Gazprombank's IFRS Net Profit Triples in Q1, but Analysts Warn of Underlying Risks
Gazprombank's net profit for the first quarter of 2026 rose to RUB 64.8 billion from RUB 19.1 billion a year earlier, driven by lower funding costs.
Headline: Gazprombank Earns 3.4 Times More: Why This Is No Cause for Celebration
Author: Independent Financial Analyst (Insider Perspective)
[The Gist]: What's Really Happening
Gazprombank reported its Q1 2026 IFRS results, and the numbers are impressive at first glance: net profit surged 3.4 times to RUB 64.8 billion, or $910 million at the average Q1 exchange rate. Return on equity jumped from 6% to 18.6%, and net interest margin expanded from 2.4% to 3.8%.
But a professional eye spots three red flags that the media is ignoring. First, the loan portfolio shrank by 1.6%, with retail loans down 3.5%. Second, the non-performing loan (NPL) ratio rose from 1.7% to 2.2% due to a single large borrower default. Third, customer funds fell by 4.6%—over RUB 600 billion in deposits have flowed out since the start of the year.
The real insight: record profit was achieved not through business growth, but by cutting funding costs. This is a cyclical, not structural, success.
Timeline and Context
Q1 2025. Gazprombank's net profit was RUB 19.1 billion, ROE 6%. The bank was still reeling from the Central Bank's tight monetary policy (rate at 21%) and sanctions pressure.
Q4 2025. Profit plunged to RUB 4.2 billion, ROE 1.2%. This was the crisis low: the bank barely made money, with provisioning costs and expensive funding eating into margins.
Q1 2026. A turnaround. Funding costs began to decline faster than expected. Net interest income soared 57% to RUB 148.5 billion. ROE hit 18.6%.
What changed? Was it a key rate cut? No. The Central Bank rate is still 21%. The real reason: the bank managed to replace expensive retail deposits with cheaper sources—corporate client funds and interbank funding. That's the so-called "trend of faster decline in funding costs."
May 27, 2026. The bank publishes its results. Simultaneously, the board recommends dividends on ordinary shares of RUB 32.1 per share, totaling RUB 20 billion. No dividends are paid on preferred shares (Type A, owned by the Ministry of Finance, and Type B, owned by the Deposit Insurance Agency).
Winners and Losers
The winners are obvious: Gazprombank shareholders holding ordinary shares. RUB 20 billion in dividends is about 30% of Q1 profit. The yield at the current price (GPB shares are not publicly traded, but there is an OTC market) is estimated at 12-14%.
But there is also a less obvious winner: the Ministry of Finance, which holds Type A preferred shares. Although no dividends are paid on them, the Ministry benefits indirectly: the bank retains capital for participation in important state projects. Gazprombank is a key financier of the defense industry and infrastructure projects.
Losers: Holders of Type A and B preferred shares, as well as minority holders who bought shares on the OTC market at RUB 8,000-10,000 per share. The decision to skip dividends on preferred shares came as a shock. Additionally, retail depositors lose out as the bank's deposit base shrinks (customer funds fell 4.6% in the quarter).
But the biggest loser is the bank itself in the long run. Why? The loan portfolio has been shrinking for two consecutive quarters. Corporate loans fell 1.5%, retail loans 3.5%. The bank is not growing. It has simply become more efficient at managing margins on a declining volume. This is not a growth strategy—it's a survival strategy.
What the Media Isn't Saying
The first insight missing from the headlines: the NPL rise from 1.7% to 2.2% is not a "single borrower default" but a systemic problem being downplayed.
Yes, formally it's due to one large borrower defaulting. But in banking, such "isolated incidents" are rarely random. Most likely, it's a company in a sector related to Gazprom—a contractor or supplier. The crisis in the Russian economy (rising receivables, falling industrial profits) is causing even large counterparties of state-owned companies to go bankrupt. If this trend continues, NPLs could reach 3-4% by year-end, requiring additional provisions of RUB 50-70 billion.
The second insight being ignored: the decline in funding costs is not management's achievement, but a result of banking sector consolidation.
Competition for depositors is decreasing. Small and medium-sized banks are leaving the market, and their deposit portfolios are flowing into the largest banks—Sberbank, VTB, Gazprombank. But these depositors receive lower rates because large banks don't compete for every client. Thus, Gazprombank obtained cheap funding not through efficiency, but through sector concentration. This is monopoly rent, not operational success.
The third insight most analysts miss: the loan-to-deposit ratio rose to 108.2%.
This is a dangerous level. It means the bank has issued 8.2% more loans than it has attracted in deposits. The gap is covered by interbank lending and repo operations with the Central Bank—i.e., expensive sources. If the situation doesn't change, the ratio could reach 112-115% by year-end. That's a technical level at which the regulator starts asking questions.
Forecast: Next 30 Days and 90 Days
30 days: Until the annual shareholder meeting (likely late June to early July), Gazprombank shares on the OTC market will trade with heightened volatility. Price around RUB 9,500-10,500 per ordinary share. The 12-14% dividend yield is already priced in. No new growth drivers are expected in the next month.
90 days: By the end of Q3, it will become clear whether the loan portfolio contraction continues. The most likely scenario (65%): the portfolio will keep shrinking at 0.5-1% per month due to weak credit demand in the economy. Q2 profit will be RUB 55-60 billion—lower than Q1 due to higher provisions for bad loans. ROE will decline to 14-16%.
Special risk: if NPLs continue to rise (2.5-2.8% by quarter-end), the bank will need to set aside additional provisions of RUB 30-40 billion, eating up half of Q2 profit.
Editorial Forecast
Based on current data, we believe the market reaction to Gazprombank's results has already played out in the next 24–72 hours. On the OTC market for GPB shares, we expect sideways trading in the range of RUB 9,800-10,300 per ordinary share. Confidence level is low, as the shares are illiquid and bid-ask spreads can reach 3-5%. The main risk: if a large holder decides to exit after the dividend record date (expected in July), the price could drop 10-15% in a few days due to lack of buying interest. This is the editorial opinion, not an investment recommendation.
— Editorial Team
