April 30, 2025/Cordros Report
First HoldCo Plc (FIRSTHOLDCO) published their Q1-25 unaudited financials yesterday (29 April), reporting an earnings per share of NGN4.72 (Q1-24: NGN5.76). We attribute the decline to the lower non-interest income (-60.0% y/y) recorded during the period.
FIRSTHOLDCO recorded a 40.2% y/y growth in interest income to NGN625.28 billion as the higher interest earned on loans and advances to customers (+42.4% y/y) and investment securities (+54.7% y/y) offset the lower interest on loans and advances to banks (-17.0% y/y). We believe that the still elevated interest rates drove the gains on these contributory lines amid the 1.5% YTD growth in earning assets.
Similarly, interest expense settled at NGN260.09 billion (+18.6% y/y) owing to the higher interest paid on deposits from customers (+24.1% y/y), financial institutions (+14.7% y/y), and borrowings (+3.2% y/y). Notably, the HoldCo’s CASA mix deteriorated to 80.9% (2024FY: 86.2%). Consequently, the group recorded an expansion in net interest income ex-LLE (+77.3% y/y) after accounting for NGN37.25 billion in credit impairment charges.
The HoldCo’s non-interest income declined by 60.0% y/y to NGN104.04 billion as the higher gains on net fees and commission (+22.5% y/y) and FX trading (+6.8% y/y) were insufficient to offset the lower gains on investment securities (-27.6% y/y) and fair value loss (NGN57.11 billion) recorded during the period. Consequently, operating income pared by 2.9% y/y to NGN431.98 billion.
Operating expenses grew by 16.5% y/y, triggered by the higher personnel expenses (+4.6% y/y), advert & corporate promotions (+396.0% y/y) and regulatory costs – AMCON (+40.6% y/y) and NDIC (+63.2% y/y). Accordingly, the faster growth in OPEX relative to operating income led the group’s cost-to-income ratio (ex-LLE) to settle at 52.3% (Q1-24: 43.3%).
FIRSTHOLDCO’s profit before tax declined by 20.4% y/y to NGN186.48 billion, while profit after tax settled 17.9% y/y lower after accounting for the income tax expense of NGN19.09 billion.
Comment: The group continues to leverage the high-yield environment and expansion in interest-earning assets to grow its core income. Looking ahead, we expect continued accretion to support topline amid a likely moderation in non-funded income. Our estimates are under review.
