E-Financial
If Capital is the Answer, What Exactly is the Problem with First Holdco
By Blaise Udunze
The Olayemi Cardoso-led Central Bank of Nigeria’s 24-month compliance timeline for the recapitalization of Nigeria’s banking system is about to conclude on March 31, 2026, which is framed as an unavoidable solution to systemic fragility, weak balance sheets, and the demands of a larger, more complex economy. Bigger capital, regulators argue, will produce stronger banks.
Though First Bank may have met the CBN’s N500 billion minimum requirement, the latest financials from Femi Otedola-led First HoldCo Plc, which is the parent of Nigeria’s oldest commercial bank, offer a sobering counterpoint, revealing that capital alone cannot cure structural weakness, governance failure, or deep-rooted risk management flaws. If capital is the answer, what exactly is the problem?
What is truly astonishing to many is that beneath the headline growth in earnings lies a financial institution struggling with collapsing earnings quality, surging credit impairments, volatile fair-value exposures, and rising operating inefficiencies. First HoldCo’s numbers are not merely a company-specific disappointment; they are a mirror reflecting the deeper fault lines within Nigeria’s financial system and a warning that recapitalisation, in its current form, risks becoming another cosmetic reset rather than a genuine reform.
On the surface, the topline appears encouraging. The figures showed that gross earnings rose by 17.1 percent to N2.64 trillion in the nine months to 2025, while interest income surged by over 40 percent to N2.29 trillion. Figuring it out, investors, depositors, and analysts understand that these figures, however, are largely the product of a high-interest-rate environment driven by aggressive monetary tightening. They reflect repricing, not necessarily improved lending quality or superior balance-sheet strength. In an economy under strain, rising interest income often signals the transfer of macroeconomic stress from borrowers to banks, rather than sustainable growth.
This becomes evident once attention shifts from revenues to profitability. The performance disclosed that profit before tax declined by 7.3 percent to N566.5 billion, while profit after tax fell nearly 13 percent to N458 billion. Earnings per share dropped by a steep 27.7 percent, a sharper decline than headline profit suggests, pointing to dilution pressures and reduced value accruing to shareholders. More striking still is the full-year picture, where profit after tax from continuing operations collapsed by about 92 percent, plunging to N52.7 billion from N663.5 billion in the prior year. Such a dramatic fall cannot be explained by temporary volatility; it is the consequence of long-suppressed risks finally surfacing.
The most damaging of these risks is asset quality. The most critical figure is the impairment charges that rose by nearly 69 percent in the nine months to N288.9 billion, and by over 75 percent on a full-year basis to N748 billion, and invariably, these numbers tell a story of borrowers buckling under FX exposure, weak cash flows, and a deteriorating operating environment. They also raise uncomfortable questions about credit underwriting standards, concentration risk, and the effectiveness of internal risk controls in earlier lending cycles. After impairments, much of the benefit from higher interest income evaporated, exposing the fragility of earnings built on stressed credit.
Compounding this weakness was a sharp reversal in fair-value accounting. First HoldCo recorded a net loss of N87 billion on financial instruments measured at fair value, a stark contrast to the N549 billion gain recorded a year earlier. Due to this outcome, larger chunks of shareholders’ value were wiped out because this single swing accounted for a negative variance of over N636 billion year-on-year.
The episode highlights a dangerous dependence on market revaluations and FX-driven gains to prop up earnings, as seen that the moment conditions turn, paper profits vanish just as quickly, raising questions about the transparency, sustainability and economic substance of reported results.
Non-interest income provided little cushion. In the nine months to 2025, it declined by 44.5 percent, falling from N618.7 billion to N343.7 billion. While net fees and commission income rose by about 25 percent, the increase was too small to offset the collapse in other income lines. The result is a revenue base that is narrow, volatile, and overly exposed to market swings. Recapitalising banks without addressing this lack of income diversification simply amplifies vulnerability.
