Femi Otedola Explains FirstBank's N748bn Loan Write-Off

The Group Chairman of First Bank Holdings, Femi Otedola, has elaborated on the reasoning behind the bank's write-off of N748 billion in non-performing loans. He described this action as a strategic decision aimed at ensuring the bank's financial well-being in the long run, even though it considerably affected reported profits.

In a post shared on his X account on January 31, Otedola indicated that the significant provisioning exercise led to a staggering 92 percent decrease in the group's reported earnings.

He explained that this choice was consistent with the Central Bank of Nigeria's (CBN) guidance for banks to address bad loans proactively rather than postponing the issue.

"At First HoldCo, we opted to thoroughly address our issues. We absorbed a substantial one-time loss of N748 billion to acknowledge existing bad loans, rather than ignoring their existence. Thus, our profit appears to have plummeted by 92 percent. Though it presents a painful headline, it represents a crucial long-term strategy," he stated.

According to the affluent investor, this move was imperative to finally resolve the lingering bad loans built up over years and to boost confidence among investors and stakeholders.

"Why take this step now? The CBN is urging banks to tackle their issues instead of pushing them aside. Therefore, First HoldCo has effectively put an end to the problematic loans from previous years, sending a clear signal that loans come with repercussions and rebuilding trust in the financial sector," Otedola further explained.