Femi Otedola, the Group Chairman of First Bank Holdings, has explained the rationale behind the decision to write off N748bn in legacy non-performing loans, describing it as a calculated move to secure the bank’s long-term financial health, despite its heavy impact on profits.
Otedola disclosed this in a post on his X handle on Saturday January 31,, noting that the extensive provisioning exercise resulted in a 92 per cent drop in the group’s reported profit.
He said the decision aligned with the Central Bank of Nigeria’s directive urging banks to confront bad loans head-on rather than defer the problem.
“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.
According to the billionaire investor, the move was necessary to finally deal with problematic loans accumulated over several years and to 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.