When I first saw the recently released First Bank results, the image that came to my mind was that of a man trying to scour the pit latrine in my secondary school.
Funnily enough, the new GMD at First Holdco is an old student, and he can attest to the putrid smell and dastardly state of those things we used to call “shalanga.”
Mr Otedola, by sinking his hard-earned funds into this “sick” elephant, was actually rolling up his sleeves, putting on rain boots, covering his nose with masks, and going to work.
Cleaning up decades of decadent corruption in what used to be Nigeria’s biggest bank cannot be an easy task, and these figures attest to that.
A full charge of N748.1b impairment for the year, following the CBN deadline of 31st Dec, throws up years of dangerous living by those who had strangled the bank all these years.
This elephant has undergone serial rape, which involved desecration of corporate governance, weak internal regulation, poor credit management, and a half-hearted loan recovery mechanism.
This opened it to fraud, both internal and external, leading to a malnourished elephant that can no longer vie for market leadership. Let’s take a closer look at the result.
This impairment charge is said to represent about 11% of the bank’s total loan book, which stands at about N7 trillion and which, by industry standard, in itself is high, if not the highest.
As if this is not enough, the bank’s cost drive is almost 3x the industry.
Its advertising and marketing cost at N185b is really high, at 25% of OPEX.
Another area is maintenance, which hit N151b, and other OPEX surged by about 44%, further weakening indices.
If I were to sit with Mr Otedola on this matter — something I really want to do — I’ll look him in the face and say: fire your Corporate Banking team NOW.
That is where the problem is. Most of these loans that are going or went bad were booked by this team.
FBN impairment from bad loans since 2015 till date stands at a staggering N2.2 trillion — a huge amount and an industry record.
As if this is not enough, the team is still not firing on all cylinders in growing revenue, and the reason for this is simple.
Corporate banking lacks the firepower of, say, an Abolore in Fidelity or a Dr Fasoranti in Zenith, whose skills in credit remain industry legend.
When you book weak credit and sum that up with weak relationship management, what you get is this tsunami of loans going bad and affecting the profit quality of the bank.
My advice to Mr Otedola, as he continues with his repair work, is to push out anyone who has done more than five years in that team, because they are already contaminated with the “na me, na me” culture that ruled the bank just before the Otedola era.
The brilliant thing for First Bank is that their treasury team is a world-beater, as they continue to dominate earnings thrown up by the bank consistently, year in and year out.
Take, for example, the treasury team delivering income of N962b, up from N850b the previous year.
FBN declared N2.9tr, with loans delivering N1.8tr, meaning that most of the impairment came from loans.
Another sad thing is that, as a result of the delay in the impairment, they were paying tax on bubble profit, which was a major blow to profits and, by extension, shareholder value.
In pushing for recovery, Mr Otedola should empower Wale Oyedeji, his GMD, to rebuild that corporate banking team, with an eye to peopling it with hawks who will tear down the market as they push to regain market dominance. The good thing here is that Mr Alebiosu, who is the MD, is an expert in risk management.
Once loan quality goes up, profits will rise also.
Another bright spot in this story is the recent increase in Mr Otedola’s direct and indirect shareholding in the bank to 18.12%, up from 11.8%.
This shows his full confidence in the bank’s robust potential for recovery, signposting his resolve to put his all into achieving his goals and vision for the institution.
So what would I now advise the investor to do?
I would confidently say BUY, and for the following reasons:
Mr Otedola has shown, by his pedigree in the space, a strong resolve to block leakages and return the bank to winning ways by insisting on strong compliance, impairment discipline, and strong corporate governance, amongst others.
He has staked his own funds in the business, meaning that he is ready to ride or die on this matter, and such confidence would cascade through the demand/supply equilibrium of its shares.
Mr Otedola’s bold move has also reduced the bank’s tax exposure very significantly, with a strong impact on earnings.
It has made a first-mover advantage by moving its headquarters to the exclusive Eko Atlantic resort.
The new headquarters is an asset that would boost its balance sheet quality, and it is being joined by such quality neighbours like the US Embassy and Shell, to mention a few.
Its brand quality is still very strong, and it still has a brilliant grasp of the retail market, which forms the bedrock of most banks.
Demand for its shares remains strong, and I project huge demand as the “close” period is officially over.
This forbearance move would lead to an aggressive recovery policy, which will hit the bottom line directly — hence the confidence of the market that a lighter First Bank, post-forbearance, is the place to be.
First Holdco has done what in the army is called “biting the bullet” with this huge bite, and from here it can go nowhere else but up.
So, Mr Otedola, I would say well done for your courage, and be assured that we are standing by you.
Thanks.
Duke of Shomolu
Last modified: February 1, 2026
