First Holdco Plc has clarified widespread misinterpretations surrounding its latest financial results, stressing that the reported N748.125 billion impairment charge does not equate to a direct bad debt write-off.
Contrary to sensational claims suggesting that the financial services group wrote off N748 billion, the company disclosed that only N27 million was formally classified and written off as bad debt during the 2025 financial year.
The N748.125 billion figure represents an impairment charge recognized under International Financial Reporting Standard (IFRS) 9, which mandates the Expected Credit Loss (ECL) model. This accounting framework requires financial institutions to provision for anticipated credit losses on financial assets, shifting from the traditional “incurred loss” methodology to a forward-looking approach.
Under IFRS 9, impairment charges are non-cash provisions that reduce the carrying value of financial assets on the balance sheet. They are not immediate cash losses and may be reversed if the underlying exposures improve or are recovered.
First Holdco’s results showed that group impairment on credit losses increased by 75 percent year-on-year, rising to N748.125 billion from N254.907 billion in 2024. The spike followed the Central Bank of Nigeria’s decision to discontinue regulatory forbearance measures previously granted to banks during the COVID-19 crisis.
In 2020, oil and gas companies faced significant financial distress due to crude oil contango and the broader economic disruption caused by the pandemic. To cushion the impact, the CBN allowed lenders temporary relief in accounting treatment, enabling banks to avoid immediate recognition of stress in their loan portfolios.
However, several borrowers, particularly within the oil and gas sector and other industries exposed to pandemic-related disruptions, experienced deteriorating credit profiles. Loan balances increased, interest burdens rose, and default rates accelerated.
With regulatory forbearance withdrawn, banks were required to fully recognize the embedded credit risk. For First Holdco, impairment on loans and advances to customers surged by 91.37 percent year-on-year to N710.033 billion in 2025, up from N371.044 billion in 2024.
The financial statement breakdown also indicated recoveries on certain exposures, including reversals on provisions previously charged against loans to banks and fair value adjustments on investment securities.
Industry analysts note that impairment recognition under IFRS 9 does not automatically translate into permanent loss. Should borrowers stabilize or repayments resume, write-backs could positively impact future earnings, potentially in 2026.
First Holdco’s clarification underscores the technical distinction between impairment provisioning and outright bad debt write-offs — a nuance critical to interpreting banking sector earnings accurately.
