First HoldCo Profit Falls 92% Following Balance Sheet Cleanup Ahead of CBN Recapitalisation Deadline
Nigerian financial services group First HoldCo reported a 92 per cent decline in profit for its 2025 financial year, a result the company attributed to a deliberate, large-scale recognition of legacy non-performing loans. The move comes as banks across Nigeria prepare for a stringent recapitalisation deadline set by the Central Bank of Nigeria (CBN) for March 31, 2026.
In a statement issued via his X account, Femi Otedola, Chairman of First HoldCo and a major shareholder with an 18.12 per cent stake, explained that the firm absorbed ₦748 billion in old bad loans during the period. This decision, he said, was made to address historical credit issues head-on rather than delay their resolution. The accounting for these losses directly caused the sharp contraction in reported profit.
Otedola framed the action as a response to regulatory pressure from the CBN under Governor Olayemi Cardoso, which is actively encouraging banks to resolve asset quality problems instead of deferring them. “We decided to clean house properly,” Otedola stated, noting that the clean-up “sends a clear message that borrowing has consequences and helps rebuild trust.”
Despite the significant one-time charge, Otedola emphasised the underlying strength of the company’s core operations. First HoldCo recorded ₦2.96 trillion in interest income and ₦1.91 trillion in net interest income for the year, figures he highlighted as evidence that the business remained fundamentally robust and capable of absorbing the balance sheet hit.
This strategy aligns with the broader regulatory mandate for Nigerian banks to significantly boost their capital buffers ahead of the 2026 deadline. By resolving legacy asset issues now, First HoldCo aims to present a cleaner balance sheet for the upcoming recapitalisation process. Otedola expressed confidence that the firm would enter 2026 in a stronger position, describing the outcome as being “lighter, cleaner, and better prepared for the recapitalisation era and serious growth.”
The development underscores a pivotal phase in Nigeria’s banking sector, where regulatory enforcement is prioritising long-term stability over short-term profit reporting. For First HoldCo, the immediate financial impact is severe, but the stated objective is to create a more credible foundation for future growth and compliance with the new capital requirements. The success of this approach will be measured by the firm’s ability to meet the CBN’s recapitalisation targets and demonstrate sustained profitability from its cleaned-up operations in the coming year.
