Russia's banks head for a record $51bn year as corporate credit losses build

Russia's banks are heading for their biggest profit yet, but the regulator that just raised the profit forecast is also warning about the bad corporate loans sitting behind the upgrade.

The Central Bank of Russia (CBR) lifted its 2026 forecast for banking sector net profit by RUB0.5 trillion ($5.8bn) on September 2, to a range running from RUB3.9 trillion ($45.1bn) to RUB4.4 trillion ($50.9bn), after the sector's net interest margin widened by 0.4 percentage points (pp) quarter-on-quarter (q/q) to 5.5% in 2Q26.

That is the third upgrade of the year. The regulator opened 2026 expecting the sector to earn between RUB3.1 trillion ($35.9bn) and RUB3.6 trillion ($41.6bn), lifted the range twice across the spring and summer to RUB3.4 trillion ($39.3bn) and then to RUB3.9 trillion ($45.1bn). Now the Bank of Russia has  raised it a third time. The top of the new range would beat the RUB3.8 trillion ($43.9bn) the sector earned in 2024, its best year on record, and clear by some way the RUB3.5 trillion ($40.5bn) it managed in 2025.

But the picture is clouded by the strain of sky high borrowing costs. Three years of state-directed lending to war-related industry are beginning to surface as credit losses at exactly the moment the CBR's own easing cycle is handing banks a cheaper funding book. The upgrade measures the second effect. It does not net off the first, which is why the profit number and the provisioning warning arrived in the same document.

Russia had 301 operating banks on August 1 by the CBR's own count - 212 holding a universal licence, 89 a basic one - with assets worth roughly 90% of GDP. The money in that system is made by only a handful of banks. The bulk of Russia's banks are small fry.

The margin the rate cuts built

After the last CBR rate cut to 14% funding costs fell 0.9pp q/q in 2Q26 as short-term retail and corporate deposits repriced, while asset yields declined a more moderate 0.4pp. The gap between those two numbers is the upgrade. Retail lending rates came down only modestly, so the margin the sector earns on the difference widened to 5.5%.

The CBR raised its full-year net interest margin forecast to 4.9%-5.1