The 'B++' rating indicates that BANK ELITA qualifies 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 Bank's credit rating is essentially supported by the qualitative improvements in its balance sheet and operating performance, favorable property structure, high quality and growth of equity capital, growing profit and operating margin in 2012 and this year.

The ownership structure of BANK ELITA has not changed for a long time already. The principal owner of the Bank is the Government of Kaluga region. The Bank is actually a publicly owned credit institution accepting deposits and placing assets only in Kaluga region, thereby supporting the local economy.

BANK ELITA is primarily committed to providing a whole range of banking services to SME businesses, extending financial support to innovative and modernization projects, implementing state retail mortgage lending programs in Kaluga region, saving personal deposits and investing them in the real economy of the region.

As a result of adding RUB 50 million to the authorized capital in 2012 and profitable operations, equity capital of BANK ELITA has increased by 37% since the start of 2012 reaching RUB 301.4 million as of July 1, 2013. This increase drove up other performance indicators of the Bank.

The Bank maintains high quality of its equity capital. The share of Tier 1 capital exceeds 98%; the authorized capital of BANK ELITA amounts to RUB 214.6 million (71% of the total equity capital), exceeding the average percentage in Russia's banking system (22.1% as of 6/1/2013).

In 2012 and Q1 2013, the Bank expanded its assets by 12% (from RUB 2,039.1 million to RUB 2,281.1 million). The balances of accounts grew by 20.5% in 2012. The number and total amount of mortgage loans provided by the Bank also increased by 26% in 2012.

The Bank's operations were profitable in 2012. Pre-tax profit increased 1.8-fold year-on-year to RUB 41 million.

In 2012, the Bank's net profit reached RUB 28.8 million, the highest in the three-year period (2010-2012), exceeding the 2010 result more than 26-fold, twice above the 2011 result.

We also appreciate the good balance of liquid assets and liabilities in terms of maturity as a positive rating driver. More than half of the Bank's assets and liabilities mature in no longer than 180 days.

In 2012, the Bank's return on equity and assets ratios increased to 16.01% and 1.77%, respectively, although staying 2.2% and 0.5%, respectively, below the average level in Russia's banking sector.

In 2011, 2012 and Q1 2013, the Bank raised capital at a rate below the Bank of Russia's refinancing rate, which contributes to its rating. At the end of the first quarter 2013, the cost of debt was 2% per annum, the interest rate on customer deposits was 1.98% per annum.

Another positive rating driver for BANK ELITA is the high quality of its loan portfolio. As of June 1, 2013, most of the Bank's loans receivable (83.34%) are high-grade loans (quality grades 1, 2). This is comparable to the average value in Russia's banking sector (84.9%). The share of non-performing and problem loans in the loan portfolio as of June 1, 2013 was 5.31%, below the average value in Russia's banking sector as of the same date (6.6%).

Over the period under review, the Bank's liquidity and credit risk ratios stayed within established limits meeting the applicable requirements of the Central Bank of Russia.

At the same time, we regard the low equity capital adequacy ratio, lower pre-tax profit, poor return ratios, high credit risk concentration, fairly high concentration of liabilities in one group of depositors, and unimpressive acid test and current liquidity ratios as negative rating drivers.

The Bank's equity capital adequacy ratio has been on a steady downward trend since the second quarter of 2012. As of July 1, 2013, it fell below the average value in Russia's banking sector to 12.57%.

In the first quarter of 2013, the Bank's pre-tax profit was RUB 2.8 million, more than 6 times below the result achieved in Q1 2012. The ROE and ROA ratios are trailing the average values in the banking sector. As of April 1, 2013, they decreased to 8.8% and 1.1%, respectively, against the average percentages of 17% and 2.1%, respectively.

The Bank's credit risk concentration is fairly high. The maximum amount of large credit risks (N7) and total magnitude of insider-specific risk (N10.1) are above the average, although not exceeding the upper limits set by the Central Bank of Russia. As of July 1, 2013, N7 was 523.9%; N10.1 was 2.47%, the maximum allowable percentages being 800% and 3%, respectively.

The concentration of liabilities in one group of depositors has increased since our previous review. As of July 1, 2013, the largest group of depositors accounted for 19.65% (RUB 373.6 million), the two largest groups of depositors for 27.68%, the ten largest depositors (groups of depositors) for 50.14% of the Bank's total liabilities.

The Bank's liquidity level leaves much to be desired. As of July 1, 2013, the acid test ratio (N2) and current liquidity ratio (N3) of BANK ELITA were 36.55% and 69.42%, respectively, far below the average values in Russia's banking sector.

BANK ELITA has been operating in the market of banking services since 1991. The Bank is registered by the Central Bank of Russia (registration no. 1399 as of March 6, 1991). BANK ELITA is focused on providing a whole range of banking services to individuals, small and medium-sized enterprises and municipal institutions of Kaluga region. As a whole, the Bank's activity profile is typical for a mid-sized Russian credit institution. As of June 1, 2013, the Bank ranked 569th in assets, 678th in equity, 339th in net profit, as estimated by Interfax-Center for Economic Analysis. The Bank's assets as of April 1, 2013 totaled RUB 2,281.1 million, equity capital as of July 1, 2013 was RUB 301.4 million.

The Bank possesses a license for banking operations involving Russian rubles and foreign currencies (without accepting money deposits from individuals) as of August 7, 2006, and a license for accepting money deposits denominated in Russian rubles and foreign currencies from individuals as of August 7, 2006.

The Bank participates in the compulsory deposit insurance scheme, DIS registration certificate no. 220 from November 25, 2004.

The Bank's auditor is Vneshgen audit LLC, certificate of membership in nonprofit partnership SRO Audit Chamber of Russia no. 850 as of 12/28/2009, principal registration number 10301003572).

Full name: BANK ELITA.

Headquartered in Kaluga, the Bank has a branch network in Kaluga and Kaluga region. The Bank provides all types of services involving Russian rubles and foreign currencies, lends to legal entities and individuals.

This press release is based on the statement of assigning a credit rating to BANK ELITA.

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).

AK&M Ratings are recognized by the Central Bank of Russia (for providing unsecured lending facilities – Regulation 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide cash and settlement services to project and engineering companies implementing investment projects), the MICEX (for the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation and bond listing purposes). By a resolution of Russia's Government AK&M Ratings count for the recapitalization of 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: S.V. Avdoshin
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18