Russia is witnessing a sharp decline in credit activity — a key driver of economic momentum. According to estimates by the Bank of Russia, the country’s credit impulse dropped to -2.3% of GDP in April 2025, the worst performance since the fourth quarter of 2016. For comparison, during the peak of credit expansion in November 2023, the credit impulse was +5.3%, and one year ago it stood at +3.8%.
Over the first four months of 2025, the average credit impulse has remained negative at -1.9% of GDP, in contrast to +4.3% in the same period of 2024, +0.8% in 2023, and +1.6% in 2021.
April’s contraction was primarily driven by the mortgage sector (contributing -1.6 percentage points), followed by unsecured consumer loans and auto loans (-1 percentage point). Only corporate lending provided a slight positive push (+0.2 percentage points).
Mortgage lending is now performing at historically low levels, while consumer and auto loans are showing their weakest results since early 2023. Corporate lending figures are the worst since autumn 2020.
The Bank of Russia also released updated statistics on loan applications and approval rates. Before the central bank began tightening monetary policy in mid-2023, the number of monthly loan applications peaked in March 2024 at 29.9 million. This high level was sustained until August 2024, during the second phase of tightening. In the fourth quarter of 2024, the monthly average dropped to 24.1 million, and by March 2025, applications plummeted to 17.4 million — the lowest level since 2022.
Approval rates have also deteriorated sharply. Between February and September 2023, about 34% of applications were approved. In the first nine months of 2024, the rate fell to 22%, and since October 2024, it has stabilized at a mere 16.5%. In absolute terms, only 2.88 million applications were approved in March 2025, compared to 6.84 million a year earlier, and a peak of nearly 10 million in August 2023.
Credit activity has collapsed, especially among households.
As traditional credit channels falter, corporate borrowing has shifted towards the bond market, where companies find more flexibility and better conditions than banks currently offer. As previously described by the analytical Telegram channel Spydell_finance, this trend has gained strong momentum.
To illustrate the trend:
- In the first four months of 2022, gross bond issuance amounted to just 148 billion rubles.
- In the same period of 2023: 893 billion.
- In 2024: 1.716 trillion.
- And by April 2025: 3.465 trillion rubles, effectively doubling again.
For the full year:
- 2022: 1.932 trillion rubles,
- 2023: 5.014 trillion,
- 2024: 9.229 trillion.
The growth is nearly exponential.
These figures clearly signal that Russia’s credit transmission channel is breaking down, with dysfunctions comparable only to those seen in 2009 and 2015. This provides a strong argument for the Bank of Russia to begin easing monetary policy, especially as inflation appears to have stabilized.
Financial market participants now expect the key interest rate to average 18.3% over the next 4–6 months, 15.5% over the next year, and around 14.5% within two years. In just two months, short-term expectations for interest rates have shifted downward by 2–3 percentage points.
The Central Bank also addressed the reasons behind the record strengthening of the ruble in its latest bulletin. According to their assessment, the main contributing factors include:
- A decline in demand for durable goods, especially cars, due to tight monetary policy, which reduces imports;
- A wide yield differential between ruble- and foreign-currency-denominated assets, incentivizing exporters to convert revenue into rubles and deposit it domestically;
- An improved balance in cross-border transfers thanks to high ruble yields;
- Seasonally lower imports at the start of the year while exports remained relatively stable;
- A reduction in country risk premium due to perceived geopolitical de-escalation — although this factor may be overstated and short-lived (relevant mainly for two weeks in February);
- Faster repatriation of export revenues, as payment discipline improves and delays in foreign earnings conversion shrink (i.e., falling accounts receivable);
- Large vehicle stockpiles at dealerships, including trucks, which could delay a visible drop in inventory-driven demand.
However, the supportive impact of monetary policy on the ruble will persist only as long as the current level of policy tightness is maintained. This tightness is not just about nominal interest rates, but more importantly about real rates (adjusted for inflation expectations). Other temporary factors, such as seasonality, are expected to weaken over time.
Despite the ruble’s current strength, the Central Bank anticipates a depreciation starting in summer 2025.
