First Bank Writes Off N748bn Bad Loans as Otedola Explains Profit Crash, Signals Stronger Future
- First Bank Holdings Plc has written off N748 billion in bad loans for long-term stability
- Chairman, Femi Otedola, explains that 92% profit drop as a necessary one-time action
- He said that the bank remains strong with N2.96 trillion in interest income despite the write-off
First Bank Holdings Plc has taken a decisive step to reset its balance sheet after writing off N748 billion in legacy bad loans, a move that triggered a sharp drop in reported profits but has been described as critical for long-term stability.
The development drew public attention after the Group Chairman, Mr Femi Otedola, addressed the decision in a detailed post on his X handle on Saturday, January 31, 2025.
Source: Getty Images
According to him, the write-off was a deliberate, one-time action aimed at clearing longstanding non-performing loans rather than masking financial weaknesses.
Profit falls 92% after one-time provisioning
Otedola disclosed that the massive provisioning led to a 92% decline in the holding company’s profit for the period. While the headline figure appeared alarming, he stressed that the drop was a direct consequence of confronting legacy issues head-on.
“At First HoldCo, we decided to clean house properly,” Otedola said. “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.”
He described the move as painful in the short term but necessary to place the institution on a firmer footing.
Move aligned with CBN’s push on transparency
According to a report by Punch, the First Bank chairman explained that the decision was in line with directives from the Central Bank of Nigeria, which has been urging lenders to address non-performing loans transparently instead of deferring them.
According to Otedola, clearing the bad loans now closes a difficult chapter inherited from previous years and sends a strong message to borrowers about accountability.
“Why do this now? Because the CBN is pushing banks to stop kicking problems down the road,” he noted, adding that the cleanup would help rebuild trust among investors, regulators, and customers.
Core banking business remains strong
Despite the size of the write-off, Otedola emphasised that First Bank’s underlying business remains solid.
He pointed to strong earnings as evidence that the institution had the financial muscle to absorb the losses without destabilising operations.
Source: UGC
The bank recorded N2.96 trillion in interest income and N1.91 trillion in net interest income, figures he said demonstrate the strength of its income engine.
“The key point is this: our business itself is still strong,” he stated, noting that the earnings provided the capacity to carry out the cleanup and remain stable.
Positioned for recapitalisation and growth
Looking ahead, Otedola expressed confidence that the balance sheet reset positions First Bank well for the upcoming recapitalisation exercise and future expansion.
He said the bank is entering 2026 “lighter, cleaner and better prepared” for a new growth phase, with bad loans cleared and a stronger foundation in place.
“Bad loans cleared, strong income engine, long-term thinking equals real value creation,” Otedola concluded.
First Bank's parent company completes sale of bank
Legit.ng earlier reported that First HoldCo Plc has completed the divestment of its merchant banking subsidiary, FBNQuest Merchant Bank Limited, selling its entire stake to EverQuest Group.
The parent company of First Bank of Nigeria said the transaction is part of a strategic plan to optimise capital allocation, improve capital efficiency and support growth in its core commercial banking operations.
EverQuest Acquisition LLP, which emerged as the preferred bidder after a competitive selection process, is a consortium of investment and financial services firms.
Source: Legit.ng
