The ‘B++' rating indicates that CJSC StarBank is qualified as a sufficiently reliable borrower (the highest sub-grade of the ‘B' grade). Risk of a delay in meeting liabilities is moderate, restructuring risk for the loan / part of the loan is insignificant.
One of the arguments supporting the rating score is the high capital quality, the share of Tier 1 capital being over 90%. Besides, Tier 1 capital is mainly covered by the authorized capital, the most reliable source. The authorized capital of CJSC StarBank is RUB 560.7 million, 50.6% of its total equity capital, above the average percentage in the banking system of the Russian Federation (24.5%).
The quality of the Bank’s loan assets improved in 2011. The share of NPLS and problem loans in the loan portfolio as of January 1, 2012 is 3.6%, below the banking average as of the same date (6.8%). This indicates that the Bank’s credit policy is well-balanced and the credit risk is low. The share of doubtful loans is 11% (against 10.4% on average in Russia’s banking system). Class 1 loans and class 2 loans account for 85.4% of the Bank’s loan portfolio, which is just above the average value in the banking system of the Russian Federation (83%).
Another argument for the rating score is the high current liquidity level (N3 as of 2/1/2012 was 151.59%).
The concentration of liabilities (as per report form no. 157) within one certain group of depositors is fairly good. The maximum share of that group in the total amount of funds as of January 1, 2012 was 4.18 of all liabilities (RUB 292.4 million), 2 largest groups account for 6.06%, 5 largest depositors (groups of depositors) for just over 9% of all the obligations. Our retrospective analysis revealed that this diversification of obligations across the groups of depositors was maintained over the whole period under review.
CJSC StarBank a well-developed PoS network in 4 federal districts of the Russian Federation. Apart form the HQ, this network comprises 3 branches, 13 operational offices, 1 stand-alone cash desk and 1 representative office. The Bank’s presence in other regions enables it to geographically diversify its loan portfolio and its funding sources. Also, the branching network increases the Bank’s capacities in the way of attracting new clients.
The high credit risk concentration is restrictive on the rating score. The maximum amount of large credit risks (N7) is above average. As of February 1, 2012, this indicator was 589.89%, the threshold level being 800%.
In 2011, the N9.1 indicator (Maximum amount of loans, guarantees and surety bonds to the bank’s member) was far above the average rate in the banking system of the Russian Federation, yet below the upper threshold set by the Central Bank of the Russian Federation (50%).
Another risk factor is a high percentage of investments in securities (43.7% of all assets). Since the start of 2011, the share of investments in securities increased bringing about more risks related to securities, with all the stability on stock markets. However, the Bank’s security portfolio mainly consists of bonds most of which being on the Lombard list.
There is a downward trend in the Bank’s capital adequacy ratio. From 19.58% as of the start of 2011 it decreased to 11.69% as of the start of 2012. The reason for the decrease is the growth of asserts outstripping the capital growth. As of February 1, 2012, the ratio decreased to 11.25%, which is close to the lower threshold set by the Central Bank of the Russian Federation (10%).
CJSC StarBank has been active in the market of banking services since 1980. The Bank of Russia assigned it registration number 548 as of October 23, 1990. The bank possesses a license for banking operations involving rubles and foreign currencies (without attraction of deposits of monetary resources from physical persons) as of October 14, 2008 and a license for attraction of deposits of monetary resources in rubles and foreign currencies from physical persons as of October 14, 2008.
The Bank participates in the compulsory deposit insurance system (registered under no. 485 as of January 20, 2005).
The Bank provides all types of services involving Russian rubles and foreign currencies, provides loan facilities and eagerly attracts funds from physical persons.
The Bank's auditor is Alt-Audit LLC which has been a member of the Audit Chamber of Russia (a non-profit partnership) since 2003.

This press release is based on the statement of assigning a credit quality rating to OJSC StarBank.
The rating score, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank's reliability 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 – Provision 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide business banking services to project and engineering entities implementing investment projects), the MICEX (as a prerequisite for including bonds in the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation base, for listing bonds and for providing access to the MICEX+ trading mode). Pursuant to an order of Russia's Government AK&M Ratings count for approving the capitalization increase procedure for 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
www.akmrating.ru
Press release by: Y.B. Kuznetsova
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18