Investors have continued to reassess the banking sector amid ongoing recapitalization efforts and other macro-economic variables.

The focus today is on UBA and FirstHoldco; two of the Tier-1 banks and members of the FUGAZ group have both delivered strong earnings in recent years, but with varying risk profiles and growth strategies.

As of October 20, 2025, UBA’s shares have gained 26.3% year-to-date (YtD), trading at N42.95, which represents about 85% of its 52-week high.

FirstHoldco, on the other hand, has recorded a 15.9% YtD gain, closing at N32.50, and currently sits 75% below its 52-week high.

However, both stocks have underperformed the broader market index, which has advanced 45.68% YtD. Last year, UBA returned 33% YtD, while FirstHoldco returned 19% YtD.

Financial performance and earnings strength

Both UBA and FirstHoldCo have maintained consistent earnings over the past five years, though 2025 has seen some pressure from fair value losses, impairment losses, and operating expenses.

Even so, both lenders have benefited from Nigeria’s high-yield environment, which continues to drive interest income growth across the banking sector.

UBA closed H1 2025 with a pre-tax profit of N388.413 billion, representing a 3.28% year-on-year decline from H1 2024.

FirstHoldCo, meanwhile, reported a pre-tax profit of N356.1 billion for H1 2025, down 13.4% year-on-year, also due to fair value losses of N69.7 billion, compared to a gain of N423.9 billion in H1 2024.

Over a five-year horizon, FirstHoldCo has grown faster at the bottom line, accumulating N1.35 trillion in PAT at a compound annual growth rate (CAGR) of 49%.

On the other hand, UBA performed better in absolute numbers accumulating profit of N1.78 trillion but at a CAGR of 46.5%.

Verdict:

Valuation overview

While both UBA and FirstHoldCo have performed well, they now sit at different valuation stages.

Looking at valuation, UBA’s P/E ratio of 1.98x means investors are paying N1.98 for every N1 it earns, while FirstHoldco’s P/E of 2.08x means investors are paying N2.08 for every N1 of earnings.

This shows that UBA is slightly cheaper, offering better current value, while FirstHoldco trades at a small premium because investors expect it to grow faster.

However, with the expected dilution from their recapitalization, both banks’ earnings per share (EPS) will likely decline in 2025. This could make their valuations look a bit higher (less cheap).

Based on valuation and earnings outlook, UBA remains the better buy for now, it is cheaper on a P/E basis, has stronger current earnings (EPS N8.86 in H1 2025), and faces less dilution risk from recapitalization. This gives it better near-term value and stability.

FirstHoldco, on the other hand, may offer greater long-term upside. Its slightly higher P/E ratio reflects investors’ belief in its faster earnings growth potential.

Looking back at 2024 performance, UBA demonstrated stronger risk management and earnings stability, reflected in its lower cost of risk (3.18%) and NPL ratio (5.6%), even though its ROAE moderated to 28%.

FirstHoldco, on the other hand, delivered a strong rebound in profitability, with ROAE at 29.8% up 32% year-on-year, but this came with higher credit risk, as shown by its elevated cost of risk (4.7%) and NPL ratio (10.2%).

That said, the 2025 financial year could shift the dynamics entirely, especially with ongoing recapitalization efforts, monetary policy changes, and foreign exchange volatility.

If both banks sustain their 2024 momentum:

Total shareholder return perspective

From a total return standpoint, UBA continues to outperform. It currently offers a dividend yield of 7.57%, and when combined with its 26.32% YtD gain, investors have earned a total return of 33.89% in 2025.

FirstHoldco, by contrast, offers a dividend yield of 1.85% and a capital gain of 15.86%, translating to a total return of 17.71%.

This highlights the difference in investor appeal:

Overall, both banks remain solid plays in Nigeria’s financial sector, but their appeal differs: