Russia's Banks: Record Profits, Credit Crisis, and Bank Closures
Russian banks’ profits continue to soar in 2026. For the first five months of the year, the Central Bank reports a net profit for the banking sector of nearly 2 trillion rubles, equivalent to 22.8 billion euros. This result represents a 48% increase compared to the same period last year and also exceeds the figure from the record year of 2024 by 32%. The sector’s annual result at that time, adjusted for intra-group dividend payments, amounted to 3.8 trillion rubles, slightly more than 43.3 billion euros. In 2025, the figure was still around 3.5 trillion rubles (39.9 billion euros); for 2026, the Central Bank expects an adjusted result of 3.4–3.9 trillion rubles (38.8–44.5 billion euros), meaning profits in line with the two strong previous years.
However, the statistics for the Central Bank’s most recent reporting month, May 2026, also point to a slowdown in growth. At 362 billion rubles (4.1 billion euros), profits were still nearly 23% higher than in the same month of the previous year. According to the Central Bank, the strong figures—particularly in the first quarter—are attributable to the falling key interest rate, as deposit rates temporarily fell faster than the yields on many loans.
More Non-Performing Corporate Loans
Nevertheless, on July 6, the British news agency Reuters reported the assessment of an unnamed European intelligence agency that warned of an “explosive banking crisis” in Russia. The most compelling argument is the high number of “doubtful corporate loans,” which the Reuters source estimates at 10%. This is on a similar scale to the Russian Central Bank’s non-performing loan ratio of 10.4% toward the end of the third quarter of 2025. As a result, the pro-government Russian economic research institute ZMAKP declared a “latent systemic banking crisis” in early 2026. By March, the ratio of non-performing corporate loans had risen to 11.6% and remained at that level in April. The Central Bank most recently estimated the volume of these loans at 11.2 trillion rubles, equivalent to 128 billion euros.
More than half of these loans (51%) are covered by provisions and high-quality collateral, the Central Bank states, assessing this coverage as “acceptable.” The risk associated with the uncovered 5.5 trillion rubles (62.7 billion euros) is “manageable” because potential losses would occur only gradually and could be covered by the banks’ current profits. ZMAKP also recently assessed the situation as less acute. The risk of a new wave of bad loans and a bank run is low. In the twelve months leading up to March 2026, household bank deposits rose by 15%, which suggests there is no crisis of confidence. Above all, the strong ruble indicates that the crisis will last less than a year overall, ZMAKP wrote in May.
The Central Bank also includes “risky” restructurings amounting to 4.6% of the total portfolio in the 11.6% of problematic corporate loans. In a restructuring, the original loan terms are modified to enable the company to continue servicing the loan. Overall, 18.2% of corporate loans had been restructured as of the end of March, up from 16.3% at the end of 2025 and 13.3% at the end of the first quarter of 2025. ZMAKP and the intelligence report cited by Reuters view these extensive restructurings as a possible means of postponing defaults and thus obscuring the true extent of the credit problems.
Small Banks Are Disappearing
While the potential credit crisis also threatens the top banks, smaller banks are coming under pressure for other reasons. As of early June, the central bank counted 301 institutions with a banking license, which is one-third of the 2010 total. While the large banks are generally subject to Western sanctions, many of the smaller institutions remain exempt from them. According to the Council of Europe, the EU has so far imposed transaction bans on 70 Russian banks. The 21st sanctions package, scheduled for July 2026, is expected to include measures against an additional 90 institutions. As of early 2026, a total of 118 Russian banks were on U.S. sanctions lists, according to the online bank T-Bank. However, not all of the listed institutions are among the 301 active commercial banks in Russia.
According to the industry association ARB, which primarily represents small and medium-sized banks, the ten largest banks accounted for 81.35% of all assets at the end of last year, up from 79.7% a year earlier. The 206 banks outside the top 100 at that time accounted for only 1.3% of total assets. Yet even 300 banks are too many for the Russian economy, Vladimir Verkhoshinsky, head of the largest private bank, Alfa-Bank, recently explained. He explained that it is only a matter of time before the “traditional banks” outside the top 20—which have fallen behind technologically—have their licenses revoked or voluntarily shut down.
The Moscow-based rating agency Expert RA expects the number to drop to 270 to 280 banks soon, while the consulting firm Fintech Partners forecasts a maximum of 260 banks by 2030. ARB predicts 250 institutions by then. Fintech Partners estimates that the top 10’s share of total assets could then reach 89%, while that of banks outside the top 100 is likely to fall to 1%.
According to Expert RA, the decline in the number of banks will result less from license revocations than from sales and mergers with larger banking groups. Smaller institutions must offer higher deposit interest rates due to their less well-known brands and smaller retail customer base. At the same time, they are particularly vulnerable to problems in specific industries because their loan portfolios are often concentrated in a few economic sectors and on a few large customers. Added to this are high investment costs for digitalization and IT security. ARB warns that this has already led to a situation where, by the end of 2025, there were no local banks left in 29 Russian regions and only one remaining in 22 others. This article was prepared for the German-Russian Chamber of Foreign Trade.