Background
The Bank of Russia’s financial stability policy aims to ensure that the level of risks accepted by the financial system is commensurate with its capital and buffers. Only in this case will the financial sector be able to absorb rather than amplify the shocks faced by the economy.
Over the six months from the release of the previous Financial Stability Review, the balance of risks in certain financial market segments was changing diversely. Two vulnerabilities of the financial sector, specifically structural imbalances in the domestic FX market and banks’ interest rate risk, have become less relevant. The situation in the domestic FX market has largely stabilised, with the volatility of the ruble exchange rate in 2025 staying at the minimum levels recorded since 2022. In the conditions of tight monetary policy, banks have proven to effectively manage their interest rate risk. During the period of decreasing interest rates, the banking sector’s margin remains stable.
Amid the negative external environment and a deceleration of the Russian economy’s growth, credit risk is becoming the main vulnerability. Financial standing of a number of highly leveraged companies has been worsening. Export-oriented industries are facing a decline in revenues caused by a contraction in external demand, lower commodity prices (crude oil and coal prices over the period under review were 8% and 32% lower, respectively, than the 2023–2024 averages), and new sanctions imposed by unfriendly countries. The sector of small and medium-sized enterprises has traditionally been the most vulnerable one in the conditions of an economic slowdown. Nevertheless, the majority of enterprises maintain sufficient safety margin. A decrease in interest rates following inflation slowdown will help reduce companies’ interest burden. As for unsecured consumer lending and mortgages, the risks accumulated in these segments during the rapid expansion of the portfolio in 2023 and 2024 H1, have continued to materialise. However, as a result of the macroprudential measures taken to limit households’ debt burden the growth rate of non-performing loans is lower than during the downward phase of the credit cycle over previous periods, and banks have accumulated a significant macroprudential buffer.
Amid rising operating expenses, deteriorating external environment (including due to the tightening sanctions), a reduction in demand in certain industries, and persistent high interest rates in the economy, the corporate sector’s financial performance has continued to go down in 2025 from the record highs of 2023–2024. Thus, as of the end of the first eight months of 2025, companies’ balanced financial results, excluding the financial and insurance sectors, decreased by 13.1% YoY to ₽15.9 trillion. The ratio of financial results of loss-making companies to that of profitable businesses rose by 8 pp YoY over the first eight months of 2025 to 25.4% (the average of the past decade was 16.3%).
As of the end of 2025 H1, the majority of companies remained financially resilient, although the debt metrics of the largest non-financial organisations deteriorated in most industries. The aggregate net debt / EBITDA ratio was up by 0.2 YoY to 1.9, thus hitting a new four‑year high. Nonetheless, major companies whose interest coverage ratio was below 1 (implying serious debt servicing difficulties) accounted for 8% as of 1 July 2025, just like at the beginning of the year (vs 5% in mid-2024). In its baseline scenario assuming monetary policy easing, the Bank of Russia forecasts that companies’ debt burden will decrease in 2026.
Vulnerabilities of the Russian financial sector
Corporate lending was expanding at a balanced pace: after the slowdown in 2025 Q1, its average monthly growth, including banks’ investment in bonds, approximated 1% in April–September 2025. Over the first nine months of the year, credit claims increased by 6.6%. In October 2025, credit claims were up by 2.5% (over the first 10 months of 2025, by 9.2%).
The rise in debt liabilities to the banking sector was primarily accounted for by large companies, part of which are highly leveraged. To reduce the risks of over-indebtedness of highly leveraged large enterprises, the Bank of Russia has applied a macroprudential add-on from 1 April 2025, as a result of which banks have accumulated a macroprudential buffer totalling ₽17 billion. The Bank of Russia decided to raise the add-on to 40% from 1 December 2025 to accumulate the buffer more quickly.
The proportion of corporate loans recognised by banks as non-performing (quality categories IV and V) edged up by 0.2 pp from the beginning of the year to equal 4.0% as of 1 October 2025, which is notably less than in previous years. The situation among small and micro businesses is somewhat worse: since the beginning of 2025, the proportion of companies experiencing difficulties in servicing their debt has risen by 2.0 pp to 9.5%. Large and medium-sized enterprises’ solvency is generally at a satisfactory level, but the percentage of companies in the ‘yellow’ zone, i.e. monitored by banks, in the loan portfolio has increased. If borrowers face problems, banks restructure their debt, but the amount of restructured loans remains steadily low in recent months. Banks have sufficient capital to cover possible losses from corporate loans.
Largest systemically important banks’ loan portfolio (large and medium-sized enterprises), by risk zone
Retail lending was expanding at a moderate pace over the past year, and therefore, households’ debt burden at the macrolevel is at its lowest from late 2018: as of 1 October 2025, households’ debt repayments accounted for 9.4% of their disposable incomes.
The portfolio of unsecured consumer loans shrank by 5.5% over the past 12 months (as of 1 October 2025). However, credit risks in this segment are materialising: the share of non-performing loans increased by 5 pp over the past 12 months to exceed 12.9% as of 1 October 2025. That was predominantly attributed to the maturing of loans issued over the period of overheating in the credit market in 2023–2024. Contrastingly, the percentage of new loans becoming delinquent within a short period after the issue went down, albeit staying elevated (2% of loans granted in July 2025 vs 1% of loans given in July 2023 and 0.9% and 0.5% of cash loans, respectively). As for borrowers with high debt service-to-income ratios (DSTI above 50%), the proportion of delinquent loans is much higher, which stresses the importance of the Bank of Russia’s measures aimed at limiting households’ debt burden. In 2025 Q3, disbursements to borrowers with DSTI above 50% accounted for 19% (vs 28% a year before) of the total amount of issued consumer loans.
Percentage of non-performing loans in unsecured consumer loan portfolio
NPL 30+ after 3 МОВ for issued cash loans, by DSTI range
The macroprudential add-ons made it possible to accumulate a macroprudential capital buffer amounting to 7.1% of the portfolio of unsecured consumer loans, net of loss provisions (as of 1 October 2025). Amid the reduction in outstanding debt and the accumulation of a considerable capital buffer by banks, from 1 September 2025, the Bank of Russia reduced the macroprudential add-ons for new unsecured consumer loans. If revenues generated by banks turn out to be insufficient to cover higher losses or if banks face capital constraints, the Bank of Russia may partially release the macroprudential capital buffer so as to ensure stable lending to the economy.
The situation in the housing market remains stable. Over the first 10 months of the year, the sales of housing under construction in value terms amounted to ₽3.8 trillion, which is comparable with the values of the previous two years when the demand for housing surged (₽3.8–3.9 trillion over the 10 months in 2023 and 2024). The percentage of sold housing under construction across Russia stays acceptable overall, specifically about 32%, which is just 2 pp lower than in 2023–2024. An oversupply is only recorded in certain regions. Developers remain overall profitable, with the majority of housing projects having an acceptable loan life coverage ratio (LLCR): projects with LLCR below 1.15 accounted for 15% as of 1 October 2025.
At the beginning of the year, instalments made up a considerable share in housing sales. The accumulated amount of instalments remains significant, approximating ₽1.4 trillion as of 1 October 2025. In order to prevent risky instalment practices, the Bank of Russia sent recommendations to banks on how to take into account instalment sales when assessing the credit quality of project finance in housing construction. In 2025 Q2–Q3, amid the key rate reduction, mortgage lending started to rebound. As a result, its growth rate from the beginning of the year has reached 5.2%, while the proportion of instalments in the new sales of housing has declined.
The quality of mortgage debt servicing continued to worsen: non-performing loans accounted for 1.7% as of 1 October 2025, compared to 0.9% a year before. That rise was associated with the maturing of mortgages granted for single-family home construction over the period of soaring demand for loans under the large-scale Subsidised Mortgage programme, as well as of mortgages issued at high market rates. Owing to the macroprudential add-ons, banks have accumulated a macroprudential capital buffer for mortgages, which covers potential losses for 1.5% of the portfolio (as of 1 October 2025). From 1 July 2025, the Bank of Russia introduced new macroprudential limits (MPLs) to restrict the issue of the riskiest mortgages, and from 1 October 2025, the regulator established MPLs for mortgages raised for single-family home construction. The Bank of Russia is going to gradually toughen the MPLs in this segment, increasing them to the level established for conventional mortgages. As a result of the application of the MPLs, the accumulation of a substantial macroprudential capital buffer, and the improvement of the mortgage lending standards, the Bank of Russia lowered the macroprudential add-ons for mortgages three times over the course of 2025.
NPL 90+ dynamics in mortgages issued from 2020, by mortgage programme (%)
Assessment of the financial sector’s resilience
Over the period under review, banks’ returns on assets and capital adequacy remained close to the historical averages. As of 1 October 2025, annual returns on assets remained stable at 1.9%, including owing to the growth in banks’ net interest income. Banks’ capital adequacy barely changed as well, equalling 12.9% as of 1 October 2025.
Amid the monetary policy easing, bond yields were declining for the most part of the period under review. As a result, the positive revaluation of banks’ bond portfolio amounted to ₽278 billion, while the accumulated but unrecognised negative revaluation of the ruble portfolio decreased by ₽214 billion. In the future, a balanced structure of the budget and sustainable disinflation will be the key factors mitigating interest rate risks.
The situation with banks’ liquidity improved over the period under review. The scheduled restoration of the requirements for compliance with the liquidity coverage ratio (LCR) from 1 July 2025 has not produced a notable effect on monetary conditions. From 30 October 2025, systemically important banks switched from the Basel III LCR to the national LCR, which enables a more accurate assessment of their liquidity risk.
Most key segments of the market of non-bank financial institutions have maintained positive dynamics in 2025. As of the end of the first nine months of 2025, insurers increased their net profit and capital, while non-governmental pension funds had higher returns on pension resources invested in federal government bonds (OFZs). Conversely, leasing companies faced a decline in their clients’ solvency, as a result of which the lease portfolio contracted and the proportion of troubled assets was up.