First HoldCo’s reset is now being priced by the market

After an oversubscribed rights issue, stronger Q1 earnings and visible balance-sheet repair, investors are reassessing one of Nigeria’s most closely watched banking franchises.

The Nigerian banking sector is being repriced around a sharper set of tests: capital strength, governance credibility, earnings resilience and the quality of balance-sheet repair.

The Central Bank of Nigeria’s recapitalisation programme has pushed banks back to the market. The new minimum capital requirement is ₦500 billion for commercial banks with international authorisation, ₦200 billion for national banks and ₦50 billion for regional banks. That policy has made capital-raising a sector-wide imperative, but the market’s response has not been uniform. Investors have been more willing to support institutions that can show a credible path from regulatory pressure to stronger earnings.

In that context, First HoldCo’s recent performance, both in the equity market and in its first-quarter 2026 results, has become a useful indicator of how investors are reassessing risk across the banking system.

A rerating before the results The shift in sentiment did not begin with the Q1 numbers. It was visible in the stock’s rerating through 2025 and early 2026. First HoldCo’s share price traded within a 52-week range of ₦24.50 to ₦79.85 before closing at ₦67.80 on 8 May 2026. That range reflects a period of intense scrutiny of Nigerian bank balance sheets, dividend capacity and legacy exposures.

The share-price movement suggests that investors had begun to price in a different view of the group’s earnings trajectory and governance stability. That judgement was further tested by the rights issue. First HoldCo set out to raise up to ₦150 billion and received subscriptions of ₦187.6 billion, more than 25 percent above target. The group described the outcome as evidence of shareholder confidence and said the capital would strengthen its flagship banking subsidiary, FirstBank.

That does not mean First HoldCo stood alone. Other strong banking franchises have also attracted capital. Access Holdings recorded subscriptions of ₦371.8 billion on its ₦351 billion rights issue, representing a 105.76 percent subscription, although it was constrained to raising the target amount. Zenith Bank raised ₦350.4 billion from its combined rights issue and public offer, exceeding the ₦290 billion it had sought.

The point, therefore, is not that First HoldCo was the only bank able to attract excess demand. It is that its oversubscription came at a sensitive point in its own balance sheet repair cycle. Investors were not merely buying into the wider recapitalisation story. They were also making a judgement about First HoldCo’s capacity to move beyond the legacy issues that had weighed on sentiment.

Earnings that support the reassessment First HoldCo’s unaudited Q1 2026 results, released on 7 May 2026, strengthened that market reassessment. Gross earnings rose 26.8 percent year on year to ₦942.0 billion, while profit before tax increased 72.2 per cent to ₦321.1 billion. Profit after tax reached ₦267.8 billion, up 56.5 percent from Q1 2025.

These are not marginal improvements. They represent one of the stronger quarterly outcomes in the Nigerian banking sector, and they follow a period in which the group says it took deliberate steps to de-risk its balance sheet. Wale Oyedeji, the Group Managing Director, said First HoldCo had “adequately provisioned for systemic impaired and non-performing loans” in 2025, a move that depressed short-term profitability but placed the group on what management now describes as a stronger foundation.

The Q1 numbers show the effect of that reset. Net interest income rose 20.1 percent year on year to ₦438.8 billion. Non-interest income more than doubled, rising 110.7 per cent to ₦219.2 billion. Operating income increased 40.2 percent to ₦658.0 billion.

The improvement in non-interest income is particularly important. Nigerian banks are operating in a volatile macroeconomic environment marked by high interest rates, currency pressure and shifting regulatory expectations. In that context, revenue diversification matters. First HoldCo’s growth in non-interest income, supported by fee income, trading-related income and recoveries, gives the group a broader earnings base than interest income alone.

Recoveries are also part of the story. First HoldCo reported approximately ₦19 billion in asset recoveries in Q1 2026, with notable progress from oil and gas obligors. That is significant because legacy exposures in that sector had been one of the issues weighing on investor confidence. Recoveries alone do not remove all asset-quality questions, but they show that the group is making progress in areas that the market has been watching closely.

The return metrics also improved sharply. Post-tax return on average equity rose to 31.6 percent in Q1 2026, compared with 4.6 percent for FY 2025. Post-tax return on average assets rose to 4.0 percent, from 0.5 percent.

A large balance sheet, with signs of discipline First HoldCo remains one of Nigeria’s largest financial services groups. Total assets stood at ₦26.88 trillion at the end of Q1 2026, slightly below ₦27.25 trillion at year-end 2025. Customer loans and advances increased 5.3 percent to ₦9.44 trillion, while customer deposits declined 2.7 percent to ₦18.38 trillion.

The movement suggests a group managing growth and liquidity with greater discipline. Net interest margin stood at 10.1 per cent, compared with 11.1 per cent for FY 2025. The cost-to-income ratio improved to 45.2 percent from 52.3 percent, pointing to better operating efficiency even as operating expenses continued to rise.

There are still areas to watch. The non-performing loan ratio rose to 13.4 percent in Q1 2026 from 12.0 per cent in FY 2025, while NPL coverage declined to 89.4 percent from 98.7 percent. These figures show why the market reassessment should be read as a recovery story, not a finished story. The balance sheet is stronger, but the asset-quality question has not disappeared.

Governance and the confidence premium Governance has also been central to the group’s stronger footing. Femi Otedola’s position as chairman and a substantial shareholder has become part of the market’s reading of First HoldCo. Public reports based on the group’s financial disclosures put his combined direct and indirect shareholding at about 18.1 percent as of December 2025.

That stake matters because it signals alignment and long-term exposure. Markets often place a premium on anchor shareholders when their presence is seen as stabilising rather than speculative. In First HoldCo’s case, Otedola’s increased exposure has coincided with a period in which the group has placed greater emphasis on balance-sheet repair, recovery of legacy exposures, capital raising and governance discipline.