Ukraine’s Foreign Intelligence Service (SZRU) declared on 5 February that Russia’s banking system has entered a systemic crisis—and the same day, fresh data showed the first concrete signs appearing in the country’s biggest lenders.
The intelligence assessment adds hard numbers to what even Kremlin-linked analysts have previously acknowledged: non-performing loans now exceed 11% of total bank holdings, surpassing the 10% threshold that international standards use to define a systemic banking crisis.
For unsecured loans, the figure hits 12%. Bank profits fell 8% in 2025 to $45 billion, while return on capital dropped to 18%, the SZRU assessed in a public report.
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First top-10 Russian bank turns unprofitable
On the same day as the SZRU assessment, The Moscow Times reported that Credit Bank of Moscow (MKB)—Russia’s seventh-largest by assets and closely tied to the state oil giant Rosneft—became the first top-10 bank to post a loss. MKB lost 9 billion rubles ($117.6 million) in Q4 2025, with December alone accounting for 8.2 billion ($107.2 million).
The deeper story: between January and September, MKB’s overdue loans surged 700%, reaching 668 billion rubles ($8.7 billion)—28% of its entire portfolio. A Central Bank inspection uncovered the problems and triggered a management shakeup, the newspaper reported.
Banks hiding bad loans behind ‘restructured’ debt
Russia’s Central Bank has quietly shifted to manual crisis management. Regulators are allowing banks to disguise non-performing loans as restructured debt, creating an appearance of stability through state-bank dominance and loosened rules, the SZRU assessed.
Banks were underreporting risks from leasing companies and special-purpose vehicles with large asset bases but minimal capital.
A Central Bank consultation paper published the same day confirmed the pattern from another angle: the regulator announced it would overhaul how banking groups consolidate subsidiaries, after finding that banks were underreporting risks from leasing companies and special-purpose vehicles with large asset bases but minimal capital. The changes could cut capital adequacy for some major banks by up to 0.9 percentage points, the Central Bank estimated.
Non-performing loans reached 10.4 trillion rubles ($135.9 billion) in corporate lending and 2.3 trillion rubles ($30.1 billion) in retail lending.
The Kremlin-linked Center for Macroeconomic Analysis and Short-Term Forecasting (CMACP) went further, calling two specific National Wealth Fund injections—300 billion rubles ($3.9 billion) for state banks in June and 82.6 billion ($1.1 billion) for Gazprombank in December—an “emergency recapitalization.” Overall, non-performing loans reached 10.4 trillion rubles ($135.9 billion) in corporate lending and 2.3 trillion rubles ($30.1 billion) in retail lending, Central Bank data showed.
War debt may be the hidden accelerant
The scale of bad debt may be far larger than official figures suggest. Craig Kennedy, a former Morgan Stanley and Bank of America vice chairman who now researches Russia’s economy at Harvard’s Davis Center, has documented how Russia forced banks to extend $210–250 billion in preferential loans to defense contractors since February 2022—many with poor credit—effectively doubling the official defense budget through off-budget debt.
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“By imposing significant amounts of debt on war-related companies that are likely to default over time, it risks overwhelming banks with a wave of toxic debt,” Kennedy wrote, adding that “the longer Moscow puts off a ceasefire, the greater the risk that credit events—such as corporate and bank bailouts—uncontrollably arise.”
Kremlin’s most tempting option would be money printing, which in an increasingly closed economy leads directly to further inflation.
A financial analyst familiar with Russia’s banking sector told Euromaidan Press that the 11% non-performing loan level alone—even setting aside the defense debt question—means the banking system will need additional capitalization.
With the state constrained by a budget deficit and the National Wealth Fund down to $53.4 billion from $185 billion in 2021, the analyst noted that the Kremlin’s most tempting option would be money printing, which in an increasingly closed economy leads directly to further inflation.
For Russia’s adversaries, the banking crisis represents a pressure point. If the Kremlin must choose between recapitalizing banks and sustaining war production, the costs of continuing the war in Ukraine grow harder to conceal from the Russian public.
