By Odinaka Anudu

ONE of Nigeria’s biggest lenders, Zenith Bank, wrote off loans totalling N1.24 trillion in 2025 after it became obvious that the debtors would not pay back. As a result, the bank was forced to declare the loans delinquent and subsequently classified them as lost, the 2025 audited financial statement of the bank revealed.

Financial experts have criticised the bank for the write-off of the humongous amount, faulting the increase in write-offs by nearly 13 times to N1.24 trillion in 2025 from N96.5 billion reported in 2024.

“This is a pretty huge amount of money to write off,” said a Lagos-based financial expert, Lizzy Aigbe. “This shows significant non-performing loans,and can also put pressure on the bank’s capital adequacy. It also questions the bank’s risk management measures. However, I think this is a cumulative impairment write-off, similar to what First Bank did.”

She, however, pointed out that the bank may be trying to clear bad loans and have a cleaner balance sheet going forward.

First Holdco, the parent company of First Bank, wrote off N748.125 billion loan for the whole of 2025 and N459.206 billion for the last quarter of 2025. Like the case of Zenith Bank, this means that loans had been granted to entities who did not repay them.

Zenith Bank said it writes off a loan balance when the group’s credit department determines that the loan is ‘uncollectable’ and has been declared delinquent and subsequently classified as lost. This determination is made after considering information such as the continuous deterioration in the customer’s financial position, such that the customer can no longer pay the obligation, or that proceeds from the collateral will not be sufficient to pay back the entire exposure.

It noted that board approval is required for such write-off. For insider-related loan (loans by the bank to its own officers and directors), the Central Bank of Nigeria (CBN) approval is required.

The lender added that loans and debt securities are written off (either partially or in full) when there is no realistic prospect of recovery. This, according to Zenith Bank, is generally the case when the group determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off.

However, financial assets that are written off could still be subject to enforcement activities in order to comply with the group’s procedures for recovery of amounts due, Zenith Bank said.

“It is unhealthy for a bank to have this kind of write-off or expected credit loss,” said a former banker, Livinus Odegbami. “This is a reflection of how loans have been granted over the years. On the other hand, it may be that the bank is too much exposed to the oil and gas sector, or that loans were granted without due diligence.”

Impairment charges

The impairment numbers show how much Zenith Bank set aside to cover loans and other assets it expected might not be fully recoverable. In 2025, impairment charges on financial instruments rose to N742.19 billion, up from N657.00 billion in 2024, indicating that the bank became more conservative or faced higher credit risk during the year. This rise suggests more borrowers were either defaulting, delaying repayment, or were reassessed as higher risk, financial analysts noted.

On non-financial instruments, impairment charges were relatively small at N578 million in 2025, compared to N1.80 billion in 2024, showing that most of the pressure came from loan-related (financial) assets rather than other balance sheet items.

Bank’s revenue, profit jump

However, Zenith Bank reported a 6 per cent increase in revenue to N4.192 trillion in 2025 from N3.971 trillion in 2024. The lender’s profit before tax stood at N1.263 trillion.

However, it paid an income tax of N222.824 billion, lower than N293.956 billion reported in 2024, leaving it with a profit after tax of N1.041 trillion. Profit attributable to the equity holders of the parent was N1.039 trillion.

A Zenith Bank spokesperson did not respond to requests for comment.

This report is republished from the Economy Post.