The Central Bank of Russia lowered interest rates from a record 21% to 18% to help companies pay off debts, writes the Financial Times. The goal of lowering rates is to bring inflation down to 4% by next year, and in 2025, further rate cuts are expected.
Banks are facing the issue of bad loans after two profitable years during the war. An economist from the Vienna Institute warned that corporate loans with floating rates now face tough refinancing conditions, increasing pressure.
Even in the strong Sberbank, the cost of risk in the second quarter rose from 0.97% to 1.71%.
The largest banks are noting a significant drop in profits and may require state assistance. According to RBC, in the first half of 2025, net profit of 5 out of 13 key Russian banks fell by more than 20%. Almost half of the top 100 banks reported lower results.
In the first half of 2025, banks made a profit of 1.7 trillion rubles after a record 3.8 trillion rubles in 2024.
Construction, coal industry, and real estate are experiencing difficulties, increasing banking risks. The profit of the Moscow Credit Bank fell by 65% over the year and it may need external assistance.