Russia’s Corporate Finances Deteriorate as Interest Rates Soar

Introduction to the Crisis

Russia’s corporate finances — including those of some of the country’s largest businesses — are deteriorating rapidly as high interest rates and a slowing economy squeeze profits, the Central Bank of Russia said. The regulator reported that companies responsible for 67% of the 43.7 trillion rubles in liabilities held by Russia’s biggest firms may face difficulties servicing their debt.

Assessment of the Debt Problem

The bank analyzed 89 of Russia’s largest companies that report under international standards. They account for 44% of total debt in the non‑financial sector, with combined revenue of 78 trillion rubles over the past year — equal to 39% of Russia’s GDP. The central bank assessed the scale of the debt problem by comparing EBITDA with interest expenses. A ratio below 1 signals a critical situation: the company does not earn enough to cover interest payments and cannot reliably service its obligations.

Companies in the Risk Zone

The bank identified 34 such companies, which together hold more than half — 58.5% — of the debt in the sample. Another 8.1% of liabilities belong to firms with a critical ratio. In total, exactly two-thirds of the sample’s debt is now concentrated among companies with a ratio below 3. At the end of 2024, that share was 1.5 times smaller at 42%.

Overall Debt and Problematic Loans

Overall debt owed by Russian businesses to banks reached 101.3 trillion rubles as of late October, including 95.1 trillion rubles in loans. At the start of the month, the central bank classified 10.4 trillion rubles — or 11.4% of the portfolio — as problematic. To assess how much more debt could become distressed, the regulator modeled a scenario in which EBITDA falls 20% next year and the average key rate remains at 14%, as projected in its baseline forecast.

Sectors with Significant Difficulties

The Central Bank of Russia noted “significant difficulties with debt servicing” among some companies in retail, real estate development, IT, precious metals, machine building, light industry, and the coal sector. To limit risks posed by large distressed borrowers, the bank tightened lending conditions this year for major companies with high debt loads.

Recent Developments and Reactions

Earlier, it was reported that former deputy head of Ukraine’s National Bank, Kateryna Rozhkova — who recently stepped down — offered an assessment of Central Bank of Russia chief Elvira Nabiullina’s actions. In August 2025, the Russian central bank stopped publishing ruble exchange-rate forecasts. On Nov. 27, 2025, it emerged that the Central Bank of Russia had begun selling off part of its strategic gold reserves.

Conclusion

The situation with Russia’s corporate finances is dire, with many large companies facing significant difficulties in servicing their debt. The Central Bank of Russia has taken steps to limit risks, but the outlook remains uncertain. As the Russian economy continues to slow down, it is likely that more companies will struggle to pay their debts, leading to a further increase in problematic loans. The bank’s decision to sell off part of its strategic gold reserves may be a sign of the severity of the situation.

Follow us on Twitter, Facebook and Google News