First Holdco weak performance raises concern in banking industry over impairment, dividends 

First HoldCo Plc is facing renewed scrutiny from investors and shareholders after its share price declined by 8.4 per cent in January 2026, reflecting growing concerns over weak profitability, rising impairment charges and uncertainty around dividend prospects.

The Group’s stock fell from N48.80 on January 2, 2026, to N45.00 per share by January 30, 2026. Market analysts and shareholders have largely attributed the slide to the Group’s unimpressive performance in its unaudited annual results for the year ended December 31, 2025, despite headline growth in gross earnings.

The recent dip marks a sharp contrast to the strong rally recorded in 2025, when First HoldCo delivered a capital gain of 69.8 per cent year-on-year. The stock price rose from N28.20 per share in January 2025 to N47.90 by December, rewarding long-term investors and reinforcing optimism about the Group’s recovery strategy. However, the latest performance has raised fears that shareholders may once again be denied dividends, a situation that has historically strained investor confidence.

In its unaudited financial statements, First HoldCo reported gross earnings of N3.4 trillion for the 2025 financial year, representing a 4.8 per cent increase from the previous year. Management said the growth reflected deliberate strategic actions aimed at strengthening the balance sheet, improving asset quality and positioning the Group for sustainable long-term growth.

Net interest income surged by 36.3 per cent to N1.9 trillion, driven by improved earnings yield of 17.11 per cent and stronger net interest margins of 11.0 per cent. Net fees and commissions also grew by 18.7 per cent to N290.7 billion, highlighting the resilience of the Group’s core banking operations and the benefits of sustained investment in digital banking platforms.

Despite these gains, profit for the year declined significantly compared with the prior period, largely due to higher impairment charges in the commercial banking segment. According to the Group, the spike in impairment reflected a conscious decision to accelerate balance-sheet clean-up following the end of regulatory forbearance and to adopt more stringent provisioning standards in line with evolving regulatory expectations.

Management described the move as painful but necessary, arguing that it enhances transparency, strengthens investor confidence and lays the foundation for improved profitability in future periods. However, the market reaction suggests that investors remain uneasy about the near-term implications for earnings and dividends.

Profitability was further pressured by higher regulatory costs, underscoring the financial burden of compliance within Nigeria’s financial system stability framework. Nevertheless, First HoldCo maintained that the underlying performance of its businesses remained strong, pointing to robust pre-provision operating profit and steady growth in customer activity across subsidiaries.

Deposit liabilities rose by 10.0 per cent year-on-year, supported by sustained deposit mobilisation and continued digital innovation. The Group also deliberately reduced its foreign currency deposits, reflecting the repayment of expensive funding and the impact of naira appreciation, which improved funding efficiency and reduced foreign exchange risk.

Gross loans and advances declined marginally during the period as the Group maintained a disciplined approach to credit growth. Loan repayments, write-offs and the appreciation of the naira, which reduced the naira value of foreign currency loans, all contributed to the decline. Management said these measures were designed to build a cleaner, higher-quality loan book capable of supporting future earnings growth.

Non-interest income, however, declined due to lower fair value gains on financial instruments following the naira appreciation in 2025. This was partly offset by stronger foreign exchange trading income and reduced FX revaluation losses. Net fee and commission income benefited from higher electronic banking fees, letters of credit commissions, custodian fees, and account maintenance income.

Excluding impairment charges and fair value gains, pre-provision operating profit rose by 23.9 per cent to N973.3 billion, underscoring the strength of the Group’s core operations. Still, analysts note that impairment remains the single biggest drag on bottom-line performance.

Commenting on the sudden deterioration in performance, David Adonri, Vice Chairman of HighCap Securities Ltd, said the problem appeared to have emerged late in the year. “In the third quarter, everything seemed fine, as if there was no problem. Then suddenly, in the fourth quarter and toward the end of the year, a major issue surfaced,” he said.

The disclosure of impaired assets has reignited debate about asset quality across Nigeria’s banking sector and raised expectations that more banks may report similar challenges as they release their full-year results.

Mazi Okechukwu Unegbu, former President of the Chartered Institute of Bankers of Nigeria (CIBN) and Chief Executive of Maxifund Investment Limited, welcomed First HoldCo’s openness, noting that some debts may ultimately prove unrecoverable.

“So, what do you think? Some of these debts are not going to be defended,” Unegbu said. “Even if you take the matter to court and the court rules that the obligors should pay, the real issue is that the means of payment may not be there. That is why I think it is good that First Bank has come out openly with this disclosure.”

He added that other banks should follow suit to give investors a clearer picture of the industry’s true financial health. “They should publish exactly how much of their debt exposure is impaired, especially debts that cannot be recovered. Knowing how Nigeria operates, even people who can pay may deliberately delay or avoid payment,” he said.

Shareholders, meanwhile, are increasingly concerned about the implications of the impairment charges for dividends, employment and long-term returns. Igbrude Moses, National Co-ordinator of the Independent Shareholders Association of Nigeria (ISAN), said investors are worried that dividend prospects for 2025 may be bleak.

“Maybe investors will be worried, meaning that this year the likelihood of declaring a dividend, or a good dividend, is quite low,” Moses said. “This is a major concern because there are many questions that need to be asked.”

He pointed to huge advances and other legacy issues as key sources of anxiety. According to him, the Chairman’s comments acknowledging unresolved legacy positions suggest that the Group is effectively starting from a clean slate.

“The information being given to stakeholders should carry them along rather than surprise them,” Moses said. “Whether these issues are addressed now or later, it is better to deal with them now. From that perspective, it looks like a progressive approach, even though the benefits have not yet been reflected.”

Moses noted that while shareholders appear to support the strategic clean-up, they expect management to clearly articulate how the impaired funds will be recovered. “The next question is how concerned we should be after incurring such an amount. Since this was done in line with CBN rules, what strategies are in place to recover part or all of the money?” he asked.

Looking ahead, First HoldCo said it will continue to focus on disciplined execution of its strategic priorities, with emphasis on improving efficiency and profitability, deepening its digital and data capabilities, and maintaining a strong balance sheet. The Group also plans to pursue selective growth opportunities, including new revenue streams, additional business verticals and expansion in targeted African markets.

Further clarity is expected with the release of the audited full-year results and during the upcoming investor and analyst earnings call. Until then, market watchers say sentiment around the stock will likely remain cautious, as investors weigh short-term pain against the promise of long-term stability and returns.