At the same time, operating costs surged. Operating expenses climbed by nearly 40 percent to N942.7 billion, while other operating expenses jumped over 43 percent on a full-year basis. Inflation, FX depreciation, energy costs, and technology spending all played a role, but the deeper issue is efficiency. Costs are rising far faster than sustainable income, eroding margins and weakening internal capital generation at precisely the moment banks are being asked to shore up capital buffers. Injecting fresh capital into institutions with broken cost structures does not resolve inefficiency; it merely postpones the inevitable days.
These financial stresses revive longstanding concerns about governance and risk culture in Nigeria’s banking system. Large impairment charges and valuation reversals do not emerge overnight. They accumulate through years of weak credit governance, excessive sector and obligor concentration, insider-related exposures, inadequate stress testing, and regulatory forbearance. Recapitalisation does not answer the most important questions: who gets credit, how risks are approved, how boards exercise oversight, and whether management is truly accountable. Without reform in these areas, more capital simply provides a thicker cushion for future losses.
Foreign exchange risk remains the system’s most dangerous and least resolved fault line. Currency devaluation inflates asset values and boosts interest income on paper, while simultaneously crushing borrowers with FX-denominated obligations. Banks may book translation or revaluation gains even as credit quality deteriorates beneath the surface. This contradiction fuels earnings volatility and undermines confidence in financial reporting. A stronger capital base does not neutralise FX mismatch risk; only disciplined risk management, credible macro policy, and transparent reporting can.
Perhaps most troubling is what First HoldCo’s results imply about regulatory credibility. Many of the impairments and valuation losses reflect risks that were visible long before they crystallised in the income statement. When losses arrive suddenly and in clusters, concerns from different quarters are raised and markets begin to question whether supervision is proactive or merely reactive. Recapitalisation without restoring trust in regulatory oversight risks being interpreted as an admission that deeper problems remain unaddressed and by extension, this erodes trust in the system and a stronger banking sector must also be a fairer and more accountable one.
Nigeria has travelled this road before. Bigger banks and higher capital thresholds have previously delivered reassuring headlines, only for familiar weaknesses to resurface in new forms. First HoldCo’s numbers demonstrate that capital adequacy, while necessary, is far from sufficient. Without the CBN confronting governance failures, asset quality deterioration, concentration risk, FX exposure, transparency gaps, and weak risk culture, recapitalisation risks will become another exercise in delay rather than reform.
The uncomfortable truth is that real stability requires more than fresh equity. It demands honest loss recognition, credible financial reporting, disciplined credit practices, diversified income streams, and regulators willing to enforce standards consistently. Until these missing pieces are addressed, recapitalisation will remain what it too often has been in Nigeria’s financial history, as a larger buffer for the same old problems, and a temporary comfort masking unresolved fragilities.
Blaise, a journalist and PR professional, writes from Lagos, can be reached via: [email protected]
Ecobank Nigeria has reaffirmed its commitment to providing customers with seamless and uninterrupted banking services throughout the Easter public holidays.
The Bank assured customers that its secure and robust digital platforms will remain fully operational to support financial activities during the festive period.
According to the bank, all digital channels, including the Ecobank Mobile App, Ecobank Business App, USSD *326#, Ecobank Online, OmniPlus, Omnilite, EcobankPay, Ecobank Cards, ATMs, PoS terminals, and over 35,000 Ecobank Xpress Point agent locations nationwide will remain accessible throughout the holiday.
Speaking on the Bank’s preparedness, Victor Yalokwu, head, Products & Analytics, Consumer & Commercial Banking, Ecobank Nigeria, assured customers of a smooth and secure banking experience during the Easter break.
He noted that customers can conveniently conduct transactions at any time using the Bank’s wide range of digital solutions.
“Customers will continue to enjoy a full bouquet of services during the holiday, including local and international funds transfers, bill payments, airtime top-ups, merchant payments, balance enquiries, account statements, and cardless cash withdrawals via ATMs.
