Press Releases / 18.06.2014
Press Release as of 18.06.2014
Upper Kama small business assistance fund Business Partner
CJSC AK&M Rating Agency assigned a 'B' microfinance institution rating to the Upper Kama small business assistance fund Business Partner on the national scale, with a stable outlook.
CJSC AK&M Rating Agency assigned a 'B' microfinance institution credit rating to the Upper Kama small business assistance fund Business Partner on the national scale, with a stable outlook.
The 'B' rating indicates a sufficient credit worthiness of the Upper Kama small business assistance fund Business Partner, with a moderate degree of full or partial debt restructuring risk.
The microfinance institution rating assigned reflects the Fund's ability to meet the requirements set forth in clause 5.10.27 of the Russian Ministry of Economic Development's Order 220 as of April 24, 2013.
The Fund's equity capital adequacy ratio was 83.4%. As of April 1, 2014, the microfinance institution's targeted capital totaled RUB 9 million. Since 2006, Business Partner Fund has received a total of RUB 1.6 million from the Kirov regional SME support fund in three loans intended for surety provision and microfinance operations. As of April 1, 2014, Business Partner Fund's principal debt amounted to RUB 784 thousand. However, with the Fund's current financial performance in mind, the loan is quite unlikely to be repaid soon.
The Fund provides microloans in the amount of no more than RUB 1 million maturing in 1 year or less. As of April 1, 201, the average loan was RUB 499.231 thousand, i.e. below the upper limit of RUB 700 thousand set by the Russian Ministry of Economic Development's Order 220 as of April 24, 2013, clause 184.108.40.206). At the start of the second quarter of 2014, the Fund's margin under the microlending program was 9.3%, (the maximum percentage under clause 5.10.24 of the Russian Ministry of Economic Development's Order 220 as of April 24, 2013 being 10%).
At the end of the first quarter of 2014, the Fund's portfolio-at-risk (PAR) ratio was 0% (the maximum acceptable level being 7%). This means that all its borrowers meet their obligations to the Fund on time and in full.
The Fund's rating is impaired by the paucity of microloans provided and the extremely low operational sustainability level.
Business Partner Fund started providing microloans to small and medium-sized businesses and minor farms in rural areas of Kirov region in 2013. Since then, the Fund had provided only 18 microloans for a total amount of RUB 7 million by April 1, 2014. The Fund's current portfolio amounts to RUB 6.490 million in microloans provided to 13 customers.
Business Partner Fund's expenses, the greater part of which (79%) are wages and salaries (including charges), maintenance of premises, telecommunications services and legal fees, are far above its income. In 2013, the loan interest and commission fees amounted to RUB 62.1 thousand; as a result, the Fund's expenses for the 12-month period exceeded its income almost 19 times. In 2013, the microfinance institution's operational sustainability was 5.3%, almost 2% below its level in 2012 and extremely low compared with the minimum percentage of 100% after two years in operation set for MFIs by Russia's Ministry of Economic Development).
The Upper Kama small business assistance fund Business Partner was established 2005 with the aim of providing assistance and support to small and medium-sized businesses, minor farms in rural areas, national arts and crafts in Kirov region. The Fund was co-founded by the Kirov regional SME support fund, the government of Verkhnekamsky district, Leonid Anatolyevich Kibardin (director of Energetik LLC), Alexey Alexandrovich Oskolkov (individual entrepreneur). The Fund was registered as a microfinance institution on October 31, 2013.
This press release is based on the Statement of assignment of a microfinance institution credit rating to the Upper Kama small business assistance fund Business Partner.
The rating assigned, along with any information and conclusions provided in this press release, only conveys our opinion on the entity's reliability and shall not be construed as a recommendation to purchase or sell securities, or to provide loan facilities to the Fund.
AK&M Rating Agency shall not be held liable for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.
CJSC AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993. CJSC AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010) and is on the Central Bank of Russia's Register of Accredited Rating Agencies.
CJSC Analysis, Consulting and Marketing Rating Agency
ul. Gubkina 3