The 'B++' rating indicates that Bank of Development of Technologies 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 of Development of Technologies qualifies as a mid-sized Russian credit institution in terms of the amount of business. As of July 1, 2014, its ranked 400th in terms of asset size among Russian banks, 378th in terms of equity capital, 518th in terms of retained earnings.

The Bank's HQ and operating satellite office are located in Moscow.

Bank of Development of Technologies is a universal credit and financial institution providing services to all groups of legal entities and individuals.

We appreciate the Bank's high quality of capital, profitable operations, well-structured assets and low funding costs as a positive rating driver.

The Bank's high, well-structured and growing equity capital results in a high upside potential for its key balance sheet indicators.

As of July 1, 2014, the Bank's equity capital totaled RUB 913.6 million growing by RUB 40.1 million (4.6%) since the start of 2013. The Bank benefits from a favorable equity capital structure with a large part of steady capital sources, as proven by the Tier 2 to Tier 1 capital ratio (17%, the regulatory requirement being no more than 30%) and the authorized capital dominance (70%, more than 3 times above the respective average level in Russia's banking sector).

The capital adequacy ratio is twice above the limit set by the Central Bank of the Russian Federation and enables the Bank to expand borrowings.

The Bank's operations were profitable both in 2013 and in the first half of 2014 (pre-tax profits reaching RUB 42.4 million and RUB 6.7 million, respectively). In 2013, the Bank's profit margin went up twice against the previous period, which caused positive changes in the pre-tax profit (+98%).

Another thing supporting the credit rating of Bank of Development of Technologies is the low cost of debt (about 3%). The Bank's cost of funding is fairly low and, of particular note, on a favorable downward trend. In aggregate, these achievements provide opportunities for a further growth of interest earnings, the main contributor to the Bank's net income profile.

We also appreciate the well-structured assets of Bank of Development of Technologies. The Bank's its main earning assets (loans receivable) account for 75.8% of the total assets. Their relative share is growing, which is another positive argument.

At the same time, the weaker key balance sheet indicators, the impaired loan portfolio quality, the growing arrears, and certain credit quality and liquidity flaws are constraining the Bank's credit rating.

The Bank's assets and liabilities have shrunk in 2013 and 2014, with a particularly strong decline in the first half of 2014: assets decreased by 3.7%, liabilities by 4.7%. The amount of funds borrowed from customers decreased both in the corporate and retail segments (-7.1% and -13.5%, respectively). These negative changes contradict the positive average trend in Russia's banking sector (except for the segment of personal deposits showing a minor decrease).

The loan portfolio quality review has shown that the aggregate share of loans of quality grades 1 and 2 decreased by 12 p.p. against the previous year to 62.9% (the average percentage in Russia's banking sector being 86.2%). The aggregate share of doubtful and non-performing loans has also decreased but is still 1.5 times above the average percentage in Russia's banking sector (9.4% against 6.1%). Furthermore, arrears on the Bank's loans doubled to 3.3%.

Another point of concern is that certain credit quality and liquidity ratios are below that comfortable level. In 2014, the total magnitude of insider-specific risk (N10.1) ranged from 2.35% to 2.28%, the current liquidity ratio (N3) dropped to 59.5% approaching the regulatory limit.

Bank name: Bank of Development of Technologies.

Bank of Development of Technologies has been operating in the market of banking services since 1990. The Bank possesses general banking license no. 3441 as of September 8, 2003 issued by the Central Bank of the Russian Federation. The Bank is a member of the deposit insurance system, reg. no. 978 as of March 27, 2009.

This press release is based on the Statement of assignment of a credit rating to Bank of Development of Technologies.

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

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www.akmrating.ru

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