The ‘B++' rating indicates that CB Altaikapitalbank LLC 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.
The rating score of the Bank is essentially supported by the high return on equity return on assets. ROA 2010 was 5.3%, ROE was 25.5%. Both are 2-3 times above the average level in Russia’s banking system. Today, CB Altaikapitalbank LLC is the most profitable bank of Altai Krai.
One of essential arguments supporting the rating score of CB Altaikapitalbank LLC is its high capital adequacy. As of May 1, 2011, equity capital of the Bank equaled RUB 507 million, capital adequacy ratio (N1) was 20.0% exceeding the average value in Russia’s banking system (17.3%). The high operating profitability enables the Bank to use its profit for equity capital injection purposes. As of May 1, 2011, the Bank’s authorized capital accounted for 19.9% of its equity capital.
The loan portfolio of CB Altaikapitalbank LLC is of high quality. The share of class 1 loans and class 2 loans as of May 1, 2011 was 88.9%, loans of class 4 and class 5 accounted for 3.3% of the loan receivables (against about 1.5% in 2010).
Also, the low share of loan arrears speaks well for the company’s loan portfolio. In 2010-2011, the share of loan arrears did not exceed 2% of the loan receivables and reached 1.4% as of May 1, 2011, about 3 times below Russia’s banking average (4.5% as of May 1, 2011).
The Bank has achieved sufficient liquidity, which naturally supports the rating score. Quick liquidity ratio of the Bank as of May 1, 2011 was 29.8%, the minimum value required being 15%. Current liquidity ratio equaled 73.4% against the minimum acceptable percentage of 50%. Long-term liquidity ratio on the same date was 63.7%, below the maximum limit of 120%. These ratios are far away from the critical ranges indicating the good financial soundness of the credit institution.
One of the negative signals for the Bank’s rating score is that its equity capital decreased by RUB 39 million from RUB 546 million to RUB 507 million over the period from April 1 till May 1, 2011 as the Bank disposed of its retained earnings of prior years. We do not consider this decrease to be too detrimental for the rating, since we used to see the Bank's equity capital decrease in the same manner in previous years, always mounting comebacks later and increasing as these years drew to a close.
The decreasing profit for Q1 2011 against Q1 2010 also restricts the rating score. Pre-tax profit decreased by 21% from RUB 35.6 million for Q1 2010 to RUB 28.1 million for Q1 2011 due to the growing provisions against possible loan losses.
Lending to small and middle-sized businesses constitutes another risk factor for CB Altaikapitalbank LLC. Loans granted to SME accounted for 77% of the total amount of loans in 2010 and 89% in Q1 2011. In absolute terms, the Bank lent RUB 1,622.5 million to legal entities as of January 1, 2011.
The Bank’s rating score is restricted by the insufficient industry-specific diversification of its customers and its regional profile restricting its geography.
CB Altaikapitalbank LLC has been active in the market of banking services since 1994. The bank possesses licenses of the Central Bank of the Russian Federation as of March 16, 2010, registration number 2659. CB Altaikapitalbank LLC, a mid-sized regional bank in the amount and volume of operations, is active in Altai Krai. CB Altaikapitalbank LLC ranked 454th in the amount of net assets as of April 1, 2011, 380th in the equity capital as of April 1, 2011. In October 2004, the Banking Supervision Committee of the Central Bank permitted CB Altaikapitalbank LLC to join the Deposit Insurance System (DIS). The Bank's auditor is Altai-Audit-Consulting LLC. The bank provides all kinds of banking services involving Russian rubles and foreign currencies, focusing on lending to SME businesses.

This press release is based on the statement of assigning a credit rating to CB Altaikapitalbank LLC.
The rating score, along with any information and conclusions provided in this press release, only conveys our opinion on the Company'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 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.

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Press release by: A.M. Krachkovskaya
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