Sberbank's CEO says Russia is facing worst banking crisis in 20 years
Sberbank's CEO, Herman Gref, has said that Russia is facing the worst banking crisis in 20 years, as the country struggles with Western sanctions, weak oil prices, and a ruble that's 38% weaker than it was a year ago; it is now running a small deficit of roughly half a percent of GDP.

MOSCOW--Russia's banking sector is the midst of a "wide-scale banking crisis," the head of Sberbank said Tuesday.

German Gref said Russia's banking system is suffering from low profitability and the pace the Bank of Russia is purging the financial system of small lenders that appear to be in financial trouble.

"What we see now is indeed a full-scale banking crisis," he said, state-run RIA news agency reported.

Although Russian officials are claiming that the economy may be recovering from the turbulence caused by double digit inflation and the depreciation of the ruble, a number of sectors are still experiencing hard times.

Data released Tuesday showed Russia's industrial production contracted in annual terms for the ninth consecutive month in October, dragged down by the manufacturing sector, data showed Tuesday.

According to the Federal Statistics Service, industrial output declined by 3.6% in October compared with a year earlier, after falling 3.7% in September.

According to analysts, Russia's central bank sacrificed consumer-related sectors for major state-owned companies in late 2014 by increasing the key interest rate to 17% to ease pressure on the free-falling ruble.

However, the weak ruble has been a boon for commodity exporters--the country's key sector--as the weaker currency boosts their dollar- and euro-denominated revenues at home.

Alxei Simanovsky, the first deputy chairman of the central bank, said he sees no signs of a crisis in Russia's banking sector, RIA reported.

Mr. Simanovsky comment comes after VTB bank said its net profit increased by more than 15-fold in July-September to 6.2 billion rubles ($94.84 million) from 0.4 billion rubles a year ago.

Write to Andrey Ostroukh at andrey.ostroukh@wsj.com