Amanze Chinonye
First Bank Holding Company (First HoldCo) has said its decision to recognise ₦748 billion in legacy bad loans in one sweep has placed the group on a stronger footing ahead of the Central Bank of Nigeria’s (CBN) planned banking sector recapitalisation, despite the move wiping out most of its 2025 profits.
The group’s profit after tax fell by 92 per cent to ₦52.75 billion in the 2025 financial year after the one-off charge, a development that sparked concerns among investors and market watchers. However, the company insists the sharp earnings decline reflects a deliberate clean-up of historical credit issues rather than a weakening of its core business.
Group Chairman, Mr Femi Otedola, addressed the concerns in a statement posted on his verified X handle, explaining that the aggressive provisioning was aimed at confronting long-standing non-performing loans head-on.
Join our WhatsApp ChannelAccording to him, First HoldCo opted to fully acknowledge problematic loans accumulated over several years, instead of carrying them forward through accounting adjustments or regulatory forbearance.
He said the approach was consistent with the CBN’s push for banks to decisively resolve asset quality challenges and strengthen their balance sheets as the industry prepares for higher capital requirements.
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Otedola described the move as painful but necessary, noting that it was better to take a single, heavy hit to earnings than to continue masking legacy problems.
Despite the impact on headline profit, First HoldCo’s operating performance remained resilient during the year. The group recorded interest income of ₦2.96 trillion, representing a 23.6 per cent increase, while net interest income stood at ₦1.91 trillion, highlighting strong earnings from its core lending activities.
The clean-up also resulted in an improvement in asset quality, with the group’s non-performing loan ratio declining to about 7 per cent after the write-off, suggesting a healthier loan book going forward.
Analysts note that the scale of the provisioning places First HoldCo among Nigerian banks that have chosen to front-load loan losses as part of broader balance sheet reforms ahead of the recapitalisation exercise expected to take effect by March 2026.
Looking ahead, the group says it is entering 2026 with a cleaner balance sheet, stronger transparency and greater capacity to pursue growth opportunities under the new regulatory regime.
Market reaction to the results has been divided. While some investors have applauded the move as a sign of improved governance and long-term thinking, others remain cautious about the near-term impact on earnings and share price performance.
First HoldCo, however, maintains that the combination of cleared bad loans, solid income generation and regulatory alignment will ultimately rebuild confidence and support sustainable value creation as Nigeria’s banking sector undergoes a major transition.
Amanze Chinonye is a Staff Correspondent at Prime Business Africa, a rising star in the literary world, weaving captivating stories that transport readers to the vibrant landscapes of Nigeria and the rest of Africa. With a unique voice that blends with the newspaper's tradition and style, Chinonye's writing is a masterful exploration of the human condition, delving into themes of identity, culture, and social justice. Through her words, Chinonye paints vivid portraits of everyday African life, from the bustling markets of Nigeria's Lagos to the quiet villages of South Africa's countryside . With a keen eye for detail and a deep understanding of the complexities of Nigerian society, Chinonye's writing is both a testament to the country's rich cultural heritage and a powerful call to action for a brighter future. As a writer, Chinonye is a true storyteller, using her dexterity to educate, inspire, and uplift readers around the world.
