Liquidity Crisis in the rf: VTB’s Net Income Declined by 49 %

In the first half of 2025, the rf’s state-owned bank VTB recorded a 49 % decrease in net interest income to $1.84 billion, while the central bank’s key rate of 18 % increased the cost of resources, reduced demand for loans, and increased provisions for losses by 43 % to $1.23 billion.

Priority lending to the defense industry at preferential rates (3–7 % and lower) widens the gap between the market value of funds and the profitability of such loans. Meanwhile, the outflow of deposits has accelerated: people are withdrawing their savings, switching to short-term deposits, and actively buying cash currency (demand rose by 50 % in July–August) – all because of new laws on payment monitoring and internet outages in the regions.

To maintain liquidity, the government placed $3.68 billion from the National Wealth Fund in VTB in the form of long-term deposits with low priority for repayment. Against the background of budget problems, the kremlin is discussing freezing of household deposits worth about $760 billion, after russians withdrew more than $6.3 billion in two months.

Under the pressure from profits, VTB is selling non-core assets, including a hotel in Sochi for $126 million. The decline in revenues at systemic banks indicates a deepening crisis in the rf’s financial system and a likely further increase in reserves for losses.