Russian banks report record profits amid rising non-performing loans

Russian banks have reported record profits totaling 3.7 trillion rubles (approximately 46 billion USD) in the first nine months of the year, matching the total profit for the entire previous year. However, analysts suggest these gains may be precarious due to a significant increase in non-performing loans.

Reports indicate that the Central Bank of Russia may be allowing banks to maintain insufficient risk provisions. Specifically, it is estimated that banks are not forming adequate reserves for roughly half of their problematic loans. This practice allows institutions to report high profits by delaying the recognition of expected losses on their balance sheets.

The volume of non-performing loans lacking sufficient provisions or collateral rose from 6.1 trillion to 7.2 trillion rubles (approximately 90 billion USD) within a single month. This figure represents about 70% of the banking sector's total capital buffer, which includes funds held above the regulatory minimum.