Western Sanctions Are Destroying russia’s Banking Sector
3/29/2025
Although russian authorities claim that the decline in the total profit of the rf’s banks is due to the growth of the main costs in securities and foreign exchange transactions, the real reason is the impact of Western sanctions on the economy of the rf.
The number of loss-making banks in russia has increased by 75 institutions. The banking sector’s net profit has dropped to USD 2.5 billion against USD 3.4 billion in January.
The corporate portfolio of banks has increased by 0.1 % not thanks to business, but due to government spending, which amounted to USD 94.8 billion in January-February.
The share of non-performing loans in the retail portfolio has increased to 5%, unsecured consumer loans issued at high rates having been the largest share of NPLs.
Given the expectation that the key policy rate will remain at 21%, the stagnation of russia’s banking sector will definitely be affected by external factors, such as the escalation of the russian-Ukrainian war, deterioration of the geopolitical situation, and the increased sanctions pressure.
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