CJSC AK&M Rating Agency affirmed the national scale credit rating of PIR Bank LLC (license no. 2655) at 'B++', tier 1, with a stable outlook.

The 'B++' rating indicates that PIR Bank LLC qualifies as a sufficiently reliable borrower. Risk of a delay in meeting obligations is moderate, full or partial debt restructuring risk is insignificant.

We appreciate the Bank's well-structured and improving equity capital, comfortable capital adequacy ratio, profitable operations, strong liquidity position and low credit exposure as the main positive rating drivers.

The well-structured and growing equity capital contributes to the Bank's rating. In particular, it increased by RUB 206.2 million (19.0%) in 2013, by RUB 30.8 million (2.4%) in the first quarter of 2014. In either case, the increase was driven by the Bank's retained earnings. The authorized capital accounts for 56.6% of the Bank's total equity capital, which is a fairly good result.

The Bank keeps its capital adequacy high: since our previous review, the N1 ratio stayed in the 12-17% range. As of the last reporting date (April 1, 2014), capital adequacy ratios were as follows: N1.1 = 16.51%, N1.2 = 16.51%; N1.0 = 17.31%.

The credit rating of PIR Bank LLC is also supported by its fast-growing earnings and profit performance. In 2013, the Bank's total net earnings increased by RUB 389.4 million (twice) reaching RUB 779.4 million. Net interest margin after provisions for possible losses is still the main contributor to the Bank's total net income.

We also appreciate the Bank's highly profitable operations as a positive argument for the rating. In 2013, the Bank posted pre-tax profit of RUB 355.0 million (2.7 times above the previous year's result). Return on assets was 5.2%, return on equity was 30.3%, exceeding the average ratios in Russia's banking sector (1.9% and 15.2%, respectively).

The Bank's liquidity and credit risk ratios are comfortably far from the regulatory limits. Over the period under review, the Bank has never failed to stay within these limits, which is a positive rating driver.

At the same time, the significant percentage of problem and non-performing loans, the heavy loan arrears and the fairly high concentration of liabilities in one group of investors are putting pressure on the Bank's credit rating.

We highlight the still high percentage of non-performing and problem loans in the Bank's loan portfolio (17.0% as of April 1, 2014). The share of loan arrears is 21.3% of the total loans receivable, which is also uncomfortably high. However, the Bank is taking active measures to improve its loan portfolio, and its claims activities are quite commendable.

Another risk factor is the Bank's inability to distribute its liabilities across the groups of investors. As of April 1, 2014, the maximum share of liabilities attributable to one group of investors was 20.25%, while the ten largest investors (groups of investors) accounted for 57.30% of the total liabilities.

Official name: PIR Bank LLC.

Full Russian name literally translated as: Bank of Industrial and Investment Settlements, Limited Liability Company.

PIR Bank LLC has been operating in the market of banking services since 1994. In January 2013, the Bank changed its previous name (CB Prominvestraschet LLC) to PIR Bank LLC.

The Bank is licensed by the Central Bank of the Russian Federation, general banking license no. 2655 as of January 24, 2013. The Bank is a member of the compulsory deposit insurance scheme (DIS registration no. 284 as of December 9, 2004.

PIR Bank LLC provides the standard range of banking products and services involving Russian rubles and foreign currencies.

PIR Bank LLC is headquartered at: Novinsky Boulevard 3, bld. 1, Moscow and has no branch network.

The Bank's reports are audited by NORMA-PROFAUDIT LLC, a member of SRO non-profit partnership Audit Chamber of Russia, primary registration number (ORNZ) 10301001996.

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

The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank's creditworthiness and shall not be construed 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) and is on the Central Bank of Russia's Register of Accredited Rating Agencies.

CJSC Analysis, Consulting and Marketing Rating Agency

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Moscow, Russia

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Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.