new minimum capital requirements and positioning the institution for sustainable growth.