Exclusive: Russia's Sberbank warns of economy overcooling, says key rate below 15% would spur growth

Reuters

18-06-2025

ST PETERSBURG, June 18 (Reuters) - The Russian economy could cool down excessively due to high interest rates and may face difficulties returning to a growth path, Alexander Vedyakhin, First Deputy CEO of Russia's largest lender, Sberbank, said in an interview with Reuters.
"There is a danger of the economy overcooling and that we may not be able to come out of this slump, and further growth could be very restrained," Vedyakhin said ahead of Russia's main economic conference in St Petersburg, starting on Wednesday.
Vedyakhin projected a growth rate of between 1% and 2% in 2025, below the government's more optimistic projection of 2.5%.
"The wisdom and sensitivity of the regulator and all economic and financial authorities are required to stop inflation and prevent such a sharp decline in production," Vedyakhin added.
He said the key interest rate could come down to 17% from the current 20% but a lower rate was needed for Russia to return to a path of growth. He also argued that the rouble is currently overvalued.
The central bank hiked the key rate to 21% last October seeking to bring down inflation in the overheated economy, which is focused on military needs. With inflation starting to come down, it then cautiously cut the rate by 1 percentage point on June 6.
"My sense is that, most likely, the central bank's key rate could be around 17% by the end of this year. I don't think the сentral bank will sharply reduce the rate as there is a risk that inflation could rise again," Vedyakhin said.
Vedyakhin argued that only a key rate below 15%, a level that equals the EBITDA margin of many of Sberbank's clients, would help to resume investment and revive economic growth.
"An intelligent investor with such an EBITDA margin could undertake new projects. I believe that a rate below 15%, that is, roughly speaking, 12-14%, is already a good level for the economy to start reviving, growing, and moving forward," he said.
On the exchange rate, Vedyakhin said: "In the view of our analysts, the rouble is currently overvalued. If everything were relatively balanced, given the current oil prices and macroeconomic factors, it should be at the level of 90-95 per dollar."
The central bank's official rate for Wednesday was 78.7135 roubles per dollar.
The rouble surprised the markets by rallying over 40% against the dollar this year, despite low oil prices, which had been falling until mutual attacks by Israel and Iran changed market sentiment.
Vedyakhin said that factors such as high interest rates, a thin domestic forex market, logistical difficulties, payment problems and sales of foreign currency from the fiscal reserve, were behind the rouble's strength.
"A high real interest rate increases the demand for rouble savings instruments, so there is no point in buying dollars. It is important to understand that the demand for dollars in Russia is small," he added.
Sberbank's corporate loan portfolio will grow by 9-11% in 2025, a slowdown compared to the 19% growth in 2025, but the number of loans that had to be restructured remains low, he said.
"In the first half of the year, the growth rates will be lower due to the high interest rates. However, I hope that the second half will delight us with higher growth rates. We are currently maintaining our forecast for the year at 9-11%," he said.
Vedyakhin said that energy and other exporting companies faced an ideal storm of low global oil prices, strong rouble and logistical difficulties due to Western sanctions but no loan restructuring procedures were launched.
He said that the bank had to restructure loans for some real estate developers, but stressed that the situation was difficult mostly for inefficient firms which did not create a safety cushion during the bumper years.
"Only the strongest, with the maximum accumulated level of capital, and the most operationally efficient will survive," he said.