Russian Banks Anticipate Mass Defaults on SME Loans

Russian banks have begun preparing for defaults on loans issued to small and medium-sized enterprises (SMEs). 63% of banking risk managers expect the situation to worsen in the near future. A survey by B1, which involved 39 banks, showed that 75% of respondents consider tax increases to be a key factor negatively affecting the quality of the SME loan portfolio. 72% noted the high key interest rate, 53% cited excessive debt burdens on companies, and 50% mentioned a severe lack of working capital. Starting January 1, 2026, the Russian government raised the VAT rate from 20% to 22%, and the income threshold for exempting businesses from VAT under the simplified tax system was reduced from 60 million rubles to 20 million rubles. The reduced rate of 15% for most enterprises has been abolished. Against this backdrop, 76% of banks are revising their lending and borrower quality monitoring procedures, while 60% are changing their approaches to dealing with overdue debts. According to the agency 'National Credit Ratings', as of May 1, 2026, one in six SMEs had overdue debts on loans. The Central Bank does not see a systemic threat to the banking sector.

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