July 30, 2025/CSL Research

Financial Highlights:

• Interest Income: +51.7% y/y to N1.44TN
• Interest Expense: +23.1% y/y to N532.58BN
• Cost of Risk: +190bps y/y to 4.2%
• Cost to Income Ratio: +360bps y/y to 50.5%
• Profit before Tax: -13.6% y/y to N356.1BN

Stock Rating: UR

First Holdco’s unaudited H1 2025 results showed strong growth in Interest Income, up 51.7% year-on-year (y/y) and 29.9% quarter-on-quarter (q/q), driven by the sustained high-yield environment. On the balance sheet, Net Loans to Customers grew modestly by 1.1% compared to the December 2024 position, Investment Securities declined slightly by 1.16% over the same period while Customer Deposits rose by 4.25%.

Interest Expense increased moderately by 23.1% y/y and 4.8% q/q, contributing to a reduction in the Group’s cost of funds, which fell to 4.8% in June 2025, down from 5.2% in the same period of the prior year. Overall, Net Interest Income grew robustly, up 75.7% y/y and 47.8% q/q, while the Net Interest Margin (NIM) expanded to 10.4%, compared to 7.7% in June 2024—highlighting improved pricing and asset yield dynamics.

Net Fee and Commission Income grew moderately, up 25.1% y/y and 16.4% q/q. With the exception of credit related fees, brokerage & intermediations fees and fund management fees, all other Fee and Commission Income lines showed y/y growth.

Other Income (Foreign Exchange Income, Net Gains on Investment Securities, Net Gains or Loss on Financial Instruments held at FVTPL, Dividend Income, Other Operating Income) declined by 84.8% y/y. Q/q, Other Income declined 73.1%. The y/y decline was due to a fair value loss of N69.7 billion in H1 2025, a reversal from the N432.2 billion gain recorded in the corresponding period of 2024. We attribute this to
the relative stability of the exchange rate.

Operating Expenses (OPEX) rose by 24.0% year-on-year (y/y) and 25.4% quarter-on-quarter (q/q) in H1 2025. This increase outpaced the 15.1% y/y growth in Total Operating Income, resulting in a moderate decline in cost efficiency. Consequently, the Cost-to-Income Ratio (CIR) excluding provisions deteriorated to 50.5% in H1 2025, compared to 46.9% in H1 2024.

In H1 2025, Impairment Charges surged by 99.4% y/y to ₦185.4 billion, and by 297.7% q/q. This sharp increase is largely attributed to heightened provisioning towards the end of the regulatory forbearance regime, as the bank strengthened its risk buffers. As a result, the annualised Cost of Risk (CoR) rose to 4.2% in H1 2025, up from 2.3% in H1 2024. Asset quality also came under pressure, with the Non-Performing Loan (NPL) ratio increasing to 12.9% in H1 2025, compared to 10.2% as at December 2024.

Meanwhile, NPL coverage declined to 38.8%, from 54.8% at the end of 2024. Overall, Pre-tax Profit declined, down 13.6% y/y to N356.1bn while Net profit was down 21.2% y/y to N283.8bn, bringing H1 2025 annualised ROAE to 20.2% compared with 36.9% for H1 2024.

Capital Adequacy Ratio (CAR) of 16.9% was reported for Jun 2025 (Dec 2024: 16.5%) Our recommendation and target price are being reviewed. Current price: N34.90/s.

To read the full report, click on the link below​​

​First Holdco – H1 2025 Quick take.pdf​​​​​​​​​​​​​​​​​​​​​​​​​

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