Russia’s banking sector struggling with mounting bad loans – CCD

This was reported on Telegram by Ukraine’s Center for Countering Disinformation (CCD) under the National Security and Defense Council, according to Ukrinform.

“According to the Central Bank of Russia, in Q1 2025, the risk of loan defaults in the retail lending sector rose to 3.6%, well above the normal level of 2%. This indicates a decline in loan quality, particularly in the consumer sector, where overdue debts are rapidly increasing,” the statement said.

The CCD emphasized that Russian banks are being forced to increase reserves to cover these bad loans. In total, they spent 215 billion rubles ($2.7 billion) in the first three months of 2025, averaging nearly 2 billion rubles ($25 million) per day. This reflects growing difficulties among Russians in repaying debts accumulated during the credit boom of 2023–early 2024.

At the same time, the number of new loans issued in the country is decreasing — particularly consumer loans, which dropped by 1.4% in Q1. Bank profits also fell by nearly a third, down to 0.7 trillion rubles (approximately $8.75 billion). This decline is attributed to increased reserve spending and reduced income, signaling rising financial risks. Higher costs of attracting funds are pushing banks to raise interest rates on deposits, which could further erode profitability.

The CCD concluded that the deterioration in loan quality, the decline in new lending, and the sharp drop in bank profits are all clear indicators that Russia’s economic situation is significantly worsening.

As previously reported, former Foreign Minister and Head of the Center for Russian Studies Volodymyr Ohryzko noted that even Russian government-funded economists are warning that 2025 will be a year of bankruptcies for the Russian Federation.

Additionally, the foreign currency reserves of Gazprom’s main office fell by 98.5% in 2024.