If you know Mr Otedola very well, you will know that he can be very effusive when it comes to good news especially the one that validates him
Last year, he had taken a step that had never been done in the history of Nigerian banking
He had led his FirstHoldco where he holds about 18% stake and sits as Chairman to take a massive historical impairment
The Bank took an N830b impairment in one fell swoop entering history books for that one move
Bankers are not built to take this kind of hit, they would rather spread it and amortise it over a period
But not the no-nonsense Otedola who came into the system on a mission to reform.
For him, he wasn’t interested in the efulefu banking that was going on there, where the Bank was building a vision on straws
He led the Bank towards clearing that augean stable even if it meant losing short-term value and humbling itself as its competitors posted beautiful results which have now come back to haunt them
Today, Otedola and his Bank are dancing in the stars. The very first result after that brace has been nothing but historical
A 72% rise in profits this quarter, overtaking such champions as GTCO and Access, and returning the second most profitable result in the field.
Wait, there is still more – the Bank also recorded the highest return in equity at 31.6%.
For those of you who do not understand what ROE is, let me explain in one sentence – this is value per Naira on equity meaning that First Bank was sweating the Naira much more than its FUGAZ colleagues.
Last quater it was a little bit over 4% and the most remarkable thing according to reports that I have seen is that this ROE is happening at the same time that a recapitalization is going on, which is totally amazing.
Profit before tax jumped from N186. 47b to the phenomenal N321b a 72% Jump as earlier mentioned
Another aspect of this report that has galled me is its cost-to-income ratio
Last result, observers pointed very succinctly at their operating costs and screamed at marketing costs amongst others
18months later, the ratio has redirected from 53.8% to 45 2%
The days of patronising expenditure seem to be over at First Bank, it’s looking like it’s a belt-tightening period
Although its operating expenses rose by 21% to N298b its net earnings jumped to 41% meaning that income was galloping away
Two strategic reasons one would offer for this- a pull away from the public sector to a deepened private sector drilling which gives us an increased interest income of N466b a 28% increase.
Another area which has always been a sore point pre-Otedola area is Loan recovery
Here and with the no-nonsense approach to recovery after taking such a huge impairment hit, the bank recorded a straight to bottom-line smash of N19b as against the joke that was N1b last year, an increase of 1,570%
With a total asset of N26. 8 trillion its very safe to say that the Elephant is back and with its trunk blaring very loudly for all to hear and bow.
When the impairment took place last year, fickle traders dumped, and the herd mentality of the market kicked in
Shallow-minded traders dumped and the stock price dipped but elementary Stockbroking would have told you that with that evacuation, pregnancy would be the natural follow-through.
Yes, First Bank has, with this result just 18months after the impairmenent, shown its readiness to regain its prime position as the markets super hero
One cannot but conclude without mentioning the brazen courage of Mr Otedola who led his board to bite this bullet without cringing knowing fully well that the upside would be nothing but phenomenal
For too long, our Banks have been building massive profits on straws, paying taxes on fluff thereby depriving shareholders of quality returns while the managers went on a hedonistic lifestyle spree at their expense
The CBN with this policy of Forebearance put an end to that and while the rest were dithering, Otedola and his team jumped in and made a splash sending a strong signal to the market that you can still stand straight while doing the right thing.
Well done, guys. Welldone
Duke of Shomolu
Last modified: May 12, 2026
