First HoldCo Plc, Nigeria’s oldest financial services holding company, has posted its weakest full-year profit in eight years after taking a massive one-off impairment charge to clean up legacy bad loans.
Net profit at the Lagos-based lender for the year ended December 31, 2025, fell sharply to N44.98 billion, representing a 92 percent decline from the N677.01 billion recorded in 2024, according to its unaudited financial statements posted on the Nigerian Exchange Group (NGX).
The drop was largely driven by a N748.13 billion impairment charge for credit losses, up from N426.29 billion in the previous year, as the bank aggressively provided for non-performing loans in line with tighter regulatory expectations.
Femi Otedola, the company’s group chairman, defended the move, describing the provisioning as a strategic clean-up exercise aimed at strengthening the group’s balance sheet and restoring confidence.
“At First HoldCo, we decided to clean the house properly. We took a huge one-time hit of N748bn to admit old bad loans instead of pretending they do not exist. That is why profit looks like it crashed by 92 percent. Painful headline, but it is a serious long-term move,” Otedola said in a post on X.
He added that the decision aligned with the Central Bank of Nigeria’s push for banks to transparently address non-performing loans rather than roll them over.
“First HoldCo basically closed the chapter on messy loans from past years, which sends a clear message that borrowing has consequences, and it helps rebuild trust,” he noted.
Core earnings remain strong
Despite the heavy provisioning, the group’s core banking business showed resilience.
Interest income rose by 23.6 percent to N2.96 trillion in 2025 from N2.40 trillion a year earlier, supported by growth in loan assets and higher yields in a rising interest rate environment.
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Net interest income rose to N1.91 trillion, up from N1.40 trillion in 2024, reflecting improved asset repricing and balance sheet expansion.
“The key point is this: our business itself is still strong. It made N2.96 trillion in interest income and N1.91 trillion in net interest income, which gave it the strength to take the cleanup and still stay standing,” Otedola said.
Fees rise, costs surge
Non-interest revenue also improved, with net fee and commission income increasing 18.7 percent to N290.74 billion, driven by higher transaction volumes across digital channels and banking services.
However, profitability was weighed down by rising operating expenses.
Personnel costs jumped to N385.91 billion from N308.47 billion. The bank spent N185 billion on adverts and corporate promotions. This represents over 25 percent of the total other operating expenses for the year, which surged to N809.36 billion, reflecting inflationary pressures, technology investments, and higher regulatory costs.
As a result, operating profit declined sharply to N228.37 billion from N795.93 billion in 2024.
Also, net losses from financial instruments at FVTPL hit N87.1 billion. In a year where market conditions should have favored conservative treasury management, this loss suggests duration mismatches or poor hedging.
On the balance sheet, total assets expanded to N27.07 trillion, up from N26.52 trillion in 2024, driven mainly by growth in customer loans and investment securities.
Loans and advances to customers increased to N9.06 trillion from N8.77 trillion, while customer deposits rose to N18.90 trillion, reflecting strong funding momentum and customer confidence.
Total equity also improved to N3.21 trillion, supported by fresh capital injection during the year and fair value gains on investment securities.
