The great clean-up: Deconstructing First Holdco’s financial rebirth

The 2025 financial year for First Holdco Plc (the parent company of First Bank of Nigeria) will be remembered not for a failure of the business, but for a deliberate, high-stakes demolition of its own balance sheet. While the headline figures initially shocked the market showing a staggering 92% plunge in profit after tax, the story behind the numbers reveals a calculated strategy to trade short-term optics for long-term survival.

Under the leadership of Chairman Femi Otedola, the group chose to pull apart its foundations, exposing and excising decades of legacy issues in a single, painful stroke.

The N748bn exorcism

The primary driver of the poor bottom-line performance was a massive N748.1 billion impairment charge for credit losses. This represents a 75.5% increase from the previous year. To put this in perspective, the bank set aside nearly N460 billion in the fourth quarter alone—more than the entire provisioning for the previous year.

This was not a sudden collapse in loan quality, but what Otedola described as cleaning house properly. By admitting to old, non-performing legacy loans rather than kicking the problem down the road, the bank took a one-time hit that effectively wiped out the year’s earnings to ensure a healthier 2026.

The engine room vs. The headlines

The irony of the 2025 results is that the bank’s core income engine was actually firing on all cylinders. If one looks past the impairment charges, the fundamental business remains robust as interest income surged by 23.6% to N2.96 trillion, fueled by high yields on government securities.

Net interest income also climbed 36.3% to N1.91 trillion, showing that the bank is still highly efficient at generating revenue from its core lending and deposit activities.

Meanwhile, before provisions and fair value gains, operating profit grew by 23.9% to N973.3 billion.

Operational headwinds and maintenance costs

Beyond the loan book, the group grappled with rising operational costs. Operating expenses jumped 44% to N809 billion, driven partly by the high cost of maintaining aging physical assets. 

The bank spent N151 billion just keeping legacy infrastructure alive—a figure critics argue reflects a "wasting" of capital on assets that have reached their zenith.

Additionally, the AMCON levy and rising income taxes (N176 billion) further squeezed the residual profit available to shareholders.

Strategic divestment

The poor performance was also exacerbated by losses linked to the divestment of its merchant banking unit. 

This exit, while contributing to the dip in Profit After Tax (which fell from N677 billion in 2024 to just N45 billion in 2025), was part of the group’s broader restructuring to focus exclusively on its most profitable commercial and retail segments.

Conclusion

While Shareholders saw Earnings Per Share (EPS) collapse from N18.21 to N1.09, the bank simultaneously completed a massive capital-raising exercise. By boosting its equity base to N3.21 trillion, First Holdco has met the CBN’s new N500 billion minimum capital requirement well ahead of the 2026 deadline.

The 2025 numbers represent a controlled burn, the destruction of old, faulty structures to make room for a world-class financial institution. The bank is now leaner, better capitalized, and free from the messy loans that have haunted its books for years.