Why FirstBank Wrote Off ₦748bn Bad Loans – Otedola

 

Group Chairman of First Bank Holdings, Femi Otedola, has explained the company’s decision to write off ₦748 billion in legacy non-performing loans, describing it as a deliberate strategy to secure long-term financial stability despite the immediate impact on profits.

Otedola, in a post on his X account on Saturday, said the large-scale provisioning led to a 92 percent drop in the holding company’s profit figure. He noted that the move was in line with the Central Bank of Nigeria’s directive encouraging banks to confront bad loans directly rather than postponing the issue.

“At First HoldCo we decided to clean house properly. We took a huge one-time hit of ₦748bn to admit old bad loans instead of pretending they do not exist. That is why profit looks like it crashed by 92 percent. Painful headline, but it is a serious long-term move,” he wrote.

He explained 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 remains strong. He disclosed that the bank generated ₦2.96 trillion in interest income and ₦1.91 trillion 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 ₦2.96tn in interest income and ₦1.91tn 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 FirstBank 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.