The 'A+' rating indicates that nonprofit organization "Stavropol regional Microfinance Fund for small and medium business" (SRMF SMB) qualifies as a highly creditworthy microfinance institution. The risk of a failure to meet obligations in time is insignificant.

The microfinance institution rating reflects the Fund's microlending improvements, acceptable overdue debt and portfolio-at-risk (PAR) ratio, and growing operational sustainability.

For the whole period of microfinance activities, the Fund has concluded 1,732 microloan contracts for a total amount of RUB 936 million (as of October 1, 2014). In 2013, the total amount of loans provided by SRMF SMB to SME businesses increased by RUB 27.7 million (9.7%) against the 2012 level. This year, the new loan portfolio growth slowed down, the total amount provided under loan agreements increasing by 3.3% (based on the comparison of the 9-month performance in 2013 and 2014).

Today, the loan portfolio of FGBD PR includes 13 borrowers undergoing court enforcement proceedings aimed to recover RUB 7.23 million. Overall, the Fund's register of debtors contains 24 SME businesses unable to timely and fully meet their payment obligations to the Fund (for a total amount of RUB 12.755 million). As of October 1, 2014, the Fund has recovered more than 43% of the total amount of loan arrears. The Fund's portfolio-at-risk (PAR) ratio (in terms of the Ministry of Economic Development's order 411 as of July 1, 2014) decreased by 0.3 p.p. since the start of the year to 2.6% as of the same date, the maximum acceptable level being 7%.

Revenues of SRMF SMB have been growing every year. In 2013, they increased by 63.5% to RUB 16.7 million; for the 9-month period in 2014, the Fund's financial income reached RUB 16.1 million, i.e. 41.2% above the amount earned for the same period in 2013. It should be noted that the Fund's expenses grew less (by 12.9%) despite the loan losses recognized in expenses starting from the second quarter of 2014 and the growing financial expenditure (more than 7 times since the start of the year). The Fund's operational sustainability ratio increased by 13.5 p.p. since the start of the year to 111.9% (the lower acceptable limit being 100%).

At the same time, the low lending efficiency is working against the rating of SRMF SMB.

The last time SRMF SMB's capital was increased was in the fourth quarter of 2013 (by 8.8%, with subsidies from the federal and regional budgets). As of October 1, 2014, the Fund's capital amounted to RUB 345 million. However, the portfolio of loans expanded by a mere 5.3%. As a result, the lending efficiency ratio was 69.6% on October 1, 2014, i.e. below the guideline recommended by Russia's Ministry of Economic Development for MFIs (80% after one year in operation).

Nonprofit organization "Stavropol regional Microfinance Fund for small and medium business" was registered as an entity affiliated with the Ministry of Economic Development of Stavropol Krai in December 2010 to provide financial support to small and medium-sized businesses using a microfinancing scheme involving inter alia targeted funds from OJSC Russian Bank for Small and Medium Enterprises Support (SME Bank). The Fund was registered as a microfinance institution on August 12, 2011.

This press release is based on the Statement of assignment of a microfinance institution credit rating to nonprofit organization "Stavropol regional Microfinance Fund for small and medium business" (SRMF SMB).

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

AK&M Rating Agency shall not be held liable for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.

CJSC Analysis, Consulting and Marketing 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 AK&M Rating Agency

Ul. Gubkina 3, Moscow, Russia

www.akmrating.ru

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