The heads of some of Russia's largest banks have discussed the possibility of seeking financial assistance from the Russian government if the level of non-performing loans on their balance sheets continues to deteriorate over the next year.

Source : Bloomberg, citing its sources

Details : According to current and former officials and documents analysed by Bloomberg, at least three banks designated by the Bank of Russia as systemically important are considering the possibility of recapitalisation over the next 12 months.

This scenario arises because their assessment of the quality of their loan portfolios is much worse than official data shows, according to information from these individuals and documents.

Any request for financial assistance will depend on the further growth of non-performing loans over the next year. However, they noted that discussions on this issue are becoming increasingly relevant in the banking industry.

On paper, the banking system is in relatively good shape, with solid profits even amid the growth of so-called non-performing loans to companies and households, while the central bank's interest rate is at a near-record high of 20%.

Officially, the level of non-performing debt remains significantly lower than that recorded during previous financial crises and was neutralised by the Russian authorities.

However, leading bankers have begun to sound the alarm about the prospects for next year. "It is already clear that it will not be easy," said Herman Gref, chief executive officer of state-owned Sberbank, Russia’s largest lender.

The quality of the loan portfolio is deteriorating, and companies are increasingly in need of debt restructuring.

At VTB, Russia's second-largest lender, the share of non-performing loans to individuals in the retail portfolio reached 5% in May. This figure has risen by 1.2 percentage points since the beginning of the year. The share of problem loans could reach 6-7% by 2026.

Support Ukrainska Pravda on Patreon !