The 'A' rating indicates that CB Transnational Bank (Limited) 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 score is unlikely to change during the rating period.

The Bank's rating is supported by the growing capital and assets, high return ratios, and good liquidity position.

CB Transnational Bank (Limited) improved its equity and assets in 2013. For the 12-month period, the Bank's equity capital grew by RUB 619.10 million (55.3%) reaching RUB 1,739.29 million as of January 1, 2014. Among the equity capital components, the Bank increased its authorized capital, reserve fund, and subordinated loan. For the 12-month period ending on October 1, 2013, the Bank's assets grew by 85.4% to RUB 16,561.11 million. The growth was mainly driven by net loans receivable.

The Bank keeps profitability high, which has also contributed to the rating. The Bank's operating profitability stays high, despite shrinking profits compared with the previous year. According to preliminary data, the Bank's pre-tax profit for 2013 was RUB 289.65 million (RUB 390.54 million in 2012), its ROA and ROE ratios being 2.0% and 20.4%, respectively. The return on assets ratio is roughly matching the average percentage in Russia's banking sector, the return on equity ratio is significantly above the average level (as of December 1, 2013, the Bank's ROA and ROE ratios stood at 1.9% and 14.9%, respectively).

We also appreciate the strong liquidity position of CB Transnational Bank (Limited) at the end of 2013 as a positive rating driver. Almost all the year 2013, the Bank's acid test ratio remained high (50% and more), hitting the year's low as of April 1, 2013 (44.36%). Current liquidity ratio has been comfortably high since September 2013 (more than 60%).

As of December 1, 2013, the Bank's acid test and instant liquidity ratios were 63.29% and 74.0%, respectively, approaching the average level across Russia's banking sector (63.3% and 76.4% as of the same date, respectively).

At the same time, the credit rating is under pressure of the low capital adequacy ratio, high amount of major credit risks, as well as high percentage of personal deposits in the Bank's liabilities.

The capital adequacy ratio of CB Transnational Bank (Limited) remains low. In 2013, it never exceeded 11%, except for the first days of just two reporting months (in February and in March), and stood at 10.51% as of January 1, 2014. The Bank's CAR ratio is markedly below the average level in Russia's banking sector exceeding 13% throughout 2013.

The percentage of major credit risks, while not approaching the upper regulatory limit, is far above the average level in Russia's banking sector. As of October 1, 2013, this ratio reached the highest point in 2013 (508.08%), against the banking sector's peak value of 211.9% on December 1, 2013. The largest borrowers of CB Transnational Bank (Limited) are poorly diversified across economy sectors, trade and construction companies accounting for more than half of the large loans.

The share of personal deposits in the Bank's liabilities is very high, exceeding 70% in 2013. In January-September 2013, individual deposits were the only growth driver for the Bank's liabilities. As of January 1, 2014, CB Transnational Bank (Limited) held approximately RUB 11,554.74 million in personal deposits, their high absolute value and fast growth resulting in higher interest expenses and cost of liabilities.

Full business name: Commercial Bank «Transnational Bank» (Limited).

Short business name: CB Transnational Bank (Limited).

The Bank has been active in the market of banking services since 1992, reg. no. 2108 at the Bank of Russia.

The Bank possesses a license for banking operations involving rubles and foreign currencies (without accepting money deposits from individuals) and a license for accepting deposits of precious metals as of December 26, 2012, along with a license for accepting money deposits from individuals denominated in Russian rubles and foreign currencies as of August 27, 1999.

Headquartered in Moscow, CB Transnational Bank (Limited) has branches in St. Petersburg, Yekaterinburg, Nizhny Novgorod, Volgograd and Bodaybo (Irkutsk region).

The bank provides all types of services involving Russian rubles and foreign currencies, lends to legal entities and individuals, carries out transactions with precious metals.

This press release is based on the statement of assigning a credit rating to CB Transnational Bank (Limited).

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 construed as advice on the purchase and sale of securities or the provision of loan facilities to the Bank.

CJSC 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.

CJSC 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).

CJSC Analysis, Consulting and Marketing Rating Agency
ul. Gubkina 3
Moscow, Russia
www.akmrating.ru
Press release by: A.M. Krachkovskaya
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18