Femi Ashekun/
Chairman of First Bank Holdings Plc, Femi Otedola, has attributed the bank’s 92 percent plunge in profit after tax to a deliberate and one-off decision to write off legacy bad loans amounting to N748 billion.
He insisted that the move was necessary to strengthen the institution for long-term growth.
Otedola explained that the sharp profit decline, which triggered widespread reaction on social media and in financial circles, was the result of what he described as a “clean house” strategy rather than a deterioration in the bank’s core business.
“At First HoldCo we decided to clean house properly,” Otedola said. “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 percent.”
He noted that the decision aligns with the Central Bank of Nigeria’s renewed push for banks to fully recognise impaired assets rather than defer them indefinitely.
According to him, the move effectively closes the chapter on problematic loans accumulated over previous years and sends a clear signal that borrowing obligations must be honoured.
Despite the headline profit drop, Otedola stressed that First Bank’s underlying business remains robust.
He disclosed that the group generated N2.96 trillion in interest income and N1.91 trillion in net interest income, providing the financial strength required to absorb the massive write-off without threatening operational stability.
The strong earnings performance, he said, demonstrates that the bank’s income engine is intact and capable of supporting future expansion.
He added that the clean-up positions First Bank more favourably ahead of the banking sector recapitalisation drive and a new phase of growth expected from 2026.
Market analysts note that while the write-off has negatively affected short-term profitability, it could improve transparency, asset quality and investor confidence in the long run, especially as regulators intensify scrutiny of balance sheets across the banking industry.
Otedola concluded that the combination of cleared bad loans, strong interest income and long-term strategic thinking represents genuine value creation for shareholders, even if it comes at the cost of painful short-term headlines.
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