Russian banks are preparing for massive loan defaults as people and firms struggle to pay back their debts. Consumers and businesses have been hit by spiralling inflation and high interest rates.
With inflation persistently hovering at around 9%, Russia’s Central Bank has been forced to hike interest rates to a two-decade high. Last autumn, the rate climbed to 21% before bank officials cut it by 1% in June this year. However, this has provided little relief to beleaguered Russian firms with high exposure to bank loans, as well as consumers.
A new report issued by the Foreign Intelligence Service of Ukraine predicts a huge wave of loan defaults beginning at the end of 2025 and into the beginning of next year.
Data shows that the total amount of overdue debt has already risen to 1.5 trillion roubles (roughly £14.2bn)—a record high in the last six years. One of Russia’s largest banks, VTB, found that the share of problematic loans has reached 5% and could rise to 7% next year.
Meanwhile, Sberbank CEO German Gref acknowledged that the situation in 2026 will be difficult during a recent shareholder meeting.
Russia’s banking system is facing further worrying signs of a loss of confidence in the country’s general economy and financial outlook. Investors have started withdrawing money from short-term investments as they brace for more turbulence.
For the first time this year, more money is flowing into bonds rather than savings funds — over US$2.5 billion (£1.9bn) have already been moved.
Furthermore, there has been a sharp increase in fraud, as scammers target people struggling to pay back loans. Payment issues are affecting both individual clients and companies, increasing the risk of a banking crisis.
Putin’s regime has tried to shrug off suggestions of an economic crisis in the country, pointing to GDP growth of 4.3% in 2024.
However, analysts at the Stockholm Institute of Transition Economics (SITE) dismissed this figure as fake news. SITE said that Russian authorities were significantly underreporting the inflation rate to conceal the real state of the economy.