Russian Modern Commercial Banks' Net Profit Continues to Decline for Two Consecutive Years, Showing Transformation Pressure

Modern Commercial Bank's net profit continues to decline for the second consecutive year

In 2025, the bank achieved a profit of 53.2 billion rubles according to International Financial Reporting Standards, with profits falling by nearly one-third in a high-interest-rate environment, but the bank expects income to "bounce back" in 2026, and the dividend policy has not yet been determined.

According to the financial report published by Modern Commercial Bank:

- 2025 Net Profit: 53.2 billion rubles, down 31% from 77.2 billion rubles in 2024

- The second consecutive year of profit decline, the previous one was 2017–2018

- Return on Equity (ROE): dropped from 26% to 15%

- Earnings per share: 2.18 rubles, down 38% year-on-year

The bank stated in its announcement that 2025 was an environment of tight monetary policy, rising retail credit risks, and strengthened regulatory requirements. Pressure on profits peaked in the second quarter, with financing costs at 17.6% and risk costs at 3.7%; since the third quarter, major operating indicators have continuously improved.

Financial Structure

- Net interest income: 176.5 billion rubles, up 12% year-on-year

- Net interest margin: slightly declined from 5.4% to 5.3%, rebounded to 6.4% in the fourth quarter

- Net fee income: 48.9 billion rubles, up 24% year-on-year

- Guarantee business volume: 1.1 trillion rubles, up 27% year-on-year

- Total fee and non-banking business income: 103 billion rubles, increased by nearly a quarter

- Loan loss provisions: 81 billion rubles, up 9% year-on-year

- Risk cost: rose to 2.9% (+0.3 percentage points)

- Non-interest expenses: 159 billion rubles, up 20% year-on-year

- Cost-income ratio (CIR): increased from 55% to 57%

Assets and Liabilities

- Net loans (total): 3 trillion rubles, up 14% year-on-year

- Corporate loans: 1.7 trillion rubles, up 25%

- Retail loans: 1.3 trillion rubles, up 3%

- Mortgage loans: 399 billion rubles, up 17%

- Customer accounts and deposits: 3.4 trillion rubles, up 13% year-on-year

- Personal deposits: 1.4 trillion rubles, up 15%

- Corporate deposits: 2.1 trillion rubles, up 12%

Bank's Official Interpretation

Osnos, Executive Director of Modern Commercial Bank, said: 2025 was a year of high interest rates and an unprecedentedly complex economic environment. However, what was affected was profit, not the business foundation; assets and capital both achieved growth.

Three Reasons for the Decline in Profits

1. Corporate income tax increased from 20% to 25%

This had a one-time impact on profits of about 11 billion rubles, unrelated to operations.

2. Rising operating costs