First Holdco’s Financial Performance: A Series of Unmet Expectations”

Femi Otedola’s appointment as Chairman of First Bank Holdings (First Holdco) in 2024 was hailed as a strategic move, leveraging his vast experience and impressive track record in Nigeria’s business landscape to rapidly transform the struggling bank. However, despite the initial optimism, First Holdco’s performance has failed to live up to expectations, leaving many to wonder if the appointment has had the desired impact.

In spite of the current situation, the optimists are not blamed. With a his remarkable career spanning over three decades, Otedola had cemented his reputation as a visionary leader and strategic genius, with notable achievements such as founding Zenon Petroleum and Gas Ltd and spearheading Geregu Power Plc.

As the single largest shareholder in First Bank of Nigeria Holdings Plc, Otedola’s intimate knowledge of the company, combined with his passion for innovation, made him the perfect fit for the role. This strategic appointment was aimed at harnessing Otedola’s expertise to propel First Holdco’s growth and transformation, leveraging his razor-sharp business acumen to chart a new course for the company’s future.

As Chairman of First Bank Holdings, Otedola was believed to be poised to unleash his visionary leadership and strategic prowess to drive explosive growth and transformation. With his keen mind for business and passion for innovation, Otedola was expected to leave an indelible mark on the Nigerian business landscape, shaping the future of First Holdco and beyond

Surprisingly , First Holdco has remained its old self . Despite Femi Otedola’s impressive pedigree and appointment as Chairman of First Bank Holdings (First Holdco) in 2024, the bank has yet to live up to expectations. First Holdco, a leading financial services group in Nigeria, faces significant challenges that impact its performance and long-term sustainability.

The bank’s financial results have raised more questions than answers, casting a shadow over its ability to generate revenue from its core lending business. A significant decline in interest income, accompanied by a reduction in interest expense, has resulted in a substantial decrease in net interest income. This trend suggests that the bank is facing challenges in its core business, possibly due to increased competition or a decrease in loan demand.

The bank’s asset quality remains a concern, despite a decrease in impairment charges. Impairment charges still account for a significant portion of interest income, indicating that the bank is still grappling with non-performing loans. The decline in net interest income is a major blow to the bank’s profitability, raising questions about its ability to sustain itself in the long term.

First Holdco’s non-interest income streams have presented a mixed bag. The significant decline in net fee and commission income is a concern, given the stable nature of this revenue source. The bank’s foreign exchange losses narrowed significantly, which is a positive development. However, the bank’s trading income remains a concern, with net losses from financial instruments at fair value through profit or loss. T

he bank’s high fixed costs, including infrastructure maintenance and personnel expenses, limit its ability to invest in innovation and growth initiatives. The bank’s over-dependence on physical storefronts poses a financial strain, and its slow decision-making process can hinder innovation and agility in responding to market and regulatory changes.

 Analysts at Cordros Securities Limited recently downgraded their estimates for First Holdco Plc due to its unimpressive earnings performance in the first half of 2025. The financial services group’s profit declined by over 22% in the first six months, primarily due to higher impairment charges and fair value losses. Despite an 18.1% year-on-year growth in gross earnings, First Holdco’s profit after tax fell by 22.3%.

The EPS forecast has been slashed by 19.80% to N14.70 from N18.33, and the target price has been reduced to N31.14 from N34.97, leading to a downgrade to a hold rating. The dividend yield is expected to be 3.0% based on the last closing price of N33.60/s, with a gross dividend per share estimate of N1.00.

The price-to-earnings ratio is estimated to be 1.7x, and the price-to-book estimate is 0.3x. Asset quality pressures, higher impairment charges, and foreign currency losses are contributing factors to the downgrade. The non-performing loan ratio spiked to 12.9% from 10.2% in 2024, resulting in a subpar NPL coverage of 38.8%. Higher impairment charges are expected to surge by 34.2%, translating to a cost of risk of 6.0%. The  analysts expect loan growth to be cautious, with a growth forecast of 6.0% year-on-year, aimed at preserving asset quality. Deposit growth is forecasted to grow by 10.0% year-on-year. Operating income and expenses are projected to grow by 2.8% and 12.9% year-on-year, respectively, resulting in a 2025E cost-to-income ratio of 59.2%.

