The 'A' rating indicates that CB International Bank of Development (CJSC) 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 credit rating of CB International Bank of Development (CJSC) is essentially supported by the good equity capital adequacy and quality, high-grade loan portfolio, and much stronger key performance indicators in 2012 which the Bank kept up in early 2013.

The Bank's equity capital increased by RUB 217.69 million (20%) in 2012, by RUB 13.24 million (1.0%) in 2013. As of August 1, 2013, equity capital amounted to RUB 1,318.80 million. The equity capital growth was mainly driven by the Bank's retained earnings in 2012, and a subordinated loan in 2013.

We appreciate the Bank's effort to keep its capital adequacy healthy. Its CAR was 14.00% as of July 1, 2013 and improved to 15.45% as of August 1, 2013.

The share of core capital in the Bank's equity capital is high (more than 80% as of the last reporting dates). The authorized capital accounted for ca. 66% of the equity capital in 2013. In the second half of 2013, the Tier 2 to Tier 1 capital ratio (capital quality ratio) floats in the 14-15% range, meeting the Central Bank of Russia's guideline.

More than 80% of the loans receivable are loans of quality grades 1 and 2 (in roughly equal portions); as of July 1, 2013, loans of grades 3 and 5 accounted for ca. 17% of the loan portfolio. The high percentage of high-grade loans is testifying to the high quality of the Bank's loan portfolio. Another strong point is the good diversification of borrowers across economy sectors.

At the same time, the loan arrears and provisions against possible losses are uncomfortably high (9.3% and 11.5%, respectively, of the total amount of loans as of July 1, 2013) – one of the reasons being that the loan portfolio contains debts from prior years pending completion of the claim-related activities.

The good capital adequacy and quality, the loan portfolio excellence are contributing to the rating of CB International Bank of Development (CJSC).

In 2012, the Bank's key performance indicators improved significantly. Its assets grew by 21.6%, net loans receivable by 37.7%, liabilities by 19.7%. In the first quarter of 2013, assets and liabilities increased by approximately 3% to RUB 9,762.12 million and RUB 8,583.97 million, respectively, as of April 1, 2013. This expansion is a powerful argument for the Bank's rating.

At the same time, the rating is under pressure of lower key performance indicators in the second half of 2013, high share of investments in securities in the Bank's assets and of loans in its liabilities, weak profitability and liquidity positions.

In the second quarter of 2013, most of the Bank's key performance indicators decreased to levels below those seen on April 1, 2012. As of July 1, 2013 assets totaled RUB 8,504.76 million, liabilities were RUB 7,315.86 million (2.8% and 5.1%, respectively, below the values at the end of Q1 2012. In the second quarter of 2013, highly liquid assets, net investments in securities and net loans receivable decreased on the asset side, customer deposits and funds of the Central Bank of Russia on the liability side. The key performance indicators continued to decrease in July 2013: account balances of companies and enterprises by ca. 17%, funds of the Central Bank of Russia by 24%, investments in securities by 18%.

It is mainly the weaker key performance indicators that made us revise the outlook for the Bank's credit rating to the negative.

The Bank's key assets are net investments in securities, while its liabilities mainly arise from the funds received from the Central Bank of Russia. As of July 1, 2013, net investments in securities accounted for 53.5%, net loans receivable for 38.0% of its assets. Over the last year, the share of net investments in securities decreased, while net loans receivable gained significance (against 61.8% and 31.5%, respectively, as of July 1, 2012). However, the percentage of net loans receivable in the Bank's assets is very low compared with the average value in Russia's banking sector (70.9% as of July 1, 2013).

More than 40% of the Bank's liabilities are loans, deposits and other funds of the Central Bank of Russia, while the share of customers' deposits dropped to lower than 40% in mid-2013 (43.9% and 39.1%, respectively, as of July 1, 2013).

The Bank's profit performance and return ratios are weaker in 2013 compared with 2012. In particular, pre-tax profit was RUB 4.66 million in the first quarter of 2013, RUB 36.49 million in H1 2013, compared with RUB 113.33 million and RUB 209.02 million for the similar periods in 2012.

As of July 1, 2013, the Bank's return on equity and assets ratios were 4.3% and 0.6%, respectively, much below the average return on equity and assets ratios in Russia's banking sector as of the same date (16.6% and 2.6%, respectively).

In 2013, we have detected negative changes in the liquidity position of CB International Bank of Development (CJSC). The acid test ratio has not exceeded 35% in 2013 (the Central Bank of Russia's upper limit being 15%). This ratio reached its lowest values on February 1 and August 1, 2013 (18.46% and 21.87%, respectively). On separate dates, the Bank's current liquidity ratio was also critically low (53.49% as of June 1, 2013, approaching the Central Bank of Russia's lower limit).

Bank name: Commercial Bank «International Bank of Development».

CB International Bank of Development (CJSC) is registered by the Bank of Russia, reg. no. 2704 as of February 21, 1994. General banking license as of April 3, 2012. The Bank has been participating in the compulsory deposit insurance scheme since March 3, 2005, registration no. 750.

The Bank's HQ and satellite offices are located in Moscow, with one branch in Ufa.

CB International Bank of Development (CJSC) provides all types of services involving Russian rubles and foreign currencies to legal entities and individuals, lends to individuals and legal entities, performs operations in the securities market and in the exchange market.

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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).

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CJSC AK&M Rating Agency<br /> ul. Gubkina 3<br /> Moscow, Russia<br /> www.akmrating.ru<br /> Press release by: A.M. Krachkovskaya<br /> Phone no. (495) 916-70-30, fax no.: (499) 132-69-18