The ‘A’ rating indicates that JSC IntechBank is qualified as a highly reliable borrower.
The Bank’s rating score is supported by its high capital quality. Over the period under review (2008-2011), the share of Tier 1 capital has exceeded 80%. Most of the Bank’s core capital is its authorized capital, which also indicates the good capital quality. The authorized capital is RUB 2 billion (92.6% of the equity capital, far above the average level in the banking system of the Russian Federation, 25%).
Capital adequacy ratio of JSC IntechBank in 2009-2011 was above the average level in the banking system of the Russian Federation. Our retrospective review of all the capital adequacy ratios of the Bank over the last three years shows that they have never failed to meet the Bank of Russia’s requirements. On August 1, 2011, the Bank’s N1 ratio was 17.8%, the average value in the Russia’s banking system being 16.7%.
JSC IntechBank has achieved fairly good diversification of funding sources. As of July 1, 2011, funds placed by the Bank’s customers accounted for most of its liabilities, the share of physical persons’ deposits in total liabilities being 66%, which is above the average Russian level (29.8%). Funds of non-credit institutions accounted for 22% of all the liabilities. Besides, the concentration of liabilities within one certain group of depositors is good, which means that the Bank is now highly dependent on large customers, and is a positive stability factor.
Despite the competition, JSC IntechBank succeeds in expanding in the banking market. In 2010, physical persons’ deposits increased by RUB 3518 million (161.5%, against 31.2% on average in the banking system of the Russian Federation). As of July 1, 2011, the deposits increased by RUB 725.8 million (12.7%) year-to-date against 7.1% in Russia’s banking system.
Another support for the rating score comes from the growing customer base. The number of legal entities’ accounts increased by 18.6% in 2010 and by 9.5% H1 2011. The number of physical persons’ accounts increased by 38% in 2010, by 8.6% in H1 2011.
Loan assets of JSC IntechBank are of fairly good quality. The share of non-performing and problem loans in the loan portfolio as of July 1, 2011 was 3.4%, below the average level in the banking system of the Russian Federation (about 8%). The share of doubtful loans is 34% (11.8% on average in the banking system of the Russian Federation). Class 1 loans and class 2 loans together account for 63% of the loan receivables, slightly below the average value in the banking system of the Russian Federation (over 80%).
Arrears on the loans granted by JSC IntechBank and other funds placed by it as of July 1, 2011 was 1.4% of the loan receivables, which is below the average level in Russia’s banking system (4.5%).
JSC IntechBank has sufficient liquidity. As of August 1, 2011, quick liquidity ratio of the Bank was 55.37%, the minimum value required being 15%. Current liquidity ratio equaled 85.71% against the minimum acceptable percentage of 50%. Long-term liquidity ratio was 84.21%, below the maximum limit of 120%.
JSC IntechBank has developed a well-spread branch network in the Republic of Tatarstan. Today, the Bank is operating three branches, 14 additional outlets and four operational cash desks in the Republic.
The rating score is restricted by the lack of stability of profit secured by the Bank. In 2007-2009, balance sheet profit of the Bank decreased; in 2010, it increased by 51.4% to RUB 139.8 million on the appreciably growing fee and commission incomes. For H1 2011, balance sheet profit of the Bank totaled RUB 69.5 million, which is 10% below the profit result achieved for H1 2010. The profit contracted due to the growing operating expenses by 36.7% year-on-year.
The high credit risk concentration is restricting the Bank’s rating. The maximum amount of large credit risks (N7) has been above average since mid-2009. As of August 1, 2011, this indicator equaled 327.42% (the average N7 percentage in Russia's banking sector as of the same date being 201.2%). N9.1 (maximum amount of loans, guarantees and surety bonds to the bank’s members) was also far above the average value in the banking system of the Russian Federation, yet did not exceed the upper threshold of 50% set by the Central Bank of the Russian Federation. As of August 1, 2011, N9.1 was 16.2%, the average value in the banking system of the Russian Federation being 1.7%.
The high share of investments in securities (20% of all assets of the Bank as of July 1, 2011, against 16.5% on average in the banking system of the Russian Federation as of the same date) also constitutes a risk factor. It will be noted that the share of investments in securities increased obviously (from 8% as of July 1, 2010) implying more securities-related risks down as the stock market lacks stability.
JSC IntechBank has been active in the market of banking services since 1994. The bank is among the 250 largest banks of Russia. As of July 1, 2011, the Bank’s assets totaled RUB 12 billion, equity capital was estimated at RUB 2.2 billion. JSC IntechBank possesses general banking license no. 2705 granted to it by the Central Bank of the Russian Federation on April 3, 2008. In January 2005, the Banking Supervision Committee of the Central Bank permitted JSC IntechBank to join the Deposit Insurance System (DIS). The Bank’s auditor is CJSC Yekaterinburg Audit Center.
JSC IntechBank is principally engaged in providing the whole range of banking services to legal entities and physical persons.

This press release is based on the statement of assigning a credit rating to JSC IntechBank.
The rating score, along with any information and conclusions provided in this press release, only conveys our opinion on the Company'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.
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 – Provision 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 entities implementing investment projects), the MICEX (as a prerequisite for including bonds in the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation base, for listing bonds and for providing access to the MICEX+ trading mode). Pursuant to an order of Russia's Government AK&M Ratings count for approving the capitalization increase procedure for 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.
E-mail: kuznetsova@akm.ru