N748bn Bad Loan Cleanup Has Positioned First HoldCo For Recapitalisation—Otedola

The Group Chairman of First Bank Holdings Plc (First HoldCo), Mr Femi Otedola, has defended the company’s decision to take a one-off charge of N748bn to fully recognise legacy non-performing loans, describing the move as a strategic step that strengthens the group’s balance sheet and positions it for the forthcoming banking recapitalisation exercise.

Otedola disclosed this in a statement posted on his verified X handle on Saturday, following concerns over the holding company’s sharp decline in reported profit.

According to him, the substantial provisioning resulted in a 92 per cent drop in profit, but was necessary to ensure transparency, regulatory compliance and long-term stability.

“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,” Otedola said.

He explained that the decision was in line with the Central Bank of Nigeria’s (CBN) directive requiring banks to decisively address non-performing loans rather than defer the problem through regulatory forbearance or accounting adjustments.

According to Otedola, the comprehensive cleanup effectively closes the chapter on problematic loans accumulated in previous years, while sending a strong signal on credit discipline and corporate governance.

“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 it helps rebuild trust,” he stated.

Despite the impact on earnings, the First HoldCo chairman stressed that the group’s underlying business remains resilient, supported by strong revenue generation across its core banking operations.

He disclosed that the bank recorded N2.96 trillion in interest income and N1.91 trillion in net interest income during the period, providing sufficient capacity to absorb the one-off provisioning without undermining operational stability.

“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,” Otedola said.

Looking ahead, he expressed confidence that the decisive action would enhance investor confidence and place First HoldCo in a stronger position as Nigerian banks prepare to meet new capital requirements set by the regulator.

“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 and long-term thinking equal real value creation,” Otedola said.

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