Russian banks posted sharply lower monthly profits in August as higher loan-loss provisions and weaker interest income weighed on earnings, the Central Bank of Russia said on September 23, according to TASS. (chart)

The sector earned RUB203bn ($2.4bn) in August, down from RUB397bn ($4.7bn) in July. “The sector’s profit (excluding dividends from Russian subsidiary banks) amounted to RUB203bn, which is significantly lower than RUB397bn in July,” the regulator said.

Year-to-date profits stood at RUB2.3tn ($27bn), slightly below the RUB2.4tn reported for the same period in 2024.

The Central Bank attributed the contraction to increased provisions and weaker margins. Reserves for corporate loans rose by RUB67bn in August, while net interest income fell by RUB36bn. The decline was concentrated in the corporate segment, where floating-rate loans account for around 65% of the portfolio, the regulator said.

Despite the monthly decline, Russian banks remain profitable overall, having weathered sanctions and tighter monetary conditions since the war in Ukraine began. However, the Central Bank’s data underline the mounting pressures from rising reserve requirements and a cooling loan market.

The result in August means Russia’s banking sector  profitability is rising but the cumulative totals are tracking slightly below the results in 2023 and 2024 when the economy grew strongly in both years at a rate of 4.3%. This year, the economy is experiencing a sharp slowdown.