The ‘A’ rating indicates that Alef-Bank is qualified as a highly reliable borrower. Risk of a delay in meeting liabilities is relatively low, restructuring risk for the loan / part of the loan is minimal.

The Bank’s ranking score is essentially supported by the upward profit trend, the high capital adequacy and quality, the sufficient liquidity cushion and the high transparency.

For 2011, the Bank posted a balance sheet profit of RUB 114.5 million, improving its 2010 result by 2%. Net profit of the Bank for 2011 totaled RUB 68.5 million against a profit of RUB 65.1 million for 2010. It will be noted that the Bank’s profit in absolute terms is appreciably high, too, and the Bank retains the greater part of it, to ensure a real and reliable capital source to resort to if necessary. It will be noted that in Q1 2012, the Bank’s profit surpassed the results achieved in the first quarters of 2010 and 2011. As of the end of H1 2012, pre-tax profit amounted to RUB 57.9 million, implying a higher annualized profit compared with the 2011 result.

As a whole, the Bank’s capital adequacy level may be considered high. The equity capital to risk-weighted asset ratio (N1) has recently been within the 24.5% to 33.9% range exceeding the average levels in Russia’s banking system (14-21%).

As of July 01, 2012, the Bank’s equity capital increased slightly to RUB 2.645 billion against RUB 2.629 billion for the same period in 2011. For the last two years, the share of Tier 1 capital has been within the 77-82% range, indicating the high quality of the Bank’s capital. The authorized capital is RUB 1.13 billion, accounting for 42.56% of the total equity capital, 1.7-fold above the average level in Russia’s banking system (24.4-26.9%).

While the amount of assets increased 2011, the Bank’s loan portfolio also expanded considerably, the share of loan receivables in the assets growing by 5.4 percentage points against what it had been in 2010. As of July 01, 2012, the share of the loan receivables was 68.1%. The Bank’s loan assets are of acceptable quality. As of July 01, 2012, non-performing loans accounted for 7.2% of the loan portfolio. Class 4 Loans account for 4.1% of the loan receivables.

It will be noted that the combined percentage of class 1 loans and class 2 loans is 53%. The low share of prime loans in the credit portfolio and the small amount of loan arrears are attributable to the Bank’s rather conservative credit policy with prudent credit risk assessment and reserve rate estimation practices.

As of July 1, 2012, the loan arrearage to loan receivables ratio, according to the Bank’s report, was 6.7%. 86% of the overdue debts are up to 30 days in arrears, 10% are over 180 days in arrears. The loan loss provision to loan arrearage ratio is 2.9 which sends a positive signal for the Bank’s rating. As of July 1, 2012, the Bank’s loan loss provisions totaled RUB 1.7 billion. As a whole, the Bank has achieved a fairly high reserve rate. Given the current credit portfolio structure and amount of loans in arrears, the loan loss provisions comfortably offset the current credit risks.

There is no substantial liquidity shortage at the Bank, particularly in its short-term and medium-term assets and liabilities. As a whole, liquidity risk management at the Bank meets the Central Bank of Russia’s requirements. As of July 01, 2012, the instant liquidity ratio (N2) was 25.9%, the minimum percentage set by the Bank of Russia being 15%.

The high transparency achieved by the Bank also supports its rating. The Bank’s website offers full information concerning its financial results, discloses its ultimate beneficiaries, staff and corporate structure, presents official documents and a complete list of the services provided by the Bank. For analysis purposes, the Bank used to provide information promptly and in due form.

The Bank’s rating is restricted by the fairly low profitability.

As of July 01, 2012, return on equity ratio at the Bank was 4.94%, 3.5-fold below the average value in Russia’s banking system and certainly, leaving much to be desired. Return on assets is also below the average. As of July 01, 2012, ROA was 1.4% (against 2.3% in Russia’s banking system), increasing by 0.1 percentage points in 2011 (against 1.9% in Russia’s banking system).

The Bank has been active in the market of banking services since 1992. In 2000, the Bank obtained a general banking license no. 2119; in December 2010, it was licensed for accepting deposits of precious metals. In March 2005, the Banking Supervision Committee of the Central Bank permitted Alef-Bank to join the Deposit Insurance System (DIS). The Bank’s auditor is Vneshaudit Consulting LLC.

Alef-Bank is a mid-sized Russian bank in the scale and volume of operations. As of July 01, 2012, the Bank ranked 240th in Russia in the amount of net assets (RUB 10.2 billion) and 175th in the equity capital as of the same date (RUB 2.1 billion).

The Bank focuses on providing a whole range of banking products and services involving Russian rubles and foreign currencies, operations in the precious metals and securities market.

This press release is based on the statement of assigning a credit rating to Alef-Bank.

The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Company's reliability and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities.

AK&M Rating Agency will not incur any responsibility for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.

AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993.

AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010).

AK&M Ratings are recognized by the Central Bank of Russia (for providing unsecured lending facilities – Provision 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide business banking services to project and engineering companies implementing investment projects), the MICEX (as a prerequisite for including bonds in the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation base and for listing bonds). Pursuant to an order of Russia's Government AK&M Ratings count for approving the capitalization increase procedure for banks. Besides, AK&M Rating Agency is recognized by AHML and accredited by SRO National Securities Market Association.

CJSC Analysis, Consulting and Marketing Rating Agency
ul. Gubkina 3
Moscow, Russia
www.akmrating.ru
Press release by: A.V. Yakovenko
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.