Press Releases / 27.08.2013

Press Release as of 27.08.2013

JSC "Izhcombank"

CJSC AK&M Rating Agency monitored the national scale credit rating of JSC Izhcombank (license no. 646) and upgraded it to 'A', with a stable outlook.

The Bank's previous rating was 'B++', with a positive outlook.

The 'A' rating indicates that JSC Izhcombank qualifies as a highly reliable borrower. Risk of a delay in meeting liabilities is relatively low, restructuring risk for a loan / part of a loan is minimal.

The rating action is primarily motivated by a significant increase in the Bank's equity capital, growing loan portfolio, and structural improvements in the Bank's assets.

From January 1 to July 1, 2013, equity capital of JSC Izhcombank increased by almost 9% reaching RUB 903.6 million. For the 12-month period preceding this date, the capital growth rate was even more impressive (27.2%). In both cases, the Bank surpassed the average growth rates in Russia's banking sector (7.4% and 20.1%, respectively, for the same periods). Apart from higher retained earnings, the equity capital growth was driven by the property revaluation surplus and a follow-on offering of the credit institution's shares.

At the end of Q2 2013, the Bank's loan portfolio exceeded RUB 4.5 billion increasing by 18.0% against the start of the year. While significantly cutting interbank loans and investments in securities, the Bank increased the share of corporate and retail loans in assets from 51.8% to 62.4%, which we regard as a major positive rating driver for JSC Izhcombank.

The Bank's rating is additionally supported by the low and still decreasing percentage of overdue loans in the loan portfolio. As of July 1, 2013, only 2.05% of the loans were in arrears (against 2.63% the year before), much below the level of delinquencies on the loans and other facilities provided to non-financial institutions and individuals in the Udmurt Republic, the main region of the Bank's activity, where the average share of debt arrears as of the same date was ca. 4.3%.

We also appreciate the relatively high profitability of the credit institution. At the end of the 12-month period ending on June 30, 2013, ROA was 1.9%, ROE was 17.1%, correlating well with the average ratios in Russia's banking sector (2.1% and 16.6%, respectively).

The key negative rating driver is the reduction in non-credit institutions' deposits with the Bank (by almost RUB 400 million or 6% of the initial amount from July 1, 2012 to July 1, 2013), which triggered negative changes in the funding base (-5.3%) and assets (-2.3%). It should be noted that Russia's banking sector improved these performance indicators by approximately 20% for the same period.

JSC Izhcombank established on the basis of the Udmurt Republican Department of Zhilsotsbank of the USSR has been active in the market of banking services since 1990. The bank comprises 2 operational offices, 18 supplementary offices, one representative office and 5 stand-alone cash desks. One of the Bank's operational offices and one of its stand-alone cash desks are located outside of the Udmurt Republic, namely, in Chaykovsky city, Perm Krai.

JSC Izhcombank is licensed by the Central Bank of Russia to provide banking service and to accept money deposits from individuals (lic. no. 646 as of October 5, 2005). In December 2004, the Banking Supervision Committee of the Central Bank permitted the Bank to join the Deposit Insurance System (DIS). The Bank's auditor is CJSC Yekaterinburg Audit Center (license of Russia's Ministry of Finance no. E 000455 as of June 25, 2012).

JSC Izhcombank provides all types of banking products and services involving Russian rubles and foreign currencies. The Bank focuses on corporate lending services and accepting money deposits from individuals.

This press release is based on the statement of assigning a credit rating to CB International Bank of Development (CJSC).

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

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 – Regulation 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide cash and settlement services to project and engineering companies implementing investment projects), the MICEX (for the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation and bond listing purposes). By a resolution of Russia's Government AK&M Ratings count for the recapitalization of 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
Press release by: A.V. Khibukhin
Phone no. (495) 916-70-30,
fax no.: (499) 132-69-18.