“We understand that festive seasons come with increased financial activity, and our priority is to ensure our customers enjoy fast, reliable, and secure banking wherever they are. Our digital channels are designed to support uninterrupted transactions, and we have strengthened our systems to guarantee optimal performance throughout the Easter break,” Yalokwu said.
He also encouraged customers to maximise the Bank’s alternative channels for transfers, bill payments, airtime purchases, card services, and account management.
He also advised customers to stay vigilant by shopping only on trusted websites; avoiding the sharing of PINs, passwords, and one-time passwords (OTPs); refraining from banking on public Wi-Fi networks; being cautious of urgent or emotionally charged messages; and regularly monitoring their account activity.
“Ecobank remains committed to providing innovative financial solutions and exceptional customer service. We wish all our customers and partners a peaceful and joyful Easter celebration.” He stated.
“We understand that festive seasons come with increased financial activity, and our priority is to ensure our customers enjoy fast, reliable, and secure banking wherever they are. Our digital channels are designed to support uninterrupted transactions, and we have strengthened our systems to guarantee optimal performance throughout the Easter break,” Yalokwu said.
He also encouraged customers to maximise the Bank’s alternative channels for transfers, bill payments, airtime purchases, card services, and account management. He also advised customers to stay vigilant by shopping only on trusted websites; avoiding the sharing of PINs, passwords, and one-time passwords (OTPs); refraining from banking on public Wi-Fi networks; being cautious of urgent or emotionally charged messages; and regularly monitoring their account activity.
“Ecobank remains committed to providing innovative financial solutions and exceptional customer service. We wish all our customers and partners a peaceful and joyful Easter celebration.” He stated.
Anchor, a global banking and payments platform that enables businesses to integrate financial products into their own systems, has processed over $2.5 billion in transactions since its inception in 2022, according to its 2025 End-of-Year Review.
Segun Adeyemi, CEO of Anchor
The company expanded its regulatory footprint by securing new Microfinance Bank and International Money Transfer Operator licences in Nigeria, and a Money Service Business license in Canada.
Since launching, Anchor has onboarded over 1,000 businesses across 18 countries in Africa, North and South America, and Europe, whilst enabling more than 20 million local and international payments.
“Acquiring these licences reinforces our commitment to building durable and trusted infrastructure,” said Segun Adeyemi, CEO of Anchor.
The regulatory licences represent a defining shift for Anchor, moving the company from operating purely as infrastructure to becoming a fully licensed financial institution in key markets.
Its Microfinance Bank licence in Nigeria enables it to offer banking services directly, while the International Money Transfer Operator licence supports cross-border remittances.
The Canadian Money Service Business licence expands its ability to serve businesses operating in North America.
The regulatory progress followed a period of intensive engagement with authorities in multiple jurisdictions and operational strengthening to meet compliance standards.
In 2025, Anchor introduced several enhancements, including USD virtual cards for global spending, improved account structures, and streamlined payment flows for international teams.
The company positions itself as an infrastructure for businesses building financial products, offering embedded accounts, payments, and card services that companies can integrate directly into their own platforms.
Anchor’s growth comes during a period of consolidation in African fintech, with several players either shutting down, scaling back operations, or pivoting business models due to regulatory pressure and funding challenges.
The company’s focus on securing licences across multiple jurisdictions suggests a strategy of building sustainable, compliant infrastructure rather than pursuing growth at the expense of regulatory relationships.
The 2025 End-of-Year Review highlights broader trends in how startups and enterprises are adopting embedded financial services and the increasing need for scalable, compliant infrastructure as regulators across Africa tighten oversight of fintech operations.
CycleFlow, powered by C2FO, the world’s on-demand working capital platform, has officially launched its operations in Nigeria. This move marks the first phase of a comprehensive Nationwide Working Capital Platform strategy designed for Africa and other emerging markets. With support from various banking partners, the platform has already secured multiple multinational and local customers.
