CJSC AK&M Rating Agency affirmed the national scale credit rating of StarBank CJSC at 'A', tier 3, with a stable outlook.

The 'A' rating indicates that StarBank CJSC qualifies as a highly creditworthy borrower. Risk of a delay in meeting obligations is relatively low, full or partial debt restructuring risk is minimal.

We appreciate the Bank's growing net incomes, well-balanced liabilities across the groups of investors, strong liquidity position, low amount of credit risk assumed, and mature branch network as the main positive rating drivers for the Bank.

StarBank CJSC keeps its net earnings growing. The total amount of its net income in 2013 increased by RUB 31.6 million (4.9%). In the first quarter of 2014, the Bank received RUB 1,007.1 million in net income (against RUB 99.7 million in losses for the same period in 2013).

The high percentage of personal deposits keeps the Bank's liabilities well-balanced across the groups of investors. As of May 1, 2014, the maximum share of liabilities attributable to one group of investors was 1.37% of the total liabilities (RUB 149.6 million), the ten largest investors (groups of investors) accounted for 5.72% of the total liabilities.

The Bank maintains a comfortable liquidity position. As of May 1, 2014, the Bank's acid test and current liquidity ratios were 113.0% and 178.38%, the minimum acceptable values being 15% and 50%. Since our previous review, these liquidity ratios have exceeded the average level in Russia's banking sector. The long-term liquidity ratio stayed below the average value in Russia's banking sector reaching 42.94% as of May 1, 2014 against the maximum acceptable value of 120%.

The Bank's credit exposure is relatively low. Its credit risk ratios are comfortably far from the regulatory limits: N7 = 380.08%, N9.1 = 7.45%, N10.1 = 1.29% as of May 1, 2014.

StarBank CJSC has a well-developed branch network comprising 3 branches, 16 operational offices, 1 stand-alone cash desk and 2 representative offices. Over the period since our previous review, the Bank has opened outlets in Labytnangi, Novy Urengoy, and Yekaterinburg cities.

At the same time, the lack of stability in the net income profile, relatively low share of net loans receivable in assets, high percentage of problem and non-performing loans, significant loan arrears, and low capital quality are working against the Bank's rating.

The net income profile of StarBank CJSC lacks stability. While miscellaneous operating earnings were the main source of income for the Bank in 2013, net earnings from securities transactions contributed most to the Bank's total net income in the first quarter of 2014. The share of net interest margin after provisions for losses decreased (2.8% in the first quarter of 2014 against 21.0% in 2013).

Despite the positive changes since our previous review, the share of net loans receivable in the Bank's assets (40.8% as of April 1, 2014) remains below the average level in Russia's banking sector (71.0%).

In AK&M Rating Agency's view, the share of non-performing and problem loans in the Bank's loan portfolio (14.5%) is fairly high. The percentage of loan arrears is 8.6%, which is above the comfortable level.

Another negative rating driver is the low capital quality. As of the last reporting date (May 1, 2014), the capital quality ratio (Tier 2 to Tier 1 capital ratio) was 66.9%, unable to meet the Central Bank of Russia's guideline (no more than 30%).

Full Bank name: StarBank Closed Joint Stock Company.

StarBank CJSC has been operating in the market of banking services since 1980. The bank possesses a license for banking operations involving Russian rubles and foreign currencies (without accepting money deposits from individuals) as of April 12, 2013, and a license for accepting money deposits from individuals denominated in Russian rubles and foreign currencies, as of April 12, 2013.

The Bank is a member of the compulsory deposit insurance scheme (registered under no. 485 as of January 20, 2005).

StarBank CJSC provides the standard range of banking products and services involving Russian rubles and foreign currencies.

The Bank is headquartered at: Moscow, Butyrsky Val street 68/70 bld. 1. Apart from the head office, StarBank CJSC operates 3 branches, 16 operational offices, 1 stand-alone cash desk and 2 representative offices in the Central, Volga, Ural and Siberian Federal Districts of the Russian Federation.

The Bank's auditor is NORMA-PROFAUDIT LLC, a member of SRO Nonprofit Partnership Audit Chamber of Russia, primary registration number (ORNZ) 10301001996.

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

The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank's / COmpany's creditworthiness and shall not be construed as a recommendation to purchase or sell securities, or to lend funds.

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.

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

ul. Gubkina 3

Moscow, Russia

www.akmrating.ru

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