r/CollapseOfRussia

Russian companies have started to forgo paying annual bonuses to employees amid an economic downturn and a difficult financial situation. By the end of 2026, nearly half of organizations—46.9%—will not be awarding bonuses to employees; in another 20.4%, the decision on payments has been postponed indefinitely; and in 10.4%, only a portion of the staff will receive bonuses. At the same time, only 22.3% of companies plan to guarantee bonus payments to their entire workforce. These findings come from a survey conducted by “Akcion Bukhgalteriya” among 1,076 organizations across Russia, according to Forbes.

The main reason cited by 56.9% of survey participants for not paying bonuses was the company’s financial results for the year. Another 23% base their decision on the owner’s or parent company’s decision. The tax burden and the amount of insurance contributions on bonuses were the determining factors for 8.8% of respondents. This trend is linked to rising taxes and costs, says Ekaterina Avdeeva, chair of the coordinating council of the Autonomous Non-Profit Organization “Center for Business Protection.” For example, effective January 1, 2025, the government raised the corporate income tax from 20% to 25%, and starting in 2026, it will raise the VAT rate to 22%. In addition, the threshold for mandatory VAT payment under the simplified tax system (USN) was sharply reduced—from 60 million to 20 million rubles.

Expensive financing is also having an impact: the key interest rate remains at 14%. At the same time, given the typical profitability levels in many industries, borrowing at 10–15% makes no economic sense: a deposit yielding 13–19% provides comparable returns without entrepreneurial risk, Avdeeva noted. At the same time, she said, companies are facing limited demand, and counterparties are increasingly failing to pay their bills on time.

Against this backdrop, a gap will emerge between large and small businesses regarding bonus payments, predicts Alla Starchenko, a leading expert at “Action Accounting.” Large companies have KPI systems, reserves, and formalized incentive programs—they will continue to pay bonuses. Small businesses, on the other hand, where decisions depend on a single person and current revenue, will increasingly forgo bonuses or limit them to a couple of key employees, Starchenko noted.

Right now, the main risk for businesses is further tax increases, says Avdeeva. According to her, doing away with bonuses may become the norm in order to ensure business survival. But at the same time, this could be a blow to productivity, the expert concluded.

source: The Moscow Times https://archive.is/E6KPm

The financial situation of Russian companies is deteriorating, and they are increasingly unable to pay their debts. Sberbank, the country’s largest lender, notes a continuing deterioration in the quality of its loan portfolio and a rise in delinquent debt. “We’ve been seeing this steady trend for several months now—more loans falling into delinquency and a deterioration in the financial condition of corporate clients,” said Taras Skvortsov, the state-owned bank’s chief financial officer (quoted by Interfax).

There are problems in many sectors, Skvortsov noted: “This certainly includes residential real estate—in specific projects—as well as retail, commercial real estate, and marketplaces.” According to him, the issue is not specific large clients affecting the bank’s performance, but rather “a general trend linked to a prolonged period of high key interest rates and a slowdown in economic growth.” The Ministry of Economic Development estimated GDP growth at 0.6% for January–August and forecasts the same figure for the full year.

All of this is affecting companies’ financial health. Over the first seven months, the difference between their profits and losses fell to its lowest level since the pandemic, with one in three Russian companies operating at a loss. Banks always end up bearing the brunt of all the problems that arise in the economy, said Sberbank CEO German Gref.

Developers are facing serious problems. “Sberbank, along with other creditors, is bailing out one of the largest, ‘Samolet.’ According to Ildar Khusainov, head of ‘Etagi,’ approximately 30% of developers are currently ‘struggling.’” The coal industry has been operating at a loss for the second year in a row, while the ferrous metallurgy and timber industries are in crisis. Wildberries borrowed the most from VTB, but Ukrainian drone attacks on marketplace warehouses have affected the loans of both the marketplaces themselves and the sellers operating on them. Sberbank has received thousands of applications for loan restructuring.

Sberbank will publish its financial statements in accordance with international standards at the end of October, but Skvortsov warned that the cost of risk will increase in the second half of the year, meaning the bank will set aside more reserves. Pyanov expects banks to have to make significant provisions over the next three years. As of the end of the first half of the year, Sberbank’s portfolio included 2.6 trillion rubles in delinquent loans, of which 1.6 trillion were more than 90 days past due.

The real problems are much greater. Sberbank does not classify restructured loans as delinquent, and these often mask a deterioration in loan quality. VTB First Deputy Chairman Dmitry Pyanov has called restructuring a “cure for default,” while the CMACP, an analytical center close to the government, views it as a means for banks to mask their problems. With this in mind, the Central Bank classifies 11.6% of corporate loans issued by banks—totaling 11.7 trillion rubles—as nonperforming as of the end of July. Over the past month, this figure rose by 0.2 trillion rubles due to “risky loan restructurings for borrowers in the real estate sector and the deteriorating financial condition of certain industrial companies.”

According to the Center for Macroeconomic Analysis and Forecasting (CMAFP), “resolving the crisis in the banking sector” will depend on a resumption of economic activity, which will allow for the “unfreezing” of restructured non-performing debt. However, most forecasts suggest that economic stagnation will persist for years. The OECD expects Russia’s GDP to grow by 0.5% in 2026 and 0.6% in 2027; the World Bank’s forecast is 0.6% this year and 0.7–0.8% over the next two years, The Bank of Finland expects 1% growth this year and 0.5% in both 2027 and 2028.

source: The Moscow Times https://archive.is/kwucK