Nigerian Banks to Write Off Toxic Loans, Impact Dividends

Nigerian banks are preparing to write off substantial volumes of toxic loans, raising concerns about dividend payouts for shareholders. This move comes as part of a broader industry trend where banks, including First Holdco Plc, are addressing legacy asset problems following the end of regulatory forbearance by the Central Bank of Nigeria.

First Holdco Plc reported a significant increase in impairment charges in its unaudited results for the year ending December 31, 2025, despite posting gross earnings of ₦3.4 trillion, a 4.8% year-on-year increase. The company's share price fell by 8.4% in January 2026 due to investor anxiety over dividend distribution and capital strength.

Other banks like Ecobank Transnational and Stanbic IBTC Holdings Plc also reported rising impairment charges, indicating a systemic issue within the banking sector. Analysts suggest that the current situation reflects a necessary shift as banks confront non-performing loans that have accumulated during previous economic shocks.