Otedola Explains N748bn Loan Write-Off as Strategic Clean-Up, Not Operational Weakness

Chairman of First HoldCo, Femi Otedola, has described the company’s massive N748 billion loan write-off as a deliberate balance-sheet clean-up rather than a reflection of poor performance or weakness in the bank’s operations.

Otedola made this clarification in a post on his X (formerly Twitter) account on Saturday, explaining that the decision was taken to formally recognise long-standing bad loans instead of carrying them forward.

“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 appears to have dropped by 92 per cent,” he wrote, describing the development as painful but necessary for long-term stability.

The write-off resulted in a sharp 92 per cent decline in profit. However, Otedola stressed that the losses were not recurring, noting that they stemmed from the recognition of legacy non-performing loans accumulated over previous years.

He further explained that the move aligns with the Central Bank of Nigeria’s push for banks to strengthen their balance sheets and stop delaying the acknowledgement of bad assets, especially as the industry undergoes recapitalisation.

According to him, the action sends a strong signal that financial discipline matters and that unresolved credit issues will no longer be ignored.

“First HoldCo has effectively closed the chapter on problematic loans from the past, which reinforces accountability and helps rebuild confidence in the system,” Otedola stated.

Despite the significant write-off, he noted that the group’s fundamentals remain solid, with N2.96 trillion recorded as interest income and N1.91 trillion as net interest income, providing enough capacity to absorb the one-off loss.

The clean-up, he added, is expected to enhance transparency, boost investor confidence, and position First HoldCo for sustainable growth in the years ahead.