Philipp Gabunia’s speech at Financial Stability Review 2025 Q4 – 2026 Q1 press conference

As a reminder, the previous Review highlighted three key vulnerabilities: credit risk in the corporate sector, household debt burden and project finance risks. All three remain relevant.

Let me begin with corporate credit risks. Monitoring the financial condition of the corporate sector is especially important when economic growth is slowing. According to Rosstat, corporate profits (excluding financial institutions) edged down last year. The main driver was the fall in prices and demand in the global hydrocarbons market. Rising costs and high interest rates also played a role, though to a lesser extent.

As a result, the debt burden of the largest companies has increased slightly. The net debt/EBITDA ratio rose by 0.4 over the year to 2.2. This is historically low and comfortable. We naturally look beyond the average, however, and focus on how the debt burden is distributed across firms. Notably, the share of companies whose operating profit falls short of servicing their debt has barely grown and stands at 9%. The majority of firms remain creditworthy.

The share of non-performing corporate loans has hovered around 4% of the loan portfolio for the past year and a half. For large companies, this measure has even declined slightly since the start of 2025, from 3.3% to 3.1%. This is partly attributable to restructuring. Still, there are cases where banks artificially understate provisions. We have extended our recommendation to banks until 1 July this year. It encourages them to restructure loans for borrowers facing temporary difficulties but with the potential to restore their financial soundness. At the same time, where a borrower’s problems are chronic, we expect banks to increase their loan loss provisioning. In addition, from 1 March, we raised the macroprudential add-on for loans to large companies with a high debt burden. All these measures will help guard against rising corporate credit risks through additional capital and reserves.

The picture is more challenging among small and medium-sized enterprises. Here, the share of non-performing loans rose from 5.9% at the beginning of 2025 to 7.6% as of 1 April this year. Still, the aggregate amount of problem debt is small and does not pose systemic risks. Banks are also accommodating entrepreneurs by restructuring their loans.

The decline in profits across the economy picked up in the first quarter. This was linked to the fall in oil prices in early 2026 and the slowdown in domestic demand. Against the backdrop of the Middle East situation, however, prices for many of our export commodities have started to rise. We can therefore expect higher revenues in a number of sectors. Moreover, the economy will be supported by monetary policy easing. More than two-thirds of our corporate loans are extended at floating rates. That means interest expenses fall automatically as the key rate is reduced. The rate has already come down by 6.5 percentage points from its peak. We therefore expect most companies to remain financially sound.

Turning now to project finance and mortgage risks. Our assessment is that the construction sector remains resilient. The area of housing sold rose by 8% in January–April. The share of sold units in projects under construction is fairly healthy nationwide, over 30%, though certain regions are showing signs of oversupply.

Most construction companies remain profitable. Financial statements show that the largest developers maintained their sales margins last year at the level of previous years. The situation is more difficult for companies that have racked up a high debt burden. That said, the escrow account mechanism protects citizens’ funds: in a worst-case scenario, money is returned to equity holders. At the same time, the banks financing these projects are no less interested than citizens in seeing construction completed. Banks are ready to accommodate developers where needed, simply because halting a project is the least attractive strategy. If necessary, banks can finish projects themselves or hand them over to other developers. Such cases have occurred. Overall, the share of non-performing loans in project finance is just over 1% – very low indeed.

The share of problem mortgage loans has edged up over the past six months, reaching 1.8% as of 1 April. Loans issued last year are being serviced far better than those issued two years ago, when the market was overheated. The rise in mortgage arrears in recent years has been driven largely by loans for private house construction. The share of such loans with payments more than 90 days overdue stands at 4.6% – five times higher than for loans to buy new apartments. To contain these risks, from 1 October last year, we set limits on issuing such loans to highly indebted borrowers. We are also working to ensure that the elevated risk of individual housing construction loans extended without escrow accounts is captured in provisioning.

In the previous Review, we flagged the risks posed by instalment plans in the housing market. We can now say that the situation with instalment sales has stabilised. Households’ debt to developers has held close to 1.5 trillion rubles since the middle of last year. Nevertheless, we are planning some changes to guard against future risks. Banks setting provisions for housing project finance will be required to assess the risks linked to instalment plans. At the same time, we expect instalment plans to fade into the background as market mortgage rates come down.

Let me now turn to retail lending, where the high level of household debt burden has been a concern.

We are now seeing households’ debt burden from loans decline, helped by rising incomes and moderate debt growth. As with mortgages, new unsecured consumer loans are falling into arrears far less frequently than those issued two to three years ago. The share of non-performing loans in this segment has risen only marginally over the past six months and stands at around 13% of the portfolio. However, had we not taken steps to restrict lending to highly indebted borrowers, this share would be considerably higher. We have also incentivised banks to build up capital buffers that insure them against losses on non-performing retail loans.

Summing up, the vulnerabilities in the financial sector are not critical. Banks’ capital adequacy reached almost 14% as of 1 April 2026, a level last seen three years ago, just before the credit boom that eroded the ratio substantially.

To conclude, I would like to say a few words about the potential risks we see stemming from the situation in global markets and the Middle East.

First, there is a risk of accelerating global inflation. Disruptions in trade chains and rising prices in global commodity markets are fuelling inflationary pressures across the world. The situation is most acute in emerging market economies and energy-importing countries. This could feed into Russian inflation and affect the trajectory of monetary policy.

Second, should the situation in the Middle East become protracted, we cannot rule out volatility in foreign financial markets and a slowdown in the global economy. How might these risks affect our country? Russia’s linkages with foreign financial markets are now much weaker, but foreign trade still matters greatly. Should the global economy slow, demand for our exports could fall.

Higher global oil and gas prices therefore allow exporters to increase their revenues. But the longer geopolitical tensions persist, the more likely negative consequences become. Long-term sustainability requires a balanced fiscal policy and prudent corporate behaviour. For our part, we will continue to ensure that the financial sector remains resilient and supports the economy.

Thank you for your attention.