Remarks by Elvira Nabiullina at the Meeting of the Association of Banks of Russia

Good afternoon, dear colleagues!

I am pleased to welcome you all to our traditional meeting. As always, I will begin with the general situation as we see it in the banking sector and our forecasts for how it will develop.

The banking sector came through 2025 with, one might say, good results. Credit growth proceeded at a more balanced pace, and this led to a decline in inflation — which we are seeing — while not depriving the economy of the financial resources it needs for development. This year we expect balanced growth to continue: our current forecast for corporate lending is in the range of 7–12%, and for mortgage lending, 6–11%. We also expect unsecured consumer lending to return to growth, which we estimate at somewhere in the range of 4–9%, driven by falling interest rates and reduced debt burdens.

Bank profits — Anatoly Gennадьевич [Aksakov, Chairman of the Association of Banks of Russia] cited the figures — a significant portion went toward capitalization, but profits declined somewhat compared to the previous year as banks recognized credit losses. Nevertheless, these profits are what allows banks to maintain capital, support credit growth, and rebuild capital buffers.

This year we expect profits — though it is still early in the year — to come in at roughly the same level as last year, in the range of 3.3 to 3.8 trillion rubles. Some banks and analysts are more optimistic in their forecasts, expecting lower provisioning charges, but we remain more cautious in our assessments for now. If results come in better — that is good; banks will build an additional capital cushion.

Now let me turn to the key priorities that Anatoly Gennадьевич highlighted. Strengthening the capital base, getting ahead of credit risks, and working through emerging problem debt — all of these priorities remain relevant for this year as well.

I will start with strengthening the capital base. This is a critically important task, and we can see that banks are managing it. The moderation in credit growth allowed banks to build up capital buffers in 2025. For the first time since 2022, capital adequacy showed an increase: over the past year it rose by 0.7 percentage points to 13.2%. The capital buffer above regulatory minimums now stands at approximately 9 trillion rubles — a solid cushion for stress scenarios.

All banks met the increase in capital surcharges that took effect at the start of this year. Under the previously established schedule, there will be two further steps toward target surcharge levels over the next two years. It should be said that most banks are already meeting those targets ahead of schedule, so for them this is simply a matter of maintaining their existing capital buffer. Some banks, however, will need to make an effort to catch up with the rest.

I would emphasize that, in our assessment, banks can meet this schedule while maintaining balanced credit growth. We monitor the situation closely and regularly assess the economy's credit capacity, including in light of all our regulatory plans, so as to avoid any risk of a credit squeeze.

Once baseline capital surcharges have been restored, we plan to begin setting differentiated capital surcharges for systemically important banks [the largest banks designated as critical to financial stability], tentatively from 2028. I am aware that many banks would prefer to postpone this to a later date — to 2030 — citing ongoing sanctions pressure and the need to recognize losses on frozen assets. But we are convinced that the introduction of differentiated surcharges — which we have discussed at length over a long period — is necessary to prevent systemic risks posed by the largest players. At the same time, we do not intend to introduce the differentiated surcharges all at once; we will phase them in gradually, as we have done with the existing surcharges. And next year we will discuss with banks in detail the schedule and magnitude of these surcharges in order to account for all relevant nuances.

As you know, we intend to raise the minimum capital requirements for smaller banks — by approximately the level of cumulative inflation since 2018, when the current requirements were set.

I know that some smaller banks are also concerned about whether they will be able to increase their capital under current conditions. I want to stress that we also intend to implement this increase gradually, over several years. In our assessment, the vast majority of institutions will not be affected, as their capital already exceeds our minimum capital benchmarks. Those that are affected will be able to build capital through retained earnings or recapitalization, and in the last resort by changing their license type — there will be ample time for this. In the near term we will prepare a consultation paper on this topic and discuss the details with you. Later today, at the roundtable, my colleagues will discuss our main plans on capital management in more detail.