First Holdco’s quarter 1, 2025 financial results have raised questions about its ability to manage costs and maintain profitability.  

First Holdco’s Q1 2025 financial results reveal concerning trends that highlight the bank’s struggles in maintaining profitability. Despite a marginal 3.3% increase in gross earnings to ₦729.3 billion, the bank’s profit after tax dipped by 18% year-on-year to ₦167.4 billion. This decline was driven by a sharp contraction in non-interest income, which plummeted by 60% to ₦104 billion, and rising operating expenses.

The bank’s operating expenses surged by 16.4% to ₦245.3 billion, resulting in a cost-to-income ratio of 52.3%. This signals operational inefficiencies due to increased personnel costs, regulatory levies, and marketing expenses. Impairment charges, although lower, still accounted for a significant portion of interest income, indicating lingering non-performing loans and potential asset quality issues.

The bank’s return on average equity (ROAE) slumped to 24.2% from 44.5% in Q1 2024, and return on average assets (ROAA) fell to 2.5% from 4.2%, highlighting the deterioration in profitability metrics. These challenges underscore the need for First Holdco to focus on improving revenue diversification, strengthening asset quality, and optimizing cost management.

The significant decline in non-interest income raises questions about the bank’s ability to generate stable revenue from customers. To restore confidence in its financial performance and improve its long-term prospects, First Holdco must prioritize effective cost management and revenue growth. Investors and analysts will be watching closely to see if the bank can improve its efficiency and restore profitability in the face of declining revenue.

Ultimately, First Holdco’s financial performance highlights the importance of effective cost management and revenue growth in maintaining profitability. The bank’s ability to navigate these challenges will be critical in determining its long-term success.

 First Holdco’s Q2 2025 results reveal a mixed financial performance, with the company posting a pretax profit of ₦169.6 billion, down 4.58% year-on-year. Despite strong growth in net interest income, which surged by 87.32% year-on-year to ₦539.6 billion, the company’s operating profit declined by 4.79% to ₦169.2 billion.

The company’s total assets stood at ₦27.1 trillion, up 2.54% year-on-year, demonstrating a strong balance sheet. Retained earnings increased to ₦1.3 trillion, reflecting a 23.17% growth. Net fee and commission income also showed a positive trend, rising by 27.54% year-on-year to ₦74.5 billion, driven by the company’s expanding transactional banking business.

However, the company’s financial performance is not without challenges. Operating expenses posed significant pressure, with personnel expenses standing at ₦102.9 billion and other operating expenses totaling ₦185.5 billion. This resulted in a decline in operating profit and put pressure on operating margins.

A notable aspect of the results is the significant reduction in foreign exchange losses, which plummeted from ₦66.4 billion to ₦6.9 billion. Despite this, the company’s reliance on interest income may expose it to significant market risks if interest rates fluctuate.

To address these challenges, First Holdco must focus on improving revenue diversification, strengthening asset quality, optimizing cost management, and mitigating interest-rate risk. By implementing these strategies, the company can work towards restoring confidence in its financial performance and improving its long-term prospects. With a robust financial position and earnings resilience, First Holdco is well-positioned for long-term growth, driven by its strong interest margins and growing transactional banking business.

First Holdco must focus on improving revenue diversification, strengthening asset quality, optimizing cost management, and mitigating interest-rate risk. By implementing these strategies, the company can work towards restoring confidence in its financial performance and improving its long-term prospects. With a robust financial position and earnings resilience, First Holdco is well-positioned for long-term growth, driven by its strong interest margins and growing transactional banking business.