The 'A' rating indicates that OJSC Lipetskcombank qualifies as a highly reliable borrower. Risk of a delay in meeting liabilities is relatively low, restructuring risk for a loan / part of a loan is minimal.

We appreciate the well-structured and growing net earnings, profitable operations, low funding costs, and efforts to maintain a robust liquidity position as the main positive rating drivers for the Bank.

OJSC Lipetskcombank has had a sustainable and improving net income profile over the recent years, which, in our view, contributes to its credit worthiness. The Bank's main net income sources are its net interest income after provisions for losses (74.8%) and net fee & commission income (24.8%). In 2012, the Bank increased its overall net income by RUB 44.6 million (3.3%).

The consistently improving profit performance is another argument for the Bank's rating. In 2013, the Bank's pre-tax profit grew by 5.1% (RUB 26.2 million) to RUB 537.5 million, profit after tax by 10.9% (RUB 37.2 million) against the previous year, reaching RUB 378.1 million.

OJSC Lipetskcombank keeps profitability fairly high. In 2013, its return on equity ratio was 19.0%, return on assets ratio was 2.1%. On a side note, both exceeded the average ratios in the banking sector (15.2% and 1.9%, respectively).

The relatively low cost of debt (compared with the Bank of Russia's refinancing rate) is another positive signal for the rating. In 2013, the cost of liabilities and interest rates on customer deposits did not exceed 6% p.a.

Another positive signal for the rating is the Bank's ability to maintain a comfortable liquidity position. Its liquidity ratios are comfortably far from the regulatory limits. As of February 1, 2014 they were as follows: N2=54.33%, N3=79.50%, N4=62.05%. The Bank has never failed to meet the requirements for these ratios.

At the same time, the following imperfections are putting pressure on the Bank's credit rating:

The Bank's asset growth rate is below the average value in Russia's banking system. In particular, the Bank's assets increased by 3.0% in 2012, by 7.9% in 2012, which is far below the average asset growth rates of Russian banks (16.0% and 18.9%, respectively).

The shares of problem and non-performing loans in the Bank's loan portfolio are exceeding the average levels in Russia's banking sector, which we regard as a negative rating driver.

Also, the high concentration of the Bank's liabilities in one group of investors generates imbalances, which is a negative signal for its rating.

Full name: Open joint-stock company Bank of social development and construction Lipetskcombank

Short name: OJSC Lipetskcombank

OJSC Lipetskcombank has been operating in the market of banking services since 1990. The Bank is licensed by the Central Bank of the Russian Federation, general banking license no. 1242 as of June 28, 2012.

The Bank is operating within the compulsory deposit insurance scheme, DIS registration certificate no. 789 as of March 21, 2005.

OJSC Lipetskcombank provides the standard range of banking products and services involving Russian rubles and foreign currencies.

OJSC Lipetskcombank is headquartered at: Internatsionalnaya 8, Lipetsk city, Russia. The Bank's retail network, apart from its HQ, comprises 4 branches, 21 satellite offices and 1 stand-alone cash desk. OJSC Lipetskcombank is operating in 4 regions: Lipetsk region, Moscow, Belgorod region, and Krasnodar Krai.

OJSC Bank Zenit has been the Bank's major shareholder since June 2007 (99.395%). ZENIT Banking Group was established in 2005 as Bank Zenit acquired a controlling stake in JSB Devon-Credit. In 2007, Lipetskcombank and Sochigazprombank (renamed as Bank Zenit Sochi) joined the group. In December 2008, the group took over Spiritbank (Tula). As of January 1, 2014, ZENIT Banking Group was present in 27 of 83 regions of the Russian Federation, its own retail network numbering 172 points of sales.

The Bank's reports are audited by CJSC ENERGY CONSULTING/AUDIT (a member of nonprofit partnership Institute of Professional Auditors of Russia (IPAR), primary registration number 10202014620.

This press release is based on the statement of assigning a credit rating to OJSC Lipetskcombank.

The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank's reliability 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).

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.