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Russian banks earned 3.7 trillion rubles in the first nine months of the year, matching their profit for all of the previous year, according to Central Bank data cited by The Bell. At the same time, The Bell says the value of non-performing corporate loans without reserves or collateral rose to 7.2 trillion rubles, raising questions about how much of the reported profit may later be offset by losses.
Russian banks made 3.7 trillion rubles in profit in the first nine months of the year, matching the sector’s earnings for all of the previous year, even as a measure of troubled corporate lending rose to 7.2 trillion rubles, The Bell reported, citing Central Bank data. The figures point to a gap between strong reported earnings and growing credit risks, though the available data do not establish how much of the loans will ultimately be lost.
The Central Bank data cited by The Bell put the amount of non-performing corporate loans with neither reserves nor collateral at 7.2 trillion rubles, up from 6.1 trillion rubles over the preceding month. The report gave dollar equivalents of about $90 billion and $75 billion, respectively. It said the 7.2 trillion-ruble amount equaled roughly 70% of the banking sector’s capital buffer—funds held above the regulatory minimum.
The Bell also reported that banks could finish the year with a record total profit, but presented that as a possibility rather than a final result. It argued that weak provisioning can allow lenders to book earnings before they recognize anticipated losses or set aside funds against them. The report’s central warning is that the reported profit may not fully reflect the eventual cost of loans that fail to perform.
The figures describe different things: profit is an earnings measure, while the 7.2 trillion rubles refers to a specific category of corporate loans. Their coexistence does not by itself show that all those loans will default or that banks will lose the full amount. The Bell’s account says the Central Bank is allowing banks to hold insufficient reserves against about half of troubled loans, but the supplied report excerpt does not give a detailed breakdown of that estimate or the relevant regulatory calculations.
How Loan Risks Could Affect Earnings
The contrast matters because bank profits can influence views of the sector’s resilience, while unreserved troubled loans may leave lenders exposed to later write-downs. If borrowers do not repay, banks may need to recognize losses and add provisions, reducing earnings and potentially narrowing capital buffers. The size and timing of any effect would depend on recoveries, collateral, future loan performance and the reserves banks already hold.
The reported comparison with the capital buffer offers a measure of scale, not a prediction of imminent insolvency. The 7.2 trillion-ruble loan figure is about 70% of capital held above regulatory minima, according to The Bell; it is not a claim that this sum will be lost or deducted from capital in full. For customers, businesses and policymakers, the issue is whether headline earnings reflect durable repayment capacity or partly defer recognition of credit costs.
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The Gap Between Earnings and Provisions
The Bell’s report juxtaposes two indicators from the same broad period: nine-month bank profits and a monthly change in a subset of non-performing corporate loans. The first reached 3.7 trillion rubles, equal to the prior full-year total, according to Central Bank figures cited by the outlet. The second rose by 1.1 trillion rubles, from 6.1 trillion to 7.2 trillion rubles, in the month described by the report.
Loan provisions are funds set aside to cover expected credit losses. When a loan deteriorates, the amount and timing of provisioning affect when its risk appears in a bank’s accounts. The Bell’s argument is that lenient reserve requirements can postpone some of that accounting impact, allowing profits to look stronger in the short term. The excerpt does not provide individual bank figures, a full timeline, or the Central Bank’s explanation for its reserve treatment, so the claim should be read as the outlet’s assessment of the data rather than a complete account of the regulator’s position.
““Record profits and growing levels of bad debt are two sides of the same coin.””
— The Bell
How Much Credit Will Be Lost?
The figures do not show how much of the 7.2 trillion rubles will ultimately be recovered, restructured or written off. Nor does the supplied report specify which banks hold the loans, how concentrated the exposure is, or how long the debts have been classified as non-performing. The measure covers corporate loans lacking both reserves and collateral, not every bad loan in the sector.
The source also does not identify the calendar year for the first-nine-month period or the month-to-month comparison. Its claim that banks are allowed to under-provision about half of troubled loans is not accompanied in the provided material by the underlying calculation or a response from the Central Bank. A possible record profit for the year remains a forecast in the report, not a confirmed full-year result. It is unclear when, or to what extent, any deferred credit losses might appear in bank accounts.
Full-Year Results and Loan Updates
The next indicators to watch are banks’ full-year earnings, subsequent Central Bank data on non-performing corporate loans and any changes in provisioning or capital measures. Those releases could show whether the nine-month profit pace continued and whether the category of loans highlighted by The Bell grew, stabilized or declined.
More detail from the regulator or individual lenders would be needed to establish the distribution of the exposure and likely recovery rates. Until then, the report supports a warning about a potential mismatch between reported profits and recognized credit risk, but not a precise estimate of future losses or a conclusion that the sector’s capital is insufficient.
Key Questions
How much did Russian banks earn in the first nine months?
They made 3.7 trillion rubles, according to Central Bank data cited by The Bell. The outlet said this matched the sector’s total profit for the previous full year.
What does the 7.2 trillion-ruble loan figure measure?
It is the amount of non-performing corporate loans with neither reserves nor collateral identified in The Bell’s account of Central Bank data. It does not mean that the full amount will be lost.
Why could reported profits later fall?
If troubled borrowers fail to repay, banks may have to recognize losses and set aside additional provisions. The Bell argues that limited provisioning can delay some of those costs; the eventual effect is not established by the figures provided.
Does the report show that Russian banks are insolvent?
No. The report compares the loan amount with the sector’s capital buffer, but does not say the loans will all be lost or show that banks cannot meet regulatory requirements. The data raise questions about credit risk and accounting timing, not a confirmed insolvency finding.
Source: en.thebell.io
