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Russia’s banking sector remains resilient overall — regulator

Despite a slight decline in interest margin, profitability of banks’ assets remained close to 1.9%

MOSCOW, May 28. /TASS/. Russia’s banking sector remains resilient overall, according to the Central Bank’s Financial Stability Review.

"The banking sector remains resilient overall. Despite a slight decline in the interest margin, returns on banks’ assets stayed close to 1.9%, owing to the positive revaluation of securities, increased operating earnings, and the reserves remaining at the previous year’s level. Banks’ capital adequacy ratio recovered to the historical averages (13% as of April 1, 2025 vs the average of 12.7% recorded since 2014) as a result of stable returns and a slower expansion of the loan portfolio," the Bank of Russia said.

The capital buffer increased from 4.5 percentage points to 4.7 percentage points of the capital adequacy ratio N1.0, including the requirements to comply with the add-ons, and from 5.2 percentage points to 5.6 percentage points taking into account the accumulated macroprudential buffer. Dividend payments by banks will put pressure on capital adequacy, the regulator warned. In particular, the simultaneous effect of the largest dividend payments from 2020 to 2024 approximated -0.5 percentage point of the banking sector’s N1.0.

The scheduled increase in the rate of the countercyclical capital buffer to 0.5 percentage point from July 1, 2025 will contribute to supporting banks’ resilience, and will not have a considerable effect on banks’ lending potential, the Central Bank said.