The platform will connect global and local financing institutions with participating anchor buyers and their MSME suppliers. Financial institutions, as well as participating buyers, will be able to extend affordable short-term financing to suppliers by purchasing and discounting invoices accepted for payment by the buyers.
These transactions will allow MSMEs to improve working capital by converting sales receivables immediately to cash, based on the better credit risk of buyers and without any collateral requirements, thus leveling the playing field among larger and smaller suppliers.
The launch marks the beginning of a multi-phase strategy to scale inclusive working capital solutions across the continent and into other emerging markets and has already secured commitments from multiple multinational and local customers.
“The official launch of C2FO’s Working Capital Platform in Nigeria marks a turning point for our financial ecosystem,” said Segun Ogunsanya, Chairman of Nigeria-based CycleFlow. “By enabling immediate access to funds locked in accounts receivable, we are not just financing businesses; we are powering economic growth across the entire ecosystem.
“This innovative technology addresses the biggest financial challenges in Africa and ensures that capital reaches the micro, small and medium enterprises (MSMEs) that drive our economy.”
When fully scaled, the platform has the potential to facilitate $25 to $30 billion in annual financing for local businesses in Nigeria – making it one of the most significant dedicated supply chain financing facilities ever deployed for smaller businesses in Africa.
The multi-bank, multi-buyer platform connects suppliers, including MSMEs, with their larger buyers and financial institutions on a single open infrastructure, removing traditional intermediary barriers and enabling affordable financing at scale.
MSMEs are the engine of Nigeria’s economy and of Africa’s at large. Across the continent, they account for up to 90 percent of all businesses and are responsible for up to 80 percent of employment.
Yet despite their outsized role, these enterprises face a persistent and structural barrier: access to affordable working capital. Traditional financial institutions typically require collateral, established credit histories, and lengthy approval processes that most MSMEs cannot meet.
The result is a financing gap that constrains growth, limits hiring, and leaves viable businesses unable to reach their potential.
The C2FO platform directly addresses this gap. Rather than relying on the creditworthiness of the MSME itself, the platform leverages the stronger credit profile of the buyer, typically a large multinational or established local enterprise to unlock receivables financing for suppliers.
This means that an MSME with an invoice accepted for payment by a large buyer can convert that receivable into immediate cash, without collateral and without the delays of traditional lending. For businesses that routinely operate on payment terms of 60, 90, or even 120 days, this access to liquidity is transformational.
“This initiative is a proof point for what development finance can achieve when it is paired with the right technology and the right partners,” said Mohamed Gouled, IFC’s Vice President for Products & Clients. “Millions of MSMEs across Africa are sitting on receivables they cannot convert into much-needed capital to grow and hire.
“This platform changes that equation. By connecting suppliers, buyers, and financial institutions on a single, open infrastructure, we are helping unlock financing that could support hundreds of thousands of jobs in Nigeria alone and we see this as a replicable model for the rest of the continent.”
The expected economic impact is significant. IFC research indicates that every $1 million financing provided to MSMEs in developing countries creates an average 16.3 direct jobs over a two-year period a trajectory that, when the platform is fully scaled, points to the creation of more than 480,000 direct jobs in Nigeria.
Furthermore, accounting for indirect employment, research points to a multiplier effect of three to five times the initial job creation figure. This surge in stable employment drives consumer spending, as newly employed individuals gain purchasing power and stimulate demand across the local economy, creating a self-sustaining cycle of growth that could boost Nigeria’s GDP by 1 to 2 percent.
“Today marks a crucial milestone for our mission to ensure every business has the capital needed to thrive,” said Alexander “Sandy” Kemper, Founder and CEO of C2FO. “Nigeria is not just a market opportunity; it is a chance to show how innovative financial technology transforms economies.
“By optimizing cash flow for buyers and providing flexible funding options for suppliers, we create a more resilient global economy. This launch kicks off our broader strategy to bring affordable liquidity solutions across Africa and other emerging markets worldwide, utilizing the groundbreaking platform and technology we have spent over 15 years perfecting across 180 countries.”
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