Why FirstBank wrote off N748bn bad loan – Otedola
Femi Otedola, the Group Chairman of First Bank Holdings, has defended the organization’s decision to write off ₦748 billion in legacy non-performing loans, characterizing it as a strategic choice intended to ensure long-term financial stability, despite the significant short-term impact on profits. In a post on his X handle, Otedola revealed that this move resulted in a staggering 92% drop in the holding company’s profit figures, reflecting the seriousness of the financial adjustments made.
This decision aligns with directives from the Central Bank of Nigeria (CBN), which urges banks to openly address non-performing loans rather than delaying action. Otedola emphasized that First Bank opted for a comprehensive approach to deal with unresolved bad loans from previous years, thereby aiming to restore stakeholder confidence. He noted that acknowledging these financial issues rather than ignoring them sends a strong message about the consequences of borrowing, which is essential for rebuilding trust in the banking system.
Otedola highlighted that despite the significant write-off, First Bank’s core business remains robust. The bank reported impressive earnings of ₦2.96 trillion in interest income and ₦1.91 trillion in net interest income, showcasing its financial resilience. These figures provided the necessary cushion for the company to absorb the write-off while maintaining operational stability.
Looking towards the future, Otedola expressed optimism regarding the bank’s positioning post-clean-up. He is confident that clearing bad loans equips First Bank for upcoming recapitalization efforts and sets the stage for sustained growth. He stated that the combination of eliminating problematic loans, alongside a strong income-generating capacity and a long-term strategic outlook, creates real value for the organization.
In summary, Otedola defended the substantial write-off as a crucial step toward transparency, accountability, and rebuilding trust within the banking sector. He assures stakeholders that while immediate profits may have taken a hit, the foundational strength and future prospects of First Bank remain promising.
