The share of non-performing loans (NPLs) in Russia’s banking sector is rising amid an economic slowdown.

Source: Ukraine’s Foreign Intelligence Service

Details: By the end of Q2 2025, non-performing loans in Russia’s corporate sector had climbed to 10.4% of the portfolio, totalling US$111.9 billion – an increase of US$8.6 billion over the quarter, Ukraine’s Foreign Intelligence Service reported.

The cost of credit risk for companies has nearly doubled over the past three months. The most significant deterioration was seen in the property, metallurgical and coal sectors, where high interest rates are weighing on businesses with declining revenues.

In these circumstances, banks are increasingly resorting to “risky restructuring”, postponing the recognition of losses. The deterioration is also affecting the banks themselves: 48 of the 100 largest financial institutions saw their financial performance decline in the first half of the year, and five of the 13 systemically important banks recorded a drop in net profit of 20% or more.

Despite public denials by Russia’s Central Bank, the Russian Ministry of Finance provided covert support to state-owned banks in July, injecting US$6.15 billion from the National Wealth Fund through subordinated loans and deposits. This effectively amounted to recapitalisation and signals deeper problems in the sector, the Foreign Intelligence Service added.

Background: Russians have begun to actively buy cash currency. Over six months, savings rose by nearly US$1.5 billion to US$93.5 billion, with stronger growth seen only in the first half of 2022.

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