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 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.”
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.
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.
-Source: Daily Trust