Banks also frequently complain that we only increase their regulatory burden. But where risks are declining — and we do see that — and where regulatory changes will help reduce long-term risks, we are prepared to ease regulation. So this is not a one-way street. For instance, the new national short-term liquidity ratio [Russia's domestic equivalent of the Basel III Liquidity Coverage Ratio] is actually somewhat softer than the Basel standard, because it better reflects Russian-specific conditions. Another example is the treatment of intangible assets created by banks as part of their import substitution programs [efforts to replace foreign technology with domestically developed alternatives, as required by law]. These represent significant investments for many banks and place an additional burden on capital. We have taken a decision — which we will publish in the shortest possible time for your review — that will allow intangible assets to be deducted from capital over four years rather than all at once, as is currently the case.

I should note that this will apply only to assets relating to critical IT infrastructure that banks are legally required to replace through import substitution. For individual banks, we estimate the effect at up to 0.5 percentage points of capital adequacy.

Let me now turn to getting ahead of credit risks and working through problem debt. This is the second topic we raised last year and one that remains equally relevant this year.

On retail lending, the share of non-performing loans in the portfolio has increased, which was inevitable after two years of rapid credit growth. But the non-performing loan share remains well below historical peaks and is already showing a downward trend. The quality of newly originated loans has improved since the middle of last year. In our assessment, this improvement is due in part to macroprudential policy measures.

On corporate lending, the overall quality of the credit portfolio remains good, most borrowers are resilient, and banks have sufficient capital and provisions to cover potential losses on problem loans. To additionally incentivize banks to accommodate borrowers facing temporary difficulties, we have recommended restructuring such loans. Anatoly Gennадьевич noted that we are showing flexibility here. Indeed, this is what is needed at this stage of economic development and the transition to more balanced rates of growth, both in the economy and in lending. At the same time, where a borrower has a realistic financial recovery plan and is executing it, we have permitted banks to refrain from building additional provisions.

Nonetheless, we are concerned about the possible accumulation of risks in the future.

We are also taking preemptive measures to guard against this. As you know, from 1 March we raised the macroprudential surcharge on new loans to large borrowers — not all large borrowers, but those already carrying an elevated debt burden. And we are prepared to raise this surcharge further if the debt of heavily indebted large companies continues to grow rapidly through bank financing. In our view, this would signal an underestimation of risk that we would need to respond to. This is also partly why we attach importance to companies accessing capital markets more actively, raising non-bank financing and not only debt financing but equity as well. This matters for the companies themselves, so that they can maintain their financial stability and a manageable debt burden, and for banks, so that they do not develop excessive concentration of exposures to individual borrowers.

In addition, we will be progressively limiting banks' ability to take a formalistic approach to assessing corporate credit risk. Specifically, in the third quarter of this year we intend to restrict banks' use of expert judgment (so-called other material factors) when assessing large problem loans. For example, banks can currently factor into their assessments an assumption of state support for a borrower, even where there is no adequate basis for such an assumption. At the same time, we intend to permit the use of more objective indicators — for example, the borrower's actual cash flows — so that the provision reflects that portion of the debt for which cash flows are insufficient to service the obligation.

Next year we plan to prohibit banks from classifying the financial condition of a company as good or satisfactory if the company is heavily debt-laden — for example, with a debt-to-EBITDA ratio above 6 and an interest coverage ratio (ICR) below 1 — and we will introduce an explicit obligation for banks, when analyzing a borrower's debt load, to take into account guarantees the borrower has issued in favor of other companies.

It is very important to progressively address the problem of elevated credit concentration at the level of individual banks. Unfortunately, banks themselves are in no hurry to reduce this concentration, even though we continually remind them of the risks. We understand, of course, that reducing concentration requires a difficult dialogue with clients — particularly large ones — and that this is not a simple process. Nevertheless, we believe it must be done, because the stability of individual banks and of the financial sector as a whole must come first. In the coming months we will present the final regulatory framework for concentration, including details of the economic and regulatory incentives for reducing concentration ratios. Our objective here is unchanged — we have stated and explained it on multiple occasions — which is that within a few years no bank should have credit exposures exceeding 25% of its capital. We must reach this point in order to ensure the overall stability of the financial sector.

