Femi Otedola reveals why FirstBank wrote off N748bn bad loans

Group Chairman of First Bank Holdings, Femi Otedola, has explained the reasoning behind the company’s decision to write off N748 billion in legacy non-performing loans, describing the move as a deliberate step aimed at protecting the bank’s long-term financial stability, despite its significant impact on profits.

Otedola made this known in a post on his X handle on Saturday, January 31, where he revealed that the extensive provisioning exercise led to a 92 per cent decline in the group’s reported profit.

According to him, the decision was in line with the Central Bank of Nigeria’s directive encouraging financial institutions 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 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.

The billionaire investor explained that the write-off was necessary to finally address problematic loans that had built up over several years, adding that the move would help restore confidence among investors and other 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.

He concluded that while the short-term financial impact may appear severe, the decision positions the bank on a stronger footing for sustainable growth and improved governance going forward.