Press Releases / 16.10.2014

Press Release as of 16.10.2014

JSCB «Primorye»

CJSC AK&M Rating Agency affirmed the national scale credit rating assigned to JSCB Primorye (license no. 3001) at 'A', tier 1, with a stable outlook.

The 'A' rating indicates that JSCB Primorye qualifies as a highly reliable borrower. The risk of a failure to meet obligations in time is low, the full or partial debt restructuring risk is minimal.

The Bank headquartered in Vladivostok city qualifies as a mid-sized Russian credit institution in terms of the amount of business. As of September 1, 2014, the Bank ranked 150th in terms of net asset size among Russian banks, 166th in terms of equity capital.

The Bank's core business is the provision of all types of banking products and services involving Russian rubles and foreign currencies, along with operations in the securities market.

The credit rating of JSCB Primorye is essentially supported by the qualitative improvements in its balance sheet and operational performance, a robust loan portfolio, and the steadily profitable operations.

The high and growing equity capital of the credit institution is a robust foundation for an increase in its key balance sheet indicators. As of July 1, 2014, the Bank's equity capital reached RUB 3,184 million increasing by 11.6% since the start of the year. Assets of JSCB Primorye also expanded by 5% since the start of the year reaching RUB 25.4 billion on July 1, 2014.

In AK&M Rating Agency's view, impressive loan portfolio management quality is a positive rating driver. Arrears on the loans granted are low (3.2% of the total loan portfolio, far below the average percentage in Russia's banking sector). Loans of quality classes 1 and 2 account for 87.15% of the Bank's loan book.

Over the period under review, the Bank's liquidity and credit risk ratios stayed within established limits meeting the applicable requirements of the Central Bank of Russia.

The Bank never failed to meet the applicable liquidity and credit risk requirements in the period under review. The corresponding ratios have been close to the average market benchmarks and stay within the regulatory limits set by the Central Bank of Russia.

At the same time, we regard the relatively low equity capital adequacy (N1). Since July 1, 2014, the Bank's capital adequacy ratio has been on a downward trend and reached 10.92 on September 1, 2014. The capital quality ratio (Tier 2 to Tier 1 capital ratio) of JSCB Primorye was 33.6% on the same date. This exceeds the level recommended by Russia's regulatory authority (no more than 30%), but meets the Basel Accord benchmark (below 50%).

Another weak point constraining the credit rating is the lower return on assets ratio in the period under review.

JSCB Primorye is making consistent efforts to reduce the share of securities in assets which is currently approaching the average level in Russia's banking sector. At the same time, we note the recent negative upward trend in the amount of securities pledged under a repo scheme. Since the start of the year, the total amount of repoed securities increased by 40% exceeding half of the Bank's total securities portfolio.

Full Bank name: Joint-stock commercial bank "Primorye"; short name: JSCB Primorye.

JSCB Primorye has been operating in the market of banking services since 1989. The Bank possesses general banking license no. 3001 as of December 27, 1994 issued by the Central Bank of the Russian Federation. The Bank is a member of the compulsory deposit insurance system, DIS registration certificate no. 147 since 2004.

JSCB Primorye is a member of the Association of Regional Banks of Russia, the Visa, MasterCard, Worldwide, Western Union payment systems, participates in the Golden Crown Money Transfer system and the Society for Worldwide Interbank Financial Telecommunications (SWIFT); also, the Bank is a permanent member of SRO National Securities Market Association (NSMA), an official dealer of the Bank of Russia in the market of government securities, and a member of Moscow Exchange.

This press release is based on the Statement of assignment of a credit rating to JSCB Primorye.

The rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank's creditworthiness and shall not be construed as a recommendation to purchase or sell securities, or to lend funds.

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 Analysis, Consulting and Marketing 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 AK&M Rating Agency

Ul. Gubkina 3, Moscow, Russia

Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.