To help banks distribute credit risk and reduce concentration, we plan to introduce credit digital financial assets [токены, backed by loan receivables, issued on Russia's digital financial asset platforms] and credit default swaps (CDS) into the regulatory framework in the third quarter of this year. I know that banks are interested in these instruments, including for concentration reduction purposes, so let me say a few more words.

Credit digital financial assets will provide greater flexibility in managing regulatory ratios by transferring the credit risk on a loan from the bank to investors. We will include a risk retention requirement so that the bank retains a portion of the risk. It is important that the bank has an incentive to transfer quality risk to the market.

On CDS, we plan to develop this market gradually: at the outset we will permit a broad range of well-rated banks to act as CDS sellers, and we will then progressively consider extending access to this derivatives segment to insurance companies and other participants. For us it is important that only those participants with deep expertise in credit risk analysis and management should be able to sell CDS. Regulatory recognition of this instrument will not only free up capital through "insurance" provided by a quality counterparty, but also redistribute risk across the system.

An important topic is the development of risk-based supervisory tools. Last year we presented to the market a consultation paper on revising our approach to assessing the financial condition of banks [the CBR's system of rating banks' overall risk profile]. As a reminder, the new methodology will allow banks to be ranked more flexibly by risk level, in a manner analogous to the approach used by credit rating agencies. Supervision of banks with low ratings will be more intensive, and those banks will pay higher contributions to the Deposit Insurance Fund [Russia's mandatory deposit insurance system]. Conversely, a high rating will allow banks to reduce their contribution costs.

We received a large volume of comments and questions on the consultation paper. We have incorporated most of them, and I am grateful for your careful engagement — you have helped us make our approach simpler and more risk-sensitive. We are currently testing the refined methodology internally. We intend to present the results at the Financial Congress [the CBR's annual flagship industry conference] in the summer for discussion.

That covers bank stability. Equally important to us — and I hope to you as well — are consumer protection, competition, and the banking system's receptiveness to innovation. Let me turn to these now.

First, I want to highlight positive trends in consumer protection — we can see these in the declining number of complaints about mis-selling, inappropriate sales practices, and misleading conduct. But the complaints data also shows new problems emerging. I would like to draw attention to two of them.

First, banks are violating the requirements on the procedure and timescales for handling customer complaints, which have been established by law since 2024. People are complaining — and unfortunately these complaints are growing — about delayed responses, boilerplate replies instead of substantive answers, and in some cases no response at all. If the quality of responses to customer inquiries — which is what genuine customer-centricity, which virtually every bank claims to practice, actually looks like in practice — if this does not improve, we will not limit ourselves to recommendations. At the moment we are working at the level of recommendations, as we often do, giving you advance notice. But if repeated violations occur, banks will receive formal supervisory orders, including financial penalties. And we will publish this information on our website so that customers know how they are being treated, and by whom.

Second, there is the question of how banks handle inquiries from customers whose transactions have been restricted under anti-money laundering legislation or anti-fraud measures. We have discussed this topic many times. It is a sensitive one for your customers. It was also discussed at the Ural Forum [the CBR's annual banking conference in Yekaterinburg]. But let me reiterate: we receive a large number of complaints that relate directly to the fact that when a transaction is restricted, people do not always understand why they have been restricted, what they need to do, or where to go to have the restriction lifted — especially when people are confident they have acted in good faith. By the end of last year the complaints had stopped growing and could be said to have stabilized, and banks' communication with customers had noticeably improved. We have been communicating with you so that you communicate better with your customers. Yet the situation remains far from ideal. We are proposing a proactive approach — which I also discussed at the Ural Forum: do not wait for customers to come to you. If a customer's transactions have been restricted, you should proactively inform that customer about the steps they need to take and why this has happened. Do not simply cite — as is sometimes done — Federal Law No. 161-FZ [on the national payment system] or Federal Law No. 115-FZ [on countering money laundering and terrorist financing] and leave the person to figure it out themselves, but explain in detail what is going on. Some banks already use this approach on their own initiative, without any prompting from us. But some inform the customer by phone, others in an app chat, or invite them to a branch. We will issue guidance on best practices for working with customers in this situation, so that customers know what approach will be taken. We ask you to adopt a proactive stance here.

