The ‘B++’ rating indicates that CJSC Bank Venets is qualified as a sufficiently reliable borrower. Risk of a delay in meeting liabilities is moderate, restructuring risk for a loan / part of a loan is insignificant.

The rating score of CJSC Bank Venets is essentially supported by the growing equity capital and authorized capital, the high capital adequacy, the operational profitability and the high quality of its loan portfolio.

The Bank’s equity capital has been growing at a good pace in recent years. The Bank’s capital increased by 49.6% in 2010, by 15.3% in 2011, by 35.8% for 5 months 2012. Equity capital of CJSC Bank Venets as of January 1, 2012 was RUB 429,873 thousand; on June 1, 2012, it reached RUB 583,842 thousand. In 2010, 2011, this equity capital increase was driven by the retained earnings and a subordinated loan. In 2012, along with the profits, the Bank’s authorized capital increased by RUB 33,000 thousand, paid-in capital by RUB 106,999 thousand.

In 2011-2012, the Bank’s capital adequacy ratio exceeded the average level in Russia’s banking sector. In Q1 2012, the Bank’s CAR was 17.2-17.7% changing to 20.9% and 20.3% as of May 1 and June 1, 2012, respectively.

The Bank’s ROA and ROE are high. The Bank’s pre-tax profit totaled RUB 66,780 thousand in 2011, RUB 28520 thousand in the first quarter 2012. Return on equity as of April 1, 2012 was 19.5%, return on assets was 3.4% (against 18.2% and 2.4% in Russia’s banking sector, respectively).

Class 2 loans account for most of the Bank’s loan portfolio. The share of problem and non-performing loans as of June 1, 2012 was 2.4%, the share of doubtful loans was 16.7%. Loan arrears are low (0.5% as of the same date, against 4.2% on average in Russia’s banking sector).

The rating score of CJSC Bank Venets is restricted by the slowly growing assets and obligations, the decreasing amount of customers’ funds, the unstable instant and current liquidity ratios.

The growth of assets and obligations of the Bank in the second half year 2011 slowed down. In the first half year 2011, the Bank’s assets increased by 40.8%, obligations by 47.9%. In the second half year 2011, the Bank’s assets increased by 2.5%, obligations by 0.6%; in Q1 2012, they grew by 3.0% and 2.5%, respectively. In Q1 2012, the customers’ funds decreased by 7.7%, although mounted a comeback to early 2012 levels as of June 1 (owing to an inflow of individuals’ deposits).

Instant and current liquidity ratios of the Bank lack stability. Fluctuations in these ratios reached 48-49% in 2011, 16-17% in 2012. In 2012, all the ratios are above the minimum allowable levels. As of 6/1/2012, the Bank’s quick liquidity ratio was 61.7%, current liquidity ratio was 68.8%.

CJSC Bank Venets has been active in the market of banking services since 1990, the Bank of Russia assigned it registration no. 524. The bank possesses a license for banking operations involving rubles and foreign currencies (without accepting deposits of monetary resources from individuals) as of 9/26/2002, and a license for accepting deposits of monetary resources from individuals involving Russian rubles and foreign currencies, as of 9/26/2002. The Bank participates in the deposit insurance scheme, DIS registration no. 77 as of October 14, 2004.

The bank headquartered in Ulyanovsk has several branches in Ulyanovsk and Ulyanovsk region, provides all the banking services involving Russian rubles, lends to legal entities and private customers.

The Bank’s auditor is FEDBEL LLC (location: F. Engels street, 155, office 228, 300012 Tula, Russia; tax number 7107015108. FEDBEL LLC is a member of the SRO Audit Chamber of Russia (a non-profit partnership), principal registration number 10301002266.

This press release is based on the statement of assigning a credit rating to CJSC Bank Venets.

The credit rating, 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 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 and for listing bonds). 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 AK&M 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