Press Releases / 27.03.2015

Press Release as of 27.03.2015

Bank «Yoshkar-Ola»

CJSC AK&M Rating Agency assigned a 'B++', tier 2 national scale credit rating to Bank Yoshkar-Ola (license no. 2802). The outlook is stable.

The 'B++' rating indicates that Bank Yoshkar-Ola qualifies as a sufficiently creditworthy borrower. The risk of a delay in meeting obligations is moderate, the full or partial debt restructuring risk is insignificant.

Bank Yoshkar-Ola is a small-scale regional credit institution whose main shareholder is the Mari-El Republic represented by the Ministry of State Property of the Mari-El Republic (75.5% stake). Apart from the HQ, the Bank's branch network comprises 3 branches, 4 satellite offices and 9 stand-alone cash desks. The bank provides all types of services involving Russian rubles and foreign currencies to legal entities and individuals. In terms of assets and equity capital, Bank Yoshkar-Ola is in the 500-600 range among the banks of Russia.

We appreciate the Bank's acceptable equity capital adequacy ratio, high quality of loan assets, low cost of funding and favorable income structure as the positive rating drivers.

Bank Yoshkar-Ola's equity capital adequacy is acceptable and meets the applicable regulatory requirements. The N1.0 ratio stayed in the 13.6-15.4% range exceeding the average levels in Russia's banking sector.

The Bank's fairly high quality of loan assets and low percentage of loan arrears also contributes to the credit rating. As of March 1, 2015, loans of quality grades 1 and 2 accounted for 93.2% of the total loan book, the share of problem and hopeless loans is insignificant (2.3%). Overdue debt is 0.19% (the average percentage in Russia's banking sector being 4.3%).

The low cost of funding is a positive signal for the Bank's credit rating. Over the period analyzed, (borrowed) financial resources cost the Bank no more than 5% on average. Our review of weighted average interest rates revealed a comfortable interest margin indicating that the Bank's interest policy in terms of lending and deposit operations is well-balanced. At the end of 2014, the Bank's interest income was 2.4 times above its interest expenditure.

Another positive argument is the effective earnings profile of Bank Yoshkar-Ola. Being able to derive most of its net earnings from net interest, fees & commissions, the Bank does not depend on volatile and risky income sources when it comes to profitability.

At the same time, we regard the poor balance of assets and liabilities on the long-term horizon, the weaker balance sheet performance indicators and the low equity capital as the rating constraints for the Bank.

The poor balance of assets and liabilities on the long-term horizon is also putting pressure on the rating. The lower liabilities maturing in more than 1 year against an increase in corresponding assets resulted in a worse N4 ratio, currently exceeding the average levels in Russia's banking sector and close to the upper limit of 120%. As of March 1, 2015, the credit institution's long-term liquidity ratio was 117.4%.

The lower assets and liabilities of the credit institution are constraining the credit rating. In 2014, the Bank's liabilities shrank by 14.2% following a contraction in legal entities' deposits. As a result, the Bank's assets dropped by 11.5%.

Despite a positive trend, the Bank's equity capital in absolute terms is fairly low, only ca. RUB 44 million above the regulatory authority's lower limit, resulting in a low capacity to absorb possible losses, which, in AK&M Rating Agency's view, is a risk factor.


Official Bank name: Bank Yoshkar-Ola

Bank Yoshkar-Ola operating in the market of banking services since 1994 has license no. 2802 issued by the Bank of Russia on April 22, 1994. The Bank possesses a license to provide banking services involving Russian rubles and foreign currencies (without accepting money deposits from individuals) as of December 23, 2014 and a license to accept ruble-denominated money deposits from individuals as of December 23, 2014. The Bank has been a member of the deposit insurance system since November 14, 2004, DIS registration no. 229.

This press release is based on the Statement of assignment of a credit rating to Bank Yoshkar-Ola and the Credit Rating Methodology for Banks and their Debt Instruments.

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.

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.


Ul. Gubkina 3, Moscow, Russia

CJSC AK&M Rating Agency

Phone: (495 916-70-30,

Fax: (499 132-69-18