Proshare analysts say First HoldCo Plc’s record N748.1 billion impairment charge in its unaudited 2025 full-year results represents a deliberate balance-sheet reset driven by regulatory and recapitalisation pressures, rather than a deterioration in the bank’s underlying franchise.
In a note released on Friday, the analysts described the disclosure as one of the most consequential by a Nigerian Tier-1 bank in recent years, noting that the impairment — equivalent to 11.5 per cent of the group’s N6.52 trillion loan book — was largely concentrated in the fourth quarter of 2025.
According to the analysts, the timing and scale of the charge reflect the convergence of three forces: the Central Bank of Nigeria’s (CBN) exit from COVID-era regulatory forbearance, the March 2026 recapitalisation deadline, and a strategic decision by the board to front-load legacy credit losses.
First HoldCo’s full-year profit fell by 93 per cent to N45.0 billion from N677.0 billion in 2024, largely due to the impairment, with N459.2 billion — or 61 per cent of the annual total — recognised in Q4 alone. The group recorded a fourth-quarter loss of N406 billion.
However, Proshare analysts noted that headline volatility masked a resilient operating performance. Gross earnings rose 4.8 per cent to N3.4 trillion, while net interest income jumped 36.3 per cent to N1.91 trillion. Pre-provision operating profit, excluding impairments and fair value movements, increased by 23.9 per cent to N973.3 billion.
“The results suggest a ‘kitchen-sink’ year, where management chose optical pain in exchange for structural credibility,” the analysts said.
They added that the impairment surge aligns with industry-wide trends following the CBN’s June 2025 directive ending forbearance on restructured loans and requiring full IFRS 9 provisioning. Peer banks, including Access Holdings, Zenith Bank and GTCO, had also recorded elevated provisions over the 2024–2025 period.
Proshare noted that First HoldCo’s regulatory risk reserve rose only marginally to N22.9 billion, indicating that IFRS 9 provisions substantially exceeded prudential minimums. This, they said, suggests an aggressive provisioning stance rather than regulatory compulsion.
The analysts also pointed to the group’s N229.3 billion capital raise during the year — comprising a rights issue and the first tranche of a private placement — which helped FirstBank meet the CBN’s N500 billion minimum capital requirement ahead of the recapitalisation deadline.
On costs, Proshare said the sharp rise in operating expenses was largely driven by regulatory levies, inflation and one-off strategic spending. AMCON levies increased to N113.4 billion, while NDIC premiums rose to N67.8 billion. Advertising and marketing expenses climbed sharply, reflecting rebranding and franchise-wide campaigns.
Despite treasury losses of N87.1 billion from fair value movements, net interest income benefited from aggressive loan repricing in a high-yield environment. Analysts said the combination of FX volatility, monetary tightening and balance-sheet repair distorted reported earnings, but did not undermine core banking strength.
Governance also came under scrutiny, with Proshare analysts arguing that the scale and timing of the impairments pointed to heightened board and audit oversight rather than failure. They noted that the write-offs, including large oil and gas exposures, reflected a shift toward balance-sheet integrity under tighter regulatory supervision.
Looking ahead, Proshare said investor confidence would depend on the audited 2025 results and a clean first quarter in 2026. Key indicators to watch include quarterly impairment trends, stage 3 loan ratios, recovery momentum and the normalisation of pre-provision operating profit above N200 billion per quarter.
“First HoldCo has sacrificed short-term earnings comfort for long-term credibility,” the analysts said. “The critical question for investors is whether this proves to be a value trap or a phoenix trade as earnings recover in 2026–2027.”
They added that while the stock’s 69.9 per cent gain in 2025 reflects renewed institutional interest, conviction will hinge on the finality of impairments and evidence that the worst of the balance-sheet clean-up is behind the group.
Investor response in the equities market has been cautious but nuanced following the results.
On the Nigerian Exchange (NGX), First HoldCo’s stock price was quoted around N45 following the results announcement, slightly lower amid profit concerns but still supported by underlying operational performance.
Some market participants welcomed the clean-up as a confidence-building measure, interpreting the aggressive provisioning as a proactive governance stance that clears legacy risks ahead of the sector’s regulatory transition.
