Russia's largest state-owned banks are facing a credit crisis and a drop in profits
Russia’s largest state-owned banks are seeing a rapid deterioration in the quality of their loan portfolios and a rise in non-performing loans, and are being forced to build up reserves due to high interest rates, sanctions, and weak economic growth.
The first-half 2026 financial report from Sber, Russia’s largest bank, showed an increase in the share of Stage 3 non-performing loans from 4.8% to 5.5%. With a loan portfolio totaling $658.7 billion, this corresponds to approximately $36.3 billion in non-performing loans.
Provisions for potential losses increased by 8.6%, while defaulted loans in project financing rose by 27.9%, in the corporate segment by 22.6%, and past-due debt in the mortgage portfolio by nearly 50%.
Sberbank CEO Herman Gref acknowledged that the bank’s credit committee is focusing more on debt restructuring than on issuing new loans. His deputy, Taras Skvortsov, lowered the forecast for Russia’s GDP growth in 2026 to 0–0.5% and warned of a possible tax increase in 2027, while also noting rising risks surrounding the “Wildberries” marketplace.
VTB, Russia’s second-largest state-owned bank, which holds about 8 trillion rubles in retail deposits, announced a 10% reduction in its head office staff. Its profit for the first half of the year fell by 20%, and in the second quarter, by 34%. Over the quarter, the bank increased its provisions for non-performing loans by nearly a third—to 66.5 billion rubles—while the share of non-performing loans in its portfolio rose to 14.2% by the end of 2025.
Analysts at the Foreign Intelligence Service of Ukraine note that the situation at both state-owned banks indicates a common trend of deteriorating asset quality, which carries the risk of new defaults and further downsizing in the financial sector.
Source: UNN.
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