First Holdco Plc’s 9M’25 financial results have been a mixed bag, with strong growth in core banking income offset by weaker non-interest revenue and higher impairment charges. However, the impact on returns has been significant, with the company’s annualized Return on Average Equity (ROAE) declining to 19.9% from 32.3% in 9M’24. Return on Average Assets (ROAA) has also taken a hit, falling to 2.3% from 3.2% in 9M’24.
The decline in returns is a concern for investors, as it suggests that the company’s profitability is under pressure. Despite a 71.7% year-over-year increase in Net Interest Income (NII) to N1.5 trillion, the company’s Profit Before Tax (PBT) declined by 7.3% YoY to N556.5 billion. Profit After Tax (PAT) was also down by 15.5% YoY to N450.9 billion.
The main culprits behind the decline in returns are the significant drop in Non-Interest Revenue (NIR) and the sharp rise in impairment charges. NIR declined by 49.2% YoY to N296.9 billion, largely due to a fair value loss of N72.8 billion. Impairment charges, on the other hand, surged by 68.6% YoY to N288.9 billion, driven by higher loan provisioning.
Key Highlights
- Net Interest Income (NII) rose by 71.7% YoY to N1.5 trillion, driven by strong yield on interest-earning assets and relatively cheap funding.
- Non-Interest Revenue (NIR) declined by 49.2% YoY to N296.9 billion, largely due to a fair value loss of N72.8 billion.
- Impairment charges surged by 68.6% YoY to N288.9 billion, driven by higher loan provisioning.
- Operating expenses increased by 39.3% YoY, nudging the cost-to-income ratio (CIR) to 52.4% from 46.4% in 9M’24.
Overall, the results suggest that First Holdco is facing significant challenges in its quest to maintain its returns. While the company’s core banking income is strong, the decline in NIR and the rise in impairment charges are major concerns. Investors will be watching closely to see how the company addresses these challenges and restores its returns to previous levels.
