The 'A+' rating indicates that JSC AIKB Tatfondbank qualifies as a highly creditworthy borrower. The risk of a failure to meet obligations in time is insignificant.

JSC AIKB Tatfondbank qualifies as a large Russian bank in terms of the amount of business. As of December 1, 2014, the Bank ranked 48th in terms of asset size place, 47th in terms of equity capital size, 299th in terms of net profit among Russian banks.

JSC AIKB Tatfondbank headquartered in Kazan is operating in 16 regions in 5 federal districts of Russia. Apart from its HQ, the Bank's branch network contains six branches and 104 internal structural units including satellite and operational offices as well as a stand-alone cash desk. The Bank provides the whole range of banking products and services involving Russian rubles and foreign currencies to legal entities and private customers.

We regard the growing key balance sheet and operational performance indicators in 2014 as the key positive rating driver for the Bank.

The Bank's equity capital growth in January-November 2014 (+20.9% from RUB 15,682 million to RUB 18,954 million) laid a foundation for improvements in its key balance sheet indicators. The quality capital ratio i.e. Tier 2 to Tier 1 capital ratio (20.3% as of December  1, 2014) met both the Basel Accord guidelines (below 50%) and the Bank of Russia's recommendations (below 30%). The Bank's capital is a reliable safety cushion capable of absorbing possible losses and keep the Bank financially sound.

In 2014, JSC AIKB Tatfondbank continued improving its liability profile. The Bank's liabilities growth rate (20.7% as of October 1, 2014) was generally commensurate with the capital growth rate. The share of customer deposits (deposits of non-credit institutions) increased to 69.5%, thereby making the Bank's financing less dependent on external funding sources.

The funding base expansion caused an increase in assets, their total amount growing from RUB 121.2 billion to RUB 142.1 billion (+17.2% as of October  1, 2014). The 14% increase in net loans receivable was a growth driver for active transactions and interest earnings (+24.7% against the same period in 2013).

AK&M Rating Agency is pleased to note that the Bank's lending and deposit policy is well-balanced against the background of the growing amount of loans receivable, which is proven by a comfortable net interest spread ratio staying equal to or above 4% on most of the reporting dates in 2014.

The Bank never failed to meet the applicable liquidity and credit risk requirements in the period under review, the corresponding ratios being appreciably far away from the regulatory limits (set by the Central Bank of Russia), which contributes to the Bank's rating.

At the same time, the low profit performance of the credit institution, the loan portfolio deterioration and the heavy investment in mutual funds are working against the Bank's credit ratings.

The underperformance in the way of 11-month profits in 2014 is putting pressure on the rating of AIKB Tatfondbank. The Bank's pre-tax profit (RUB 10.4 million) looks inconspicuous against the previous year's level on the same date (RUB 551.2 million).

The weak financial result is attributable to losses in the third quarter of 2014 caused by the negative revaluation of funds in terms of foreign currency and growing provisions for possible loan losses.

The erosion of loans receivable in the wake of growing problem and non-performing loans is another matter of concern. As of December  1, 2014, the shares of these loans in loans receivable increased 1.6 times and 1.4 times, respectively, against the start of the year, to 4.10% and 3.71%, respectively, the combined share of non-performing and problem loans exceeding the average percentage in Russia's banking sector.

Additional liquidity risks arise from heavy investments in mutual funds (9.4%) whose profit performance is subject to excessive volatility.

Full name: Joint Stock Company 'Joint stock investment commercial Bank Tatfondbank'.

Short name: JSC AIKB Tatfondbank.

JSC AIKB Tatfondbank has been operating in the market of banking services since 1994, registration no. 3058 by the Bank of Russia. The Bank has a license for banking operations involving Russian rubles and foreign currencies (no. 3058 as of October 15, 2012), a license to accept ruble- and foreign currency-denominated money deposits from individuals (no. 3058 as of October 15, 2012) and a license for accepting deposits and placement of precious metals (no. 3058 as of April 18, 2005).

Apart from the said licenses, JSC AIKB Tatfondbank is licensed by Russia's Federal Financial Markets Service (FFMS) as a professional participant of the securities market. The Bank has non-expiring licenses for the following activities: brokerage (no. 016-03237-100000 as of November 29, 2000); dealer activity (no. 016-03327-010000 as of November 29, 2000); securities management (no. 016-03403-001000 as of November 29, 2000); custody activities (no. 016-04195-000100 as of December 20, 2000).

This press release is based on the Statement of assignment of a credit rating to JSC AIKB Tatfondbank.

The 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 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.

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CJSC AK&M Rating Agency

www.akmrating.ru

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