FirstHoldCo’s N748bn bad loans’ write-off raises dust

First HoldCo Plc, the parent company of FirstBank Nigeria PLC, Nigeria’s oldest financial institution, has sparked debate among shareholders and analysts following the write-off of N748 billion in bad loans, a move that weighed heavily on its 2025 profit despite strong revenue growth.

The write-off was disclosed in the Group’s unaudited financial results for the year ended 31 December 2025 and formed a major part of elevated impairment charges in the commercial banking segment.

While management described the action as a deliberate balance-sheet clean-up, investors and shareholders have raised concerns about its impact on earnings and dividend prospects.

For the year 2025, First HoldCo reported gross earnings of N3.4 trillion, up 4.8 per cent year-on-year, driven by a 36.3 per cent increase in net interest income to N1.9 trillion.

However, profit declined compared with the previous year due to higher impairment charges following the end of regulatory forbearance.

In its unaudited financial results, the Group recorded a 4.8 per cent year-on-year increase in gross earnings, driven mainly by strong interest income performance. Net interest income surged by 36.3 per cent to N1.9 trillion, supported by improved earnings yield of 17.11 per cent and net interest margin of 11.0 per cent, reflecting enhanced pricing discipline and balance sheet optimisation.

Net fees and commission income also posted strong growth, rising by 18.7 per cent year-on-year to N290.7 billion. The increase was largely attributed to higher electronic banking fees, letters of credit commissions, custodian fees, and account maintenance income, underscoring the strength of the Group’s core banking operations and continued success of its digital transformation strategy.

Despite the impressive top-line growth, profit for the year declined compared to the previous year, largely due to elevated impairment charges in the commercial banking segment.

The Group disclosed that this followed a deliberate strategic decision to accelerate balance-sheet clean-up through more aggressive provisioning standards, including the write-off of N748 billion in loans. Management described the move as prudent, noting that it enhances transparency, strengthens asset quality, boosts investor confidence, and aligns with evolving regulatory expectations.

Profitability was further pressured by increased regulatory costs, which the Group said reflect its compliance with Nigeria’s financial system stability framework and commitment to maintaining systemic confidence. Notwithstanding these headwinds, First HoldCo noted that the underlying performance of its core business remained strong.

Customer deposits grew by 10.0 per cent year-on-year, driven by sustained deposit mobilisation efforts and continued investment in digital banking platforms. The growth, according to the Group, signals strong customer confidence and deeper engagement across its key market segments.

The N748bn bad loans

The decision to write off N748 billion from the bank’s balance sheet is raising concerns among shareholders and investors.

Analysts are divided, with some viewing the move as exposing legacy asset quality issues, while others see it as a necessary reset that improves transparency and positions the bank for stronger future performance.

However, the management said the N748 billion write-off aligns with stricter provisioning standards and evolving regulatory expectations, adding that it would ultimately strengthen asset quality and investor confidence.

Chairman of FirstHoldCo, Mr. Femi Otedola, while defending the decision, said it was meant to close the chapter of messy loans, which have been non-performing for years.

In a post on his verified X handle over the weekend, Otedola said, “At First HoldCo, we decided to clean the 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%. Painful headline, but it is a serious long-term move.

“Why do this now? Because the @cenbank 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.

“The key point is this: our business itself is STILL strong. It made N2.96tn in interest income and N1.91tn in net interest income, which gave it the strength to take the clean up and still stay standing.

“Now at @FirstBankngr and beyond, we go into 2026 lighter, cleaner and better prepared for the recapitalisation era and serious growth. Bad loans cleared + strong income engine + long-term thinking = real value creation.”

Shareholders, analysts react

Ayokunle Olubunmi, Head of Financial Institution Ratings at Augusto & Co., in a chat with Daily Trust, said the decision was part of the Central Bank of Nigeria (CBN’s) directive on deposit money banks to clean up their books following the end of the forbearance.

Daily Trust reports that regulatory forbearance is a policy tool used by central banks that permits banks and financial institutions to maintain operations despite falling below required capital thresholds. It is a provisional measure that allows the restructuring of assets such as non-performing loans.

The apex bank in a June 13 circular froze dividends and other capital outflows for banks still operating under regulatory leniency frameworks introduced in the aftermath of COVID-19 and the attendant economic downturn. The circular effectively ended the forbearance era.

Olubunmi, however, stated that with the present position of the bank’s balance sheet, the financial institution can now start on a clean slate.

He said, “If you check the body language of the CBN, the CBN is trying to make all the banks clean up their books, and then with this new capital, they can just use it to, should I even say, create new loans, and even we can really know where they are because remember that the forbearance ended last year.

“So that’s what I meant by saying that the body language of the CBN is that, ‘banks bring out your toxic assets’, you have enough capital, write the ones that you can write off so that going forward we all know that you have a good book.”

“Haven’t said that, going forward, we’ll see if they have fully written off all the toxic assets, and then we can see it. If they’ve done that, that will actually be a corner that they’ve turned, and their performance will improve, but we’ll see going forward.”

According to him, the decision does not mean that the banks would not go after the debtors.

“If you check most banks, particularly the big banks, they have what they call the remedial team. So what they’ve done is that all the bad loans that they’ve not been able to recover, they don’t want them to be like the normal loans. So, they are separating it. So, their remedial or recovery team would now go after it.

“So, the beauty of it is that any amount that they recover turns into profit fully. By the time you check how much they have recovered, it is always very huge, and any amount they have recovered would actually boost their profit.

So, it doesn’t mean that they’ve forgotten about it, you know. What they’ve done is that they just set it aside, and those people who are focusing on recovering bad loans, let them just focus on that one.”

He advised that going forward, banks should strengthen their credit risk management framework to reduce exposure to bad loans.

An Economist and financial analyst, Dr Marcel Okeke, stated that the volume of bank loans being written off by a financial institution is a reflection of the state of the economy.

He said it simply means that many businesses are unable to service their loans with commercial banks. However, he stated that it is a corporate decision aimed at cleaning the bank’s balance sheet.

He said, “This is a corporate decision and truly, truly, that kind of thing happening is showing you the shape of the economy. It shows businesses are not doing well enough to continue to service their loans.

“Maybe many of them must have gone bankrupt and become insolvent, maybe many of them no longer exist because of the condition of the economy. Forget about this internal and external propaganda by the World Bank, IMF and others.

“Giving all those figures they are giving, Nigeria has become this, Nigeria has become that. The result from the First Bank is showing you the reality that they are unable to recover those loans. They have done all they could in banking books and they could not, something as huge as N748 billion.

“When other banks publish their results, you will see similar figures. This clearly exposes the volume of bad loans—businesses that have been unable to service or repay their obligations. As a result, the banks had no option but to write them off, having exhausted all remedies permitted under the law.”

Mr Boniface Okezie, a shareholder activist, in a chat with our correspondent, expressed concerns about the amount of money involved. He said those indebted to the banks are not ghosts and, as such, they should go after them.

Speaking with our correspondent, he said, “Is it that they are not going to recover those loans?

The question I want to pose to those who are running the bank, you know, they have a board, they have management. So, if the loans are going to return N740 billion, that means it has surpassed the recapitalisation they are talking about.

“The capitalisation set up benchmark is 500 billion and they are writing off almost a trillion. Then, where is the bank standing? Where is the groundwork for the bank, the foundation? Because if the foundation is destroyed, what can we do?”

He stated that the investors need an assurance that writing off the loans does not mean they are not going to recover the loans.

“The public needs an assurance that writing it off does not mean we are not going to recover this money. But we want them to take it away from our books so that it doesn’t constitute an obstruction for us. So we put it aside. When we recover it, we’re able to write it back, make provision again, and write it back to their books.

“I think that should be the language. In other words, I agree with them because if those loans have constituted an obstacle because the recovery is not in sight for those loans, why are you booking them on the books?

Another shareholder, Pastor Samson Olagoke, said members of the public must show ample interest in the management of the FirstHoldCo, saying it has been hijacked by those he called moneybags.

“We must be careful in the way we manage this institution. This is something that belongs to all of us, but I can’t tell you that I understand the game being played at the moment,” he added.

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