The ‘A’ rating indicates that Evropeisky ICB (CJSC) is qualified 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.

Increasing the Bank’s rating, we appreciate its improving key performance indicators (equity capital, assets, net loan receivables, customers’ funds, net income, pool of customers). Maintaining a fairly high quality of the loan portfolio and absence of liquidity-specific issues are further arguments for the high rating score.

Equity capital of Evropeisky ICB (CJSC) continues to improve. In 2011, it increased by RUB 125.7 million (or 15.1%). As of November 1, 2012, the Bank’s equity capital increased by RUB 42.5 million (or 4.4%) year-to-date.

The Bank’s assets are increasing. In 2011, assets of Evropeisky ICB (CJSC) rose by RUB 1,786.3 million (23.5%). As of October 1, 2012, the Bank’s assets were estimated at RUB 10,393.0 million increasing by RUB 1,017.1 million (10.2%) year-to-date. The Bank’s assets are increasing at a rate fully matching the average asset growth rate in Russia’s banking system.

Net loan receivables are also on the rise. In 2011, they increased by RUB 2,196.5 million (49.1%) against 2011 and reached RUB 6,674.5 million. As of October 1, 2012, the loan receivables increased by RUB 650.6 million (9.7% since the start of the year).

The relatively high quality of loan assets of Evropeisky ICB (CJSC) also supports the rating quality. The loans of quality classes 1-2 account for most of the loan portfolio, whereas the amount of loans in arrears is low.

Another positive signal for the rating score of Evropeisky ICB (CJSC) is the growth of total net incomes: by RUB 108.5 million (23.0%) in 2011, by RUB 28.9 million (7.1%) for 9 months 2012.

For the purpose of the Bank’s rating, AK&M Rating Agency also appreciates the growing amount of funds deposited by both individuals and legal entities. As a whole, the customers’ funds increased by RUB 1,501.8 million (22.3%) in 2011. The growth continued in 2012 (by RUB 923.4 million or 11.2% since the start of the year, as of October 1, 2012).

The customer base of the Bank is growing across the board, which is also favorable for its rating score. The wider customer pool proves the public confidence in the Bank, its good name in the market and high operational efficiency.

All the liquidity ratios are acceptable and meeting the Central Bank of Russia’s requirements. Since our previous review, the bank has never failed to meet the established liquidity standards. The average quality of liquidity ratios, applying AK&M Rating Agency’s estimation method, exceeds 100%, which is quite good. As a whole, the absence of liquidity-specific issues at Evropeisky ICB (CJSC) may be regarded as one of the arguments underlying the high rating score.

At the same time, the decreasing capital adequacy ratio, the considerable share of short-term liabilities and the high N7 and N10.1 ratios prevent a still higher rating score.

The Bank’s capital adequacy ratio (N1) is on the downward trend. Since the start of 2012, this ratio decreased from 16.37% on January 1, 2012 to 11.48% on November 1, 2012.

Another risk factor for the Bank is the relatively high share of short-term obligations in the Bank’s general maturity-based structure of liabilities. On-call and overnight liabilities account for just over 50%, liabilities maturing in over 90 days for 35.2% of the Bank’s total obligations.

The fairly high N7 and N10.1 ratios also work against the rating score. The aggregate amount of large credit exposures (N7) is above the average level in Russia’s banking system, although still far below the maximum percentage of 800% set by the Central Bank of Russia. As of the last reporting date (November 1, 2012), the N7 ratio of the Bank was 462.23% the highest since our previous analysis. Total magnitude of insider-specific risk (N10.1) was also above the average level in Russia’s banking system (2.43% as of November 1, 2012, the upper threshold being 3%).

The Bank (full business name: Evropeisky Investment Commercial Bank Closed Joint Stock Company; short business name: Evropeisky ICB CJSC) has been active in the market of banking services since 1991. The Bank possesses general banking license no. 1616 issued by the Central Bank of the Russian Federation on July 25, 2012.

The Bank participates in the compulsory deposit insurance scheme, DIS registration no. 260 as of December 2, 2004.

Evropeisky ICB (CJSC) provides the standard range of banking products and services involving Russian rubles and foreign currencies. It focuses on providing comprehensive services to corporate customers (prioritizing enterprises engaged in foreign trade activities), lending to small and middle-sized businesses.

Evropeisky ICB (CJSC) is headquartered at: ul. Kutuzova 39, Kaliningrad, Russia. The Bank’s retail network, apart from its HQ, comprises 4 additional outlets and 1 stand-alone cash desk. The bank is only active in Kaliningrad region of Russia.

he Bank’s auditor is Finansoviye i Bukhgalterskiye Konsultanty LLC (FBK LLC) (member of the SRO non-profit partnership Audit Chamber of Russia, membership certificate no. 5353 as of 12/21/2009, principal number of registration entry 10201039470).

This press release is based on the statement of assigning a credit rating to Evropeisky ICB (CJSC).

The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank'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.

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).

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 business banking services to project and engineering companies implementing investment projects), and 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 the recapitalization of banks. Besides, AK&M Rating Agency is recognized by AHML and accredited by SRO National Securities Market Association.

CJSC Analysis, Consulting and Marketing Rating Agency
ul. Gubkina 3
Moscow, Russia
www.akmrating.ru
Press release by: Y.B. Kuznetsova
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.
Email: kuznetsova@akm.ru