A constant deterioration of income of lending, treats the 2nd largest bank Russia is VTB Bank, which feeds concerns about its stability in the midst of the economic pressure exerted by Vladimir Putin’s President’s war against Ukraine.
Russian bank’s net interest revenue decreased by 49% to 146.8 billion rubles ($ 1.9 billion) during the six months to June compared to the previous year, according to the presentation of the results of July 31, the latest reduction for its basic credit activities.
Such a fall is rare among comparable lenders worldwide, and bank executives say that data do not reflect the true seriousness of the situation, according to sources in the debate of private issues.
The decline in loan revenue highlights the challenges facing the Russian economy, as Putin and US President Donald Trump are preparing for a summit in Alaska this week, with the aim of reaching an agreement to end the war.
The White House increases the pressure on the Kremlin, with the latest moves including doubling duties in India as a penalty for Russian oil markets.
Net interest revenue is the difference between the interests a bank earns from the loans and the interest it pays for the deposits. At a time when Russia’s official reference rate reached a high level of 21%the reduction highlights the challenges facing the bank’s loan portfolio.
According to the results, the bank continued to record net profits of 280 billion rubles during that period. This is due, according to the data, a factor that may not provide reliable returns in the long run.
VTB reported that net interest income declined because interest rates from 7.5% to 21% was “so important and so prolonged that it essentially affected net interest income”.
Bloomberg said in June that bank officials were seeing a credible risk of systemic crisis over the next 12 months, as lenders were increasingly worried about the level of precarious debts in their balance sheets. Asked about these fears, as Russia’s central bank reduced interest rates to 18% last monthCommander Elvira Nabiullina insisted that “there is no reason to worry”.
Russian government has been largely based on banksespecially in states such as VTB, to finance the war. Moscow has forced lenders to grant privileged loans to businesses linked to the military-industrial sectormany of which are difficult to record in public statistics due to the restrictions on the publication of data on war -related costs.
The huge increase in government spending on war and the support measures affected by international sanctions triggered inflation in Russia and prompted the central bank to raise interest rates on the 21% record to cool the economy. With the increase in interest rates, banks have seen a sharp increase in non -payment and loan restructuring.