Russia’s banking sector is coming under increasing pressure as problem loans mount and profitability weakens. According to data from the Central Bank of Russia, 68 out of 306 banks reported losses in August, 13 more than in the previous month. Their combined losses reached 229 billion rubles (around €2.5 billion), marking a sharp increase compared with August 2023 and 2024 — though still below the levels seen during the crisis year of 2022.
Analysts attribute the surge in losses primarily to higher provisions for bad loans, reflecting the growing credit default risk across the economy. In total, banks increased their reserves by 67 billion rubles (€0.7 billion) compared with July. Other contributing factors included a decline in net interest income, which fell by 36 billion rubles (€0.4 billion) month-on-month, and a 33 billion ruble (€0.35 billion) rise in tax expenses.
Experts warn that these trends point to tightening financial conditions in the banking system, as institutions face a dual challenge of weaker lending profitability and higher credit risks. Sustained pressure in these areas could force some smaller or regional banks to consolidate or seek external support in the coming quarters.
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