In our view, the same proactive approach should be applied to customers who — as you can see at early stages — will struggle to service their loans. Do not wait until significant arrears have accumulated. Customer-centricity should manifest not only in the sale of products (which banks focus on) but also in resolving problems that arise when those loans are being repaid. This will give people less reason to turn to so-called debt-relief firms [companies that claim to help borrowers avoid repaying debts, often using questionable or illegal methods]. You know that this is a serious problem. After turning to such firms, borrowers' situations often only deteriorate. Please pay attention to this and proactively engage with customers at risk of falling into arrears.

The topic of debt-relief firms was discussed within the Association, and I thank you for your specific proposals. We believe the first step could be the introduction of standards for advising citizens and providing legal assistance on matters of overdue debt, so that in the market for debt consultants it is immediately clear who can provide genuine help and who is merely looking to profit aggressively from others' misfortune.

A few words on a specific but important issue also relating to consumer protection — the situation with mortgages on individually constructed housing (IZhS) [mortgages for the construction of private homes, as distinct from apartment buildings]. You will recall what happened: thousands of borrowers were left without homes but with mortgages, partly because at the time those mortgages were taken out, the escrow account requirement [a requirement to hold buyer funds in escrow until construction is complete, protecting buyers if the contractor defaults] had not yet been extended to individually constructed housing. In April of last year we recommended that you provide support to those borrowers, and thanks to the measures taken by banks — and thank you to those who responded — the situation has improved significantly. However, for a relatively small number of socially vulnerable citizens the problem persists. We are monitoring the situation. The problem persists and is unlikely to resolve itself. We recommend that restructurings be carried out again where necessary and that banks be more willing to agree to full or at least partial debt forgiveness where borrowers are objectively unable to service their mortgage — particularly given that people often relied on lists of contractors that banks posted on their own websites. Yes, this does not constitute a formal endorsement of those contractors, but if such lists were published on the bank's website, even without any formal recommendation to use those contractors, your customers treat the information you provide as trustworthy.

I come back again here to customer-centricity. Real customer-centricity must manifest itself precisely in resolving problems like these. Incidentally, the total cost of providing such support — if banks were to fully support all IZhS mortgage customers in this situation — is not that high: for the banking sector as a whole, it is just over 4 billion rubles. I think this problem can be solved, and I would not like to see it raised yet again at the next meeting. I also ask the Association to get involved.

Last year we had a substantial discussion about new fines for systemic violations of consumer rights. These will be many times higher than those previously in force, which is why we discussed in advance the conditions for applying the fines at the State Duma Committee on the Financial Market. The draft Central Bank Directive has been prepared in line with those agreed conditions. In particular, we will not apply the increased fines for violations of laws or regulations that entered into force less than six months earlier. This is reasonable, to allow time to adapt to new requirements. But beyond that period, a bank that commits a violation will not only be required to compensate consumers in full but will also pay a fine of the equivalent amount — to make deception unprofitable.

Let me now turn to the next topic, which matters for both stability and consumer protection: competition. I cannot fail to address the disputes between banks and marketplaces [large e-commerce platforms such as Wildberries and Ozon], which started with bank cards and discounts but prompted us to take a broader view of the topic and to discuss comprehensively the changes and challenges for competition arising from the development of the platform economy.

We are currently discussing with the Government a so-called open model for the provision of any financial services on marketplaces. All banks should have the opportunity to offer their own bonuses and cashback on a marketplace, and the same should apply to other financial products — for example, loans and buy-now-pay-later installment plans.

But that is only one side of the coin. It is only fair to apply the same standard to partnership arrangements within the ecosystems being developed by the largest financial market participants and participants from other sectors — for example, retail chains. We propose to discuss an approach under which the principle of equal distance and equal access to infrastructure for the sale of goods and services would apply equally to all large companies with an ecosystem business model and tens of millions of users — regardless of what business the ecosystem is built on, whether it started in e-commerce or in banking services. What matters is that neither side should enjoy preferences at the expense of the other, and that the terms of partnership are known in advance and transparent to all — published on the website, for example. Transparent and competitive conditions matter for consumers, because more competition means better outcomes for consumers.

