Otedola explains rationale behind N748bn legacy loan clean-up at First HoldCo

The Group Chairman of First Bank Holdings (First HoldCo), Femi Otedola, has shed light on the company’s decision to write off N748 billion in legacy non-performing loans, describing the move as a necessary reset to secure the institution’s long-term health, even though it significantly depressed short-term profit figures.

Otedola, in a post shared on his X handle on Saturday, said the one-time provisioning led to a 92 per cent drop in reported profit, but insisted the decision was deliberate and aligned with regulatory expectations from the Central Bank of Nigeria (CBN).

According to him, the apex bank has been urging financial institutions to confront lingering bad loans transparently rather than carry them forward in their books.

“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 action was designed to finally draw a line under problematic exposures from previous years and to send a clear signal about accountability and discipline in lending practices.

“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. This sends a clear message that borrowing has consequences and helps rebuild trust,” he added.

Otedola was quick to emphasise that the bank’s underlying business performance remains solid despite the heavy provisioning.

He disclosed that the bank generated N2.96 trillion in interest income and N1.91 trillion in net interest income, figures he said demonstrate the strength of its core operations and its capacity to absorb the clean-up exercise.

“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 clean-up and still stay standing,” he stated.

Looking ahead, Otedola expressed confidence that the decisive move would position First Bank advantageously as the industry moves into a recapitalisation phase and prepares for renewed 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 equals real value creation,” he said.