VTB braces for rising loan losses as Russian inflation bites

The shift in strategy follows a sobering assessment from the central bank, which warned that the window for monetary easing is closing. Pyanov noted that while markets previously anticipated a more moderate interest rate trajectory, the reality of the current economic climate forces a different approach. Most of VTB’s corporate clients hold loans with floating interest rates, meaning the elevated cost of borrowing directly threatens their ability to service debt.

Despite the tightening environment, Pyanov remains confident in the bank's resilience. Unlike smaller institutions, VTB maintains a loan portfolio dominated by massive corporate entities, such as the state-owned railway monopoly Russian Railways, which Pyanov expects to meet all payment obligations this year. He maintains that this concentration of large-scale clients provides a superior buffer against credit risk compared to competitors exposed to smaller businesses.

Looking toward the central bank's July 24 meeting, Pyanov anticipates either a pause or a modest 25-basis-point rate cut. However, he cautioned that the medium-term outlook remains grim, with significant upward revisions to the key rate forecast likely as the government prepares its 2027 budget. Meanwhile, VTB is moving to secure its market position through a recent partnership with e-commerce giant WB, a strategic maneuver aimed at challenging the retail dominance of its main rival, Sberbank.