The Ministry of Economic Development [Mineconomrazvitiya], together with the Federal Antimonopoly Service (FAS) and with our participation, is currently analyzing the loyalty programs used by marketplaces, retail chains, and banks. I repeat: the topic began with marketplaces, but the same practices are used by other large-audience market participants, including major banks. And the approach must be consistent. This is our firm position as regulator. Fair rules of competition within the financial sector are important to us. The immediate agenda item is the development of a memorandum that will enshrine best competitive practices, including the open model principle. We are prepared to discuss the content of this memorandum with both platforms and the banking community, and we consider it equally important that both sides sign on to it — otherwise it will not work. I also think that the Association could play a key role in organizing this dialogue. We would like to take stock of initial progress at the Financial Congress in July. We have also discussed with the Government that if the memorandum does not function or not all parties join it, corresponding legislative amendments will be required.

The second point I would like to make in the context of competition is the introduction of a universal QR code this year. Once it is deployed, people will have a genuine ability to scan a QR code at any point of sale — regardless of which bank they are a customer of — and to choose which payment instrument to use. In other words, people will have a real, unconstrained choice. This is very important in order to prevent the imposition of dominant players' services on consumers.

By law, banks must support the universal QR code from September of this year. We intend to publish the rules this month, in March. We will monitor very closely, through our supervisory function, whether banks that need to make technical adjustments do so on time. Not all banks require such adjustments, but some do. We will monitor the situation to ensure that all banks are ready by September.

Another development that should stimulate competition is the emergence of non-bank payment service providers. We have had a years-long discussion on this topic. Understandably, many banks do not want new payment service providers entering the market. But in my view, this long-running discussion is nearing its conclusion. We have taken on board many of the banks' comments, but on one point we hold to our original position: non-bank payment service providers will be able to operate as independent players, not dependent on banks. Without this, the whole point of the institution is lost. In essence, this independent status is what should allow fintech companies to bring innovative solutions to market quickly. We are talking not only about the innovativeness of existing players, but about the innovativeness of the financial sector as a whole. Those who develop innovations — useful to people, reducing costs for the economy — must of course have the ability to bring those products to market quickly and compete with market leaders, including to keep those leaders on their toes. Overall, this will reduce transaction costs in the economy. Technology now makes it possible to reduce transaction costs substantially. We know how important this is for companies, especially small and medium-sized businesses, which pay significant sums to carry out transactions. If technology makes this possible, our task is to ensure that it becomes a reality and that the financial sector delivers these services. The draft law is ready for its second reading [in the State Duma], and I hope it will be adopted in this parliamentary session.

Finally, I would like to say a few words about one of the major anticipated events of this year: the launch of the digital ruble into general circulation for all customers of the largest banks who wish to use it. We are on schedule: all core functionality (transfers and payments) is operational, a multi-layered cybersecurity framework has been built to protect the digital ruble platform, and first-wave banks are completing their preparatory work on their side so as to be able to offer the digital ruble service to all who wish to use it.

Over the past year we introduced digital ruble payments via the universal QR code, successfully piloted the digital ruble in budgetary processes on selected projects, and received a large number of constructive proposals from banks on developing the digital ruble's capabilities. Your proposals are very important to us in ensuring that the digital ruble is genuinely in demand. One such proposal is the creation of a commercial smart contract platform onto which market participants could deploy their own developments. We warmly welcome this idea — it is only through such a platform that a broad range of smart contracts can be created and continuously improved. And we see strong interest from the Government and from businesses in smart contracts in digital rubles as a means of automating and simplifying the many manual checks and operations that currently exist, making them less costly. This year we will present for discussion with you a concept for a commercial smart contract platform. After that discussion, we will need to find ways to move quickly, because demand for such a platform is clearly there.

That is, I think, everything I wanted to say by way of opening remarks. It has been lengthy, but I wanted to cover both the problems we are seeing and the main plans and regulatory changes that will affect you. I know there are questions, and we will now discuss them. My deputies and I are ready to answer them. Thank you!