VFD Group Plc posted a modest improvement in profitability for the year ended December 31, 2025, despite strong growth in revenue and investment income as elevated finance costs and rising impairment charges continued to pressure net earnings.
Gross earnings increased to ₦88.36 billion in 2025 from ₦78.04 billion in 2024, a 13.2 percent growth driven by expansion across its investment portfolio.
Net investment income rose to ₦57.96 billion from ₦52.63 billion, supported by a decline in investment-related expenses and steady income generation from financial assets.
However, other income declined to ₦6.43 billion from ₦8.80 billion, partially offsetting gains from core operations. The group recorded a one-off gain of ₦2.74 billion from the disposal of subsidiaries, which contributed to overall revenue growth.
A key concern remains the sharp increase in impairment charges on financial assets, which rose to ₦2.40 billion from ₦544.51 million.
Despite this, net gains on financial assets measured at fair value surged to ₦10.69 billion from ₦3.90 billion, indicating strong market-related gains.
Net revenue rose to ₦75.42 billion from ₦64.79 billion. Operating expenses increased to ₦23.17 billion from ₦19.39 billion, driven by higher personnel costs and general operating expenses.
Operating profit improved to ₦52.25 billion from ₦45.40 billion, demonstrating strong core performance. However, the group’s capital structure continues to exert pressure on profitability.
Finance costs increased significantly to ₦38.20 billion from ₦35.41 billion, consuming a substantial portion of operating profit. This remains the most critical drag on earnings and reflects the group’s high leverage and cost of borrowing.
Profit before tax rose to ₦14.18 billion from ₦10.02 billion, representing a 41.5 percent increase. Tax expenses also increased to ₦4.46 billion from ₦2.27 billion, in line with higher taxable income.
Profit after tax stood at ₦9.72 billion, up from ₦8.69 billion in 2024, indicating a modest growth of 11.8 percent. Earnings per share increased to 95 kobo from 82 kobo.
Total comprehensive income rose significantly to ₦18.88 billion from ₦13.41 billion, driven largely by fair value gains on equity securities amounting to ₦8.57 billion. This highlights the importance of unrealized gains in supporting total returns.
Balance Sheet Expansion and Risk Considerations
Total assets surged to ₦445.81 billion from ₦295.67 billion, reflecting aggressive expansion in investment assets, funds under management, and cash holdings.
Cash and cash equivalents rose sharply to ₦79.47 billion from ₦13.35 billion, while investment in financial assets nearly doubled to ₦98.70 billion.
Funds under management increased to ₦77.35 billion from ₦49.38 billion, reinforcing the group’s asset management growth strategy.
However, this expansion has been accompanied by a significant increase in liabilities. Total liabilities rose to ₦376.19 billion from ₦237.14 billion, driven by higher borrowings, deposit liabilities and other obligations.
Borrowings increased to ₦123.86 billion, while deposit liabilities rose to ₦65.30 billion, underscoring the group’s reliance on external funding to drive growth.
Equity grew to ₦69.62 billion from ₦58.53 billion, supported by retained earnings and capital restructuring. However, the scale of liabilities relative to equity indicates a highly leveraged balance sheet, which exposes the group to interest rate and liquidity risks.
Critical Assessment
VFD Group’s 2025 results reflect a business in expansion mode, leveraging its investment platform to drive revenue and asset growth. Strong gains in fair value assets and improved operating income highlight effective portfolio management.
However, the sustainability of earnings remains a key concern. A significant portion of profitability is being eroded by high finance costs, which continue to consume a large share of operating profit.
Additionally, the rise in impairment charges signals increasing risk within the loan and investment portfolio.
The group’s heavy reliance on unrealized fair value gains to boost comprehensive income introduces volatility, particularly in uncertain market conditions. Furthermore, the sharp increase in liabilities relative to equity raises questions about long-term financial stability and capital efficiency.
While VFD Group has delivered growth across key metrics, future performance will depend on its ability to reduce borrowing costs, improve asset quality and sustain core operating income without over-reliance on market-driven gains.