Russia’s record bank profit forecast masks mounting losses and troubled debt
Russia’s central bank has raised its forecast for banking-sector profits to a record 4.4 trillion rubles ($52.2 billion), about 52 billion euros ($59.3 billion). But the number of loss-making banks has doubled. NV Business examined what is happening in Russia’s banking system.
Russia's central bank has projected a record $52.2 billion in banking-sector profits for 2025, but the number of loss-making banks has doubled. The banking sector appears strong, with a 36.3% increase in profit for the first half of the year, but the profits are concentrated among just 10 large, state-controlled institutions. Sberbank alone earned $11.8 billion, accounting for nearly half of the total financial-sector profit.
The number of loss-making institutions rose by 87% year over year to 65 out of 300. Major banks such as Pochta Bank, Bank Sinara, and UBRR reported significant losses. Funding costs for these banks are rising, restricting their access to cheap money. Foreign institutions are also seeing declines. The profits are driven by a decline in provisioning, which can be inflated through temporary regulatory relief.
The quality of Russia's corporate loan portfolio is deteriorating rapidly, with problem debt reaching $159 billion. The central bank has extended relaxed provisioning requirements, allowing institutions to conceal the true scale of the problems. Corporate loan restructurings have increased, and pressure is growing from subsidized lending to the defense industry, which has resulted in a significant number of bond defaults.
Despite public statements from senior officials, the situation within Russia's banking system is far more troubled.
Written by urgent.news from New Voice of Ukraine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
