First Bank Takes Bold Step with N748 Billion Bad Loan Write-Off
In a significant move aimed at securing long-term financial health, First Bank Holdings Plc has written off a staggering N748 billion in legacy bad loans. This decisive action, while resulting in a sharp 92% decline in reported profits, has been characterized by the bank's leadership as essential for future stability and growth.
Otedola Addresses Public Concerns Over Profit Crash
Group Chairman Femi Otedola took to his social media platform to provide detailed explanations regarding the bank's financial decisions. He emphasized that the substantial provisioning was a deliberate, one-time measure designed to address longstanding non-performing loans rather than conceal underlying weaknesses.
"At First HoldCo, we decided to clean house properly," Otedola stated. "We took a huge one-time hit of N748 billion to admit old bad loans instead of pretending they do not exist. That is why profit looks like it crashed by 92 percent."
He described the move as painful in the short term but necessary to establish a more solid foundation for the institution's future operations.
Alignment with Central Bank Transparency Directives
The decision to write off these bad loans aligns with ongoing directives from the Central Bank of Nigeria, which has been urging financial institutions to address non-performing loans transparently rather than deferring them. Otedola explained that clearing these problematic assets now closes a difficult chapter inherited from previous years and sends a strong message about accountability to borrowers.
"Why do this now? Because the CBN is pushing banks to stop kicking problems down the road," he noted, adding that this cleanup would help rebuild trust among investors, regulators, and customers.
Underlying Business Strength Remains Intact
Despite the massive write-off, Otedola emphasized that First Bank's core banking operations remain robust. The institution recorded N2.96 trillion in interest income and N1.91 trillion in net interest income, demonstrating the continued strength of its income-generating capabilities.
"The key point is this: our business itself is still strong," he stated, noting that these earnings provided the financial capacity to absorb the losses without destabilizing day-to-day operations.
Positioning for Future Growth and Recapitalization
Looking forward, Otedola expressed confidence that this balance sheet reset positions First Bank favorably for upcoming recapitalization exercises and future expansion opportunities. He indicated that the bank is entering 2026 "lighter, cleaner and better prepared" for a new growth phase, with bad loans cleared and a stronger foundation established.
"Bad loans cleared, strong income engine, long-term thinking equals real value creation," Otedola concluded, summarizing the strategic rationale behind the difficult decision.
Strategic Divestment Supports Core Operations
In related developments, First HoldCo Plc has completed the divestment of its merchant banking subsidiary, FBNQuest Merchant Bank Limited, selling its entire stake to EverQuest Group. This transaction forms part of a strategic plan to optimize capital allocation, improve capital efficiency, and support growth in the bank's core commercial banking operations.
The parent company stated that EverQuest Acquisition LLP emerged as the preferred bidder following a competitive selection process. This consortium of investment and financial services firms will now oversee the merchant banking operations previously managed by First Bank.
