First Holdco Writes Off N27m as Bad Debt, Not N748bn
Screaming headlines, First Holdco wrote off N748 billion in bad debt, is a wrong explanation if International Financial Reporting Standard 9 on expected credit losses.
The impairment charge, an attempt to clean up the balance, surged on legacy loans that have not been performing; if recovered later, there will be a write-back in the profit or loss statement.
The charge is a non-cash provision that reduces the asset value on the balance sheet. FirstHoldco’s profit plunged because the group impairment on credit losses spiked by 75% after the Central Bank of Nigeria (CBN) pulled the plug on forbearance.
Many oil and gas clients entered trouble in 2020 when oil ‘contago’, and because COVID-19 was a development beyond banks’ control, the CBN allowed banks to account for their loan books as if nothing happened.
But some oil and gas names, and other industries with significant exposures to COVID-19 related issues, could not survive – loan size expanded, their interest cost rose, and the default rate surged.
It is sufficient to say the banking industry’s earnings were practically overstated in the normal course event without the CBN forbearance. Then, FX gain windfall helped some lenders to gradually reduce their expected credit losses risk, but First Holdco was even having FX losses.
IFRS 9 Expected Credit Loss (ECL) is an impairment model requiring entities to recognize forward-looking credit losses on financial assets, shifting from an “incurred loss” to an “expected loss” approach.
Details from First Holdco Plc results showed that the impairment charge for losses sustained from its credit decisions increased by 75% year-on-year to N748.125 billion from N254.907 billion in 2024.
The breakdown showed that First Holdco recovered some offset made on loans to banks in 2024 and the fair value on investment securities which a provision had been charged reversed.
There was a year-on-year increase of 91.37% increase in impairment on loans and advances to First Holdco customers in 2025, which settled at N710.033 billion from N371.044 billion in 2024. First Holdco wrote off N27 million as bad debt in 2025.
Bad debt written off suggests that the loan has advanced to a stage that may not be recoverable. Impairment charges could be written back in 2026. Moody’s Assigns A1 to PepsiCo’s New Euro Unsecured Notes
