Sharp drop in non-interest earnings hits First Holdco, profit drops by 18%

Bamidele Famoofo

First Holdco Plc, formerly FBN Holdings, one of Nigeria’s foremost financial groups, has reported about 18 per cent in net profit for the first quarter ended March 31, 2025.

Despite a sharp moderation in the group tax expenses, profit fell by 17.9 per cent year on year to N167.4 billion from N208.3 billion in Q1-2024.

The performance was primarily weighed down by a sharp contraction in non-interest revenue, which offset the strong growth recorded in net-interest income, limiting the expansion of gross earnings.

As a result of below-the-belt, non-interest-related earnings, the group’s aggregate revenue struggles to grow compared with its immediate rivals in the financial services industry.

According to details from First Holdco’s unaudited financial statement, gross earnings only grew by 3.3 per cent year-on-year to N729.3 billion from N704.2 billion in the comparable period in 2024.

Net interest income surged by 61 per cent year on year to settle at N365.2 billion from N226.8 billion in the comparable period in 2024. But First Holdco’s non-interest income softened drastically, settling at N104 billion in Q1-2025, down by 60 per cent year-on-year from N260 billion posted in Q1-2024.

A significant increase in operating expenses (OPEX) offset the gains from lower impairment charges, further pressuring net income. Details showed that operating expenses rose by 16.4 per cent year on year to settle at N245.3 billion from N210.8 billion in the equivalent period in 2024.

On the asset quality front, cost-of-risk improved to 1.7 per cent , supported by the 1.31 per cent year-on-year decline in impairment charges on loans and advances, despite an 11.1 per cent YoY increase in gross loans to N9.7 trillion.

On the flip side, the cost-to-income ratio (CIR) climbed to 52.3 per cent , reflecting higher personnel costs, regulatory levies (AMCON and deposit insurance), and increased spending on advertising and promotions.

Overall, the weaker earnings performance resulted in an annualised return on average equity (ROAE) of 24.2 per cent , a sharp drop from 44.5 per cent in Q1-2024.  First Holdco’s return on average assets (ROAA) also fell to 2.5 per cent from 4.2 per cent 12 months ago, according to analysts’ notes from Cardinal Securities Limited.