First HoldCo Plc, the parent of Nigeria’s oldest lender First Bank of Nigeria, plans to hand out N0.60 per share in dividend (totalling N25.1 billion) to shareholders for the financial year 2024, half more than its cash distribution for the previous year.
The financial services group, which pays dividends once a year, unlike its top-tier peers, which pay twice, said in a regulatory filing on Tuesday that shareholders with stakes in the company as of 12 May will be eligible for the cash reward.
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First HoldCo’s dividend payout ratio, a measure of what it is paying to shareholders out of its profit for the year, stood at 3.7 per cent, down from 4.6 per cent a year ago.
That compares to those of big lenders like Guaranty Trust Holding Company, United Bank for Africa, Access Bank and Zenith Bank, whose dividend payout ratios for the year stood at 26.9 per cent, 22.3 per cent, 20.8 per cent and 19.9 per cent in that order.
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Retaining the larger part of its net income in the business rather than allocating it for dividend payment purposes could imply the group is more inclined to take the long view by prioritising scaling up equity and growth over improving its dividend payout ratio.
First HoldCo, where billionaire mogul Femi Otedola currently holds a combined stake of 11.8 per cent as the principal shareholder, more than doubled its turnover to a record N3.2 trillion last year.
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Profits accelerated 118.1 per cent to N677 billion, aided by a phenomenal jump in interest income.
One dark spot on the broadly impressive result was an 89.5 per cent surge in the cash the group set aside to cover potential defaults.
That highlights how sharp hikes in the lending rate set by the central bank during the year and elevated inflationary pressures strained borrowers’ income, hurting their ability to repay loans.
Total assets expanded 56.6 per cent – the fastest pace since the pandemic struck – on the back of a rapid climb in investment securities.
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