Femi Otedola says First Bank’s N748bn loan write-off was a deliberate clean-up move to strengthen long-term stability despite slashing profits by 92 per cent.
The Group Chairman of First Bank Holdings, Femi Otedola, has defended the company’s decision to write off N748bn in legacy non-performing loans, describing it as a strategic step to secure long-term financial stability. In a post on his X handle on Saturday, Otedola explained that the move led to a sharp 92 per cent drop in reported profit but was necessary to confront long-standing bad loans in line with the Central Bank of Nigeria’s (CBN) directive. “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.
Otedola said the decision was aimed at addressing problematic loans accumulated over several years and restoring stakeholder confidence, noting that the CBN has encouraged banks to stop delaying the recognition of non-performing assets. “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,” he added.
Despite the scale of the write-off, Otedola maintained that the bank’s core operations remain strong, citing robust earnings as evidence of underlying financial health. He disclosed that the bank recorded N2.96tn in interest income and N1.91tn in net interest income, figures he said were sufficient to absorb the clean-up while keeping the institution stable. “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,” he stated, expressing confidence that the balance sheet reset has positioned First Bank for recapitalisation and sustained growth.