Why FirstBank wrote off N748bn bad loan – Otedola

Group Chairman of First Bank Holdings, Femi Otedola, has justified the company’s decision to write off N748bn in legacy non-performing loans, saying the move was a deliberate strategy aimed at securing long-term financial stability, even though it significantly reduced reported profits.

Otedola made this known in a post on his X handle on Saturday, where he explained that the large-scale provisioning led to a 92 per cent drop in the holding company’s profit figure.

According to the billionaire investor, the write-off was in line with the Central Bank of Nigeria’s directive encouraging banks to confront non-performing loans openly instead of postponing the issue.

“At First HoldCo we decided to clean house properly. We took a huge one-time hit of N748bn to admit old bad loans instead of pretending they do not exist. That is why profit looks like it crashed by 92 per cent. Painful headline, but it is a serious long-term move,” he wrote.

He noted that the decision was taken to finally address problematic loans accumulated over previous years and to strengthen confidence among stakeholders.

“Why do this now? Because the CBN is pushing banks to stop kicking problems down the road. So First HoldCo basically closed the chapter on messy loans from past years which sends a clear message that borrowing has consequences and it helps rebuild trust,” Otedola added.

Despite the scale of the write-off, Otedola maintained that the bank’s core business remained solid, stressing that strong earnings demonstrated the institution’s underlying financial strength.

He disclosed that the bank generated N2.96tn in interest income and N1.91tn in net interest income, figures he said were sufficient to absorb the clean-up while keeping operations stable.

“The key point is this: our business itself is STILL strong. It made N2.96tn in interest income and N1.91tn in net interest income, which gave it the strength to take the cleanup and still stay standing,” he stated.

Looking ahead, Otedola expressed confidence in the bank’s future, saying the balance sheet clean-up has positioned First Bank well for recapitalisation and sustained growth.

“Now at First Bank and beyond we go into 2026 lighter, cleaner and better prepared for the recapitalisation era and serious growth. Bad loans cleared + strong income engine + long-term thinking = real value creation,” he concluded.

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