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Russian banks earned 3.7 trillion rubles in the first nine months of the year, putting them on course for potentially record annual profits. But The Bell, citing Central Bank data, reports that corporate non-performing loans without reserves or collateral rose to 7.2 trillion rubles, while regulators allow banks to hold insufficient reserves against some troubled loans. The eventual scale and timing of losses remain uncertain.
Russian banks earned 3.7 trillion rubles in the first nine months of the year, matching their profit for all of the previous year, even as the value of corporate non-performing loans without reserves or collateral climbed to 7.2 trillion rubles, according to a report by The Bell citing Central Bank data. The figures point to a gap between current reported earnings and potential future credit losses, though the report does not establish how much banks will ultimately lose or when those losses will be recognized.
The Central Bank figures cited by The Bell put banks’ first-nine-month earnings at 3.7 trillion rubles, or about $46 billion. That equaled the sector’s total profit for the whole preceding year. The report said full-year earnings could set a record, but that remains a possibility rather than a confirmed outcome.
At the same time, the amount of non-performing corporate loans for which banks held neither reserves nor collateral rose from 6.1 trillion to 7.2 trillion rubles over roughly one month, the report said. It gave the dollar equivalents as about $75 billion and $90 billion, respectively. The 7.2 trillion rubles represented around 70% of the sector’s capital buffer—funds held above the regulatory minimum.
The Bell says the Central Bank is allowing lenders to set aside less than the full amount of reserves for about half of troubled loans. That treatment can delay the effect of expected credit losses on reported results: banks may record stronger profits before recognizing losses or adding funds to cover them. The supplied report does not provide a breakdown by bank or loan, or quantify the total reserves that would be required under different assumptions.
Profits May Precede Credit Losses
The figures matter because reported profits do not by themselves show the full condition of loan books. If borrowers cannot repay, banks may eventually need to recognize losses and set aside more money, reducing earnings or weakening capital. The current gap between uncovered troubled loans and reserves therefore bears on how resilient lenders may be if defaults increase.
The comparison with the capital buffer gives the reported loan figure added relevance: The Bell says uncovered, unsecured non-performing corporate loans amount to about 70% of capital held above regulatory minimums. That is not a forecast that banks will lose an equivalent share of capital. It is a measure of scale, and the eventual loss depends on recoveries, collateral values, borrower performance and future provisioning.
For customers, businesses and policymakers, the distinction between current earnings and eventual credit costs can affect assessments of bank strength and lending capacity. The report does not say that any particular bank is insolvent or unable to meet obligations. It describes a sector-wide risk that may become clearer as loans are reclassified, repaid, restructured or written down.
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How Earnings and Loan Risks Diverge
The report presents record-level earnings and rising bad debt as concurrent developments, not contradictory ones. Profit figures reflect income and costs recognized during the reporting period. Loan losses can be recorded later, particularly when borrowers’ repayment problems have not yet led to full provisioning or write-offs.
In the account provided by The Bell, the Central Bank’s approach to reserves is central to that timing. The regulator is said to permit banks to under-provision for about half of troubled loans. The report does not include the specific rules, loan categories or regulatory statements behind that description, so the precise scope of the allowance cannot be independently assessed from the supplied material.
The source also distinguishes the larger category of troubled loans from the narrower figure of corporate non-performing loans with neither reserves nor collateral. The 7.2 trillion-ruble amount refers to that narrower category, not necessarily all bad loans in the banking system. No further detail is supplied about consumer lending, individual institutions or the broader quality of banks’ assets.
““The proportion of bad debt is increasing.””
— The Bell
Unclear Scale and Timing of Losses
The available material does not show how much of the 7.2 trillion rubles will ultimately be lost. A loan classified as non-performing may still generate partial repayment or recoveries, and the report provides no recovery estimates, bank-by-bank exposures or details of guarantees and restructuring arrangements. The absence of reserves and collateral in the cited category leaves those loans exposed, but does not establish that every ruble will become a loss.
It is also unclear when banks might have to recognize additional losses or whether the Central Bank will change its provisioning approach. The supplied source does not state the publication date, identify the exact calendar year for the figures, or include a response from the regulator or banks. The potential full-year record profit remains a projection in the report, not a final result.
Watch Provisions and Year-End Results
The next indications will come from subsequent Central Bank data on loan quality, reserves and bank capital, alongside lenders’ year-end earnings reports. Those figures could show whether the increase in uncovered non-performing corporate loans continued and whether banks added provisions against them.
Any assessment will depend on more than headline profit: readers will need to distinguish loans that are overdue or non-performing from amounts ultimately written off, and compare provisions with the risks banks disclose. The supplied report does not give a date for the next release or describe a specific regulatory decision expected next.
Key Questions
How much did Russian banks earn in the first nine months?
They earned 3.7 trillion rubles, about $46 billion, according to Central Bank data cited by The Bell. That matched the sector’s profit for the entire preceding year.
What does the 7.2 trillion-ruble figure cover?
It refers to non-performing corporate loans for which banks held neither reserves nor collateral, as described in The Bell’s account of Central Bank data. It is not stated to represent all troubled loans or a confirmed final loss.
Does the loan figure mean banks will lose 7.2 trillion rubles?
No. The report gives the value of a category of loans, not an estimate of eventual losses. Recoveries, repayments and restructuring could affect how much is ultimately lost, and the supplied material does not quantify those outcomes.
Why can profits rise while bad loans increase?
Profits record income and costs recognized during a period, while losses on troubled loans may be recognized later. The Bell says the Central Bank allows banks to hold less than full reserves against about half of troubled loans, which can defer some of the effect on reported earnings.
Source: en.thebell.io
