The Credit Bank of Moscow, a financial institution with strong ties to the oil giant Rosneft, has recently reported a rare net loss, marking a significant turning point in Russia's banking landscape. This development underscores the mounting financial pressures within the country's banking sector, particularly concerning the surge in bad loans. The bank, which holds around 700 billion rubles ($9.1 billion) in household deposits, reported a net loss of 9 billion rubles ($117 million) in the fourth quarter of 2025, with the majority of the losses incurred in December. Despite this setback, the bank remained profitable for the year, though net profit declined by one-third compared to 2024. The issues at Credit Bank of Moscow began to surface in the middle of the year, with the volume of overdue loans on its balance sheet surging by 700% to 668 billion rubles ($8.7 billion) by September. This figure represents 28% of its loan portfolio. A Central Bank audit revealed problems at the bank, leading to a change in senior management. While the banking sector as a whole ended the year in profit, earning 3.5 trillion rubles ($45.5 billion), this was a decrease of 300 billion rubles ($3.9 billion) from 2024 due to rising credit losses. The crisis is unfolding in a "latent form," as banks restructure troubled loans and the state dominates the financial system. The situation has effectively triggered a banking crisis in Russia, according to experts, with payment defaults affecting defense manufacturers, metals producers, construction firms, and even oil and gas companies. The Credit Bank of Moscow's story is a stark reminder of the challenges facing Russia's banking sector, and it invites further discussion on the impact of bad loans and the role of state-owned banks in the financial system.
