As Q2 Results Near, Questions Loom Over First Bank’s P&L Sustainability
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FBN Holdings, the parent company of First Bank, posted an impressive first-quarter performance for 2025, with gross earnings climbing to ₦274.3 billion from ₦220.9 billion in the same period last year, and profit before tax rising to ₦74.2 billion from ₦56.1 billion.
On the surface, these numbers appear to underscore a strong start for one of Nigeria’s oldest and most influential financial institutions. However, as the countdown to second-quarter results begins, growing concerns suggest that the path ahead may be far less straightforward than the headline figures imply.
Readership NG reports that taking a closer look reveals mounting pressure points that could undermine sustainability. Chief among them is the relentless rise in operating costs, which remain stubbornly high despite efforts to drive efficiency. Inflationary pressures, escalating energy costs, and broader economic headwinds have kept the bank’s cost-to-income ratio elevated, a trend that threatens to erode profitability if income growth slows in the quarters ahead. While Q1 revenue gains provided a cushion, the question is how long that buffer will last in an economy battling persistent inflation and policy uncertainty.
Margins pose another significant risk. The cost of funds remains elevated as competition for deposits heats up, and with liquidity still tight, defending net interest margins will be an uphill task. Loan repricing, which could help offset rising funding costs, typically lags behind market dynamics, leaving the bank vulnerable to margin compression if interest income fails to keep pace. Any slowdown here would place immediate pressure on earnings and make it harder to deliver consistent returns.
Asset quality is also a growing worry. While the bank managed to expand its loan book, impairment charges ticked higher in Q1, hinting at stress pockets within its credit portfolio. In a volatile macroeconomic environment where consumer purchasing power remains weak and corporates grapple with cost escalations, the likelihood of rising non-performing loans cannot be dismissed. If defaults increase, the bank may be forced to set aside more provisions, eating further into profitability and dampening investor confidence.
Adding to these structural challenges is the volatility of non-interest income, which played a notable role in the Q1 earnings boost through trading gains and fee-based revenues. While this diversification can enhance profitability in strong markets, it also exposes the bank to fluctuations that could quickly turn against it, particularly if market conditions sour. Relying on such unpredictable streams raises questions about the consistency of earnings going forward.
As investors await the second-quarter results, the underlying question is whether First Bank can sustain its early momentum against these intensifying risks. Without significant cost discipline, sharper margin management, and proactive measures to safeguard asset quality, the impressive Q1 numbers could prove to be the high point of the year rather than a foundation for